Even as the gap between the rich and everyone else widens, the quality of life for the bottom 99 percent has vastly changed since 1928.
This makes me wonder how much people care. In a global economy where the 1% are investing in markets that can reach billions of people, extreme poverty on a global scale was sliced in half in a 30 year period, and supply chains allow us to have super computers and unlimited entertainment for tiny fractions of the median wage, you can expect a lot of inequality, but life is way better for everyone in the world since 1928.
Inequality is only a problem in so much that it leads to higher crime rates and (eventually) civil instability in places where its most apparent. We haven't seen much of that (yet), but don't stop looking for it.
Inequality has other negative implications although they are far more indirect - misallocation of resources. To reduce to the absurd logical extreme while one technically might get the best students in the world by tutoring a handful of megawealthy kids with the budget of the entire US school system exposing all children would pay off far more just by giving them opportunity to advance more alone.
In addition that level of concentration has the power to corrupt systems to serve self-perpetuation of the interests of the wealth holder at the cost of everyone else. Horrifying third world corruption like lobbying against a reliable power grid because it would hurt the diesel and generator seller's profits despite it killing people and holding the country back.
Technically a robust system of law and justice could keep those controlled but money comes with myraid ways to undermine that. These are extreme examples but they demonstrate why it should be watched carefully.
I think the really important point you make is the issue with corruption. If someone simply provides value and gets rewarded for it, that is great and they deserve the wealth; but it is the sad reality that most people with lots of money/power eventually seem to seek more power through any available means, which eventually becomes through by force of law and corrupting governments. The thirst for power and the hubris of seeing yourself as a kingmaker is a powerful temptation for a lot of people.
I don't believe in forced redistribution or any of that (that usually just ends up making the problem worse). I think actually having a just system of laws which are enforced fairly and a culture that promotes virtue are the best guards against corruption.
If you want to understand wage stagnation in the US, look up the "elephant curve." In a nutshell: middle income of rich countries has stagnated because of the new need to compete with rapidly industrializing poor countries. Everyone's income around the globe tends to increase during this process (a very good thing!), except for middle wage earners in rich countries.
Meanwhile, in local politics, both sides of the aisle blame eachother for this effect, which is totally outside of either of their control.
Cutting taxes and then cutting government services is totally within their control. Providing assistance to big corporations while denying it to citizens is also under their control.
Saying both sides do it when clearly only one side is doing it does not help.
I find the elephant curve explanation compelling. But I’m not sure it’s fair to then say there’s nothing that can be done to mitigate the impact of that.
Rich Scandinavian countries, for example, have a more redistributive tax system that appears to leave people broadly happier. Fine to argue the relative merits of such an intervention, of course, but worth noting it’s very much an option.
This is exactly right and something that my fellow American Millennials can't seem to grasp. I do business in many different developing countries where a good wage even for skilled programmers is less than 10% of a normal silicon valley wage.
It really is the whole world competing for information jobs these days and while it will eventually level out, it's bound to cause wage depression in already developed countries.
> Even as the gap between the rich and everyone else widens, the quality of life for the bottom 99 percent has vastly changed since 1928.
>> This makes me wonder how much people care.
People do care, because their year of comparison isn't 1928, because most weren't alive at that time. Rather they compare it with the long post-WWII period of growth that they or their parents grew up in, when basic goods and services like housing, education, and health care became affordable for the working class.
People don't feel grateful that polio isn't prevalent today because they don't see anyone with it anymore - it's baked (justifiably, IMO) into the expectations-cake in the developed world. However, they do see that it's harder to afford the basics, and also some of the luxuries of life (i.e. the boat and cabin by the lake).
Cheaply available entertainment and computing power is cold comfort when you are struggling to pay your mortgage/rent, your out-of-pocket medical costs, or for your childrens' education.
EDIT: I would add that I also recognize that the post WWII social contract wasn't (and still isn't) available to large sections of the population.
To be honest, a nice gap between rich and poor is probably a good thing for the economy. If people aspire to become rich by producing value/wealth, that's a great thing for everyone.
The problem is when people become rich by not producing any value or hampering future value. You either become rich by producing more wealth than your peers, suppressing wealth of your peers or force acquiring from your peers.
The 0.1% start engaging in suppressing and the dictators start engage in force acquiring.
I believe a healthy tax system and a healthy income gradient makes up for a long term prosperous country.
The problem with US and more pronounced by Trump administration is the big tax benefits to the 0.1%-ers, pulling out ACA, net neutrality e.t.c is going into the "suppressing your peers" area.
America may have a strong economy now, but its not sustainable for long term.
I would also suggest that inequality is also a problem in that it can distort the political process - this seems to be a particular problem in the US although we are hardly immune from it here in the UK.
Many who argue this point are usually the ones who would be doing the distortion when the time comes -- for example, when Yanis Varoufakis argues that there needs to be more income redistribution across Europe or else the pitchforks and torcehs are coming, I wonder what the difference is between predicting instablity and vaguely threatening political violence.
I think tech workers are vastly out of touch with how the majority of Americans are living in this country, but- it is only a suspicion. Indeed, we are fortunate.
By and large, you are correct. I think it's just a human condition that if you make 10x what the poverty line is you are also 10x unable to sympathize or empathize with those making less.
It's very easy to feel like a rational human when you have everything you need and more. It's too easy to blame the poor for making bad decisions. They are operating under an entirely different logic system and reality is bent in ways the upper 20% cannot fathom unless they've been there.
It's especially galling when success in this country is increasingly tied to a birth lottery that the winners justify the system with such disregard to the unfortunate.
Its actually correlated with much more than crime and civil instability. Its correlated with health, happiness, and a bunch of things that affect well being.
Is income inequality also correlated with a lower median income?
If so, then any correlation between income inequality and all of those other things are likely a correlation between them and median income.
Do places with with high income inequality and high median income compare favorably or unfavorably with places with high income inequality and low median income?
This is an overly simplistic interpretation of human beings. Our life satisfaction is partially dependent on our perceived social status, so increased inequality can indeed weaken quality of life.
Comparing quality of life today to quality of life in 1928 (or any other time) is not a simple exercise, there are a lot of variables to take into consideration.
Philosophy is really subject you need to study to understand this. On quality of life, economics is very superficial and unsophisticated (and honest economists have always admitted as much).
If you'd like to know more take a course in philosophy (or listen to the Philosophize This podcast)
Or, stated similarly:
“Inequality is only a problem for the wealthy in so much that it leads to higher crime rates and (eventually) civil instability in places where its most inconvenient for the wealthy.
Your conclusion sounds like the premise of Ready Player One (and countless other dystopian future scenarios). Hooking poor people up to cheap, advanced entertainment is no better than stuffing them which cheap over-processed calories.
So only rich people can afford to make good choices in regards to food? Rice, beans, whole grain bread, and frozen vegetables are all fairly cheap. It doesn't have to be Whole Foods Organic to be healthy.
Inequality is a pretty big problem when you're one of the majority stuck on the bad side of it. Most people here seem to exhibit a deeply held ignorance on the plight of the vast majority of their fellow citizenry.
The top 1% of earners pay more than 40% of the total federal taxes. Moreover: "the top 1 per cent paid more tax than the total paid by the bottom 90 per cent combined."[1]
Those taxes fund defense, social security, national parks, interstate highways and many other services that benefit everyone.
A) This only refers to income tax, and does not count more regressive federal taxes (FICA) or state taxes (sales tax). It's interesting that I can easily find sites with aggregate tax distribution by income level for income tax pretty easily (https://taxfoundation.org/summary-latest-federal-income-tax-...), but finding sites with aggregate tax distribution by income level for FICA seems difficult...
Obviously the United States is progressive taxation overall, but I feel that this oft-quoted bullet point way over-simplifies the American tax landscape.
I think it's important to remember that the top 1% can only claim credit for funding over 40% of the total federal taxes because they have managed to suppress the growth of wages for the bottom 99%. Since they have captured so much of the wealth, they have robbed the bottom 99% of the ability to sustain their own the country. This isn't a function of generosity or humanitarian sentiment and to imply otherwise would be, in my opinion, dishonest.
As we see the top 1% decide to pay less and less of the tax burden (a burden they have placed on themselves), we'll see more crime and unrest and roads rot and the social safety net touted in this article begins to disappear.
Try looking outside the US for the crime rates and civil instability. There were riots in the Haitian capital a couple of weeks ago as their government tried to raise the cost of fuel.[0]
While we talk about the "global economy" a lot here in the US, I believe that we only benefit because we have so much control over that global economy. As US control erodes it seems reasonable to assume that we'll start to be hit much harder and the top 1% will be well positioned to be insulated from that hit.
"Serfdom in itself causes unhappiness. Or jealousy, if you want to call it that."
Interestingly, it seems to me that the current iteration of the oppression business can somehow always dismiss calls for justice as envy/jealousy, but never the previous ones.
I always used to mis-use Jealousy, when I meant Envy. you mean Envy. The lord God is a Jealous God. He's not envious.
That snark aside (sorry) I actually agree with you. relativism is all here, the mass inequality fuels dissent in unhelpful ways and the marginal freedoms of Moar Moar is actually low: if they paid more tax, the increment on society would be huge, and the decrement to their disposable income unimportant.
I think many people feel something is wrong with society, but don't necessarily know where to pin the blame. The Brexit vote here in the UK, and Trump's campaign in the US, successfully played to these feelings (but pinned the blame on immigrants, the EU, the Democrats, liberal elites, etc.)
I find it quite scary how easily people are influence/manipulated, especially in the age of the internet. It has never been easier to make sensationalist, misleading headlines without anything to back them up. Many people will only read the headline. The human mind is so easily manipulated and over time, makes up information and remembers it as fact (see confabulation-https://youarenotsosmart.com/2012/05/30/yanss-podcast-episod...). Who knows how much Brexit, Trump, etc are due to such manipulation?
> but life is way better for everyone in the world since 1928.
I agree with most of your comment, but everyone?
For sure, the mean and median purchasing power of people is way up, but the floor of human experience is as low as ever. Being poor today in North Korea, Iraq, or Syria is surely as miserable as human life has ever been.
> Inequality is only a problem in so much that it leads to higher crime rates and (eventually) civil instability in places where its most apparent. We haven't seen much of that (yet), but don't stop looking for it.
Our crime rates in the US are higher than most places in the world. For example, more than half the countries in the world have lower homicide rates than the US. I agree with your hypothesis that crime is linked with inequality and I think we are already seeing that.
Of course, this time the robber barons know what will happen if they delve too greedily and too deep. Unions, the New Deal... can't have that. This time they are making more clever investments in propaganda, government control, and distraction.
They've also gotten much better at hiding, laundering their money. The smart ones, at least.
I grew up around a lot of rich people. Old money knew how to blend in. New money (nouveau riche) stood out. Then, it was just gauche. Now, I think the dummies flaunting their wealth engenders a lot of resentment.
Not surprisingly, there's 5 places in California where the top 1% has more wealth than in 1928. Which means that the ratio of income of top 1% to income of bottom 99% is higher than it was in 1928. Which is a sign of rise in income inequality.
I would be really interested in studying the breakdown of wealth within the top 1% in all the places listed. In my experience (here in India at least), most people in the top 1% are just as worried [about income inequality] as the rest of us. It's the people at the top 20% of the 1% that can live anywhere, but sure, journalists can still call them the 1%.
The Gold Rush did indeed make a lot of people wealthy. Not the gold itself, but rather land speculation and the business bubble.
When I randomly recall old wealth families that I’m aware of, they pretty much all started from local business tycoons (newspapers, railroads, essential consumer products, etc.) that usually diversified through real estate. No different than the rest of the US.
It is the gateway to asian trade, Mediterranean climate, resource rich, has great ports, chokepoints east that make scaling business like railroads easier, etc. It was also empty during modern times.
The initial burst of wealth began with the gold rush and was extended with the transcontinental railroad, but the basis for California’s modern wealth, all the way from San Diego to San Francisco, was the military industrial complex. Hollywood is a major industry in Southern California for sure, but Hollywood didn’t turn California into an economic juggernaut, the Pentagon did.
That same defense contract money and influx of tech talent is largely responsible for the foundations of Silicon Valley as we know it today.
...It wasn't always wealthy. My family has been around Marin for generations, and my aunt bought a nice house in San Jose for like $14,000 years ago. What it's worth now that everyone wants it...yikes.
The initial pulse was gold, as you suggest. The state motto is “eureka”, referring to gold. Gold was discovered in 1848, statehood followed quickly in 1850.
Just to give unspoken point of view, a scenario which i would like to pose: That Income inequality provides a kind of fiscal stability vs uncontrollable inflation.
If you overlay a chart of inflation on top of the chart of inequality you will find that maximum equality appears to correspond closely to periods of maximum inflation.
Governments from both sides of the argument have focused on reducing collective bargaining and on ensuring that efforts to rejuvenate economies, like quantitative easing via the financial sector and tax breaks are focused on the corporations and wealthy precisely because of the low impact this can have on inflation
The effect of these measures tends to pump money into the already wealthy while bulk of the population experience no-change.
The lack of inflation is making it easy to concentrate and safely hoard cash, which is cutting off the oxygen for everyone else. We've had 30 years of an ultra-safe, guaranteed strategy to make money -- move all value-added services to places with cheap labor and cheap money and export cash, facilitated by tithing a good portion of GDP to the OPEC producers. It's destroying western society.
The best thing that could happen to the west today would be a devaluation.
That sounds like a side effect of the wealthy holding more passive assets and spending less of their income than an inherent virtue. Of course the real question is why inflation? Real wealth creation should cause inflation. There are far more goods available today and just subdividing the old currency won't cut it as a medium. "Was there earlier and held onto value doing nothing granting disproportionate gains" isn't a very good basis for resource allocation even if it personally works out well for some people. Or is the inflation from heavy spending devaluing the currency to try to pay everyone without any corresponding value? Inflation is just a symptom and may be beneficial, neutral, or pathological depending on context and cause.
Of course stability and inequality go together, that's how the system has always been. There's never been a culture that was both a world power and also egalitarian. In order to have the wealth inequality vanish, you change the value of things. It upsets the entire market and valuation of goods and society as a whole. Governments tend to focus on fixing things the way you're speaking because they're A- strong, already established governments and B- they have capitalists helping to make the decisions that stand to lose the most from a change in the marparadigm
You can't have a non-capitalist society and also care about inflation, since inflation is a product of capital/money.
Remember, most of Marxism is based on a central pillar of "The cause of all the world's evils is the inequitable distribution of goods across needs." People are less likely cares about money/inflation if all their needs are being met.
This article’s chronology is off a bit. It compares current income inequality to 1928. But 1928 was not part of the Gilded Age. 1870-1900 is usually the period known as the Gilded Age.
Aside from that anachronism, I used the exact same term to describe where we’re at just a few weeks ago.
Yes, and it's too bad because the irony of pointing out that the 20's were part of the so-called "Progressive Era" despite having robber barons and such horrible inequity is really too good IMO.
The Gilded Age refers to the last several decades of the 19th century, and yet the article compares today's data to 1928. That would be "the Roaring Twenties."
Misusing the term Gilded Age is becoming more prevalent recently within the inequality narrative. I'm guessing The Gilded Age was shown to produce more clicks and why let facts get in the way of clicks
Readit News
This makes me wonder how much people care. In a global economy where the 1% are investing in markets that can reach billions of people, extreme poverty on a global scale was sliced in half in a 30 year period, and supply chains allow us to have super computers and unlimited entertainment for tiny fractions of the median wage, you can expect a lot of inequality, but life is way better for everyone in the world since 1928.
Inequality is only a problem in so much that it leads to higher crime rates and (eventually) civil instability in places where its most apparent. We haven't seen much of that (yet), but don't stop looking for it.
In addition that level of concentration has the power to corrupt systems to serve self-perpetuation of the interests of the wealth holder at the cost of everyone else. Horrifying third world corruption like lobbying against a reliable power grid because it would hurt the diesel and generator seller's profits despite it killing people and holding the country back.
Technically a robust system of law and justice could keep those controlled but money comes with myraid ways to undermine that. These are extreme examples but they demonstrate why it should be watched carefully.
I don't believe in forced redistribution or any of that (that usually just ends up making the problem worse). I think actually having a just system of laws which are enforced fairly and a culture that promotes virtue are the best guards against corruption.
Dead Comment
Meanwhile, in local politics, both sides of the aisle blame eachother for this effect, which is totally outside of either of their control.
Saying both sides do it when clearly only one side is doing it does not help.
Rich Scandinavian countries, for example, have a more redistributive tax system that appears to leave people broadly happier. Fine to argue the relative merits of such an intervention, of course, but worth noting it’s very much an option.
It really is the whole world competing for information jobs these days and while it will eventually level out, it's bound to cause wage depression in already developed countries.
People do care, because their year of comparison isn't 1928, because most weren't alive at that time. Rather they compare it with the long post-WWII period of growth that they or their parents grew up in, when basic goods and services like housing, education, and health care became affordable for the working class.
People don't feel grateful that polio isn't prevalent today because they don't see anyone with it anymore - it's baked (justifiably, IMO) into the expectations-cake in the developed world. However, they do see that it's harder to afford the basics, and also some of the luxuries of life (i.e. the boat and cabin by the lake).
Cheaply available entertainment and computing power is cold comfort when you are struggling to pay your mortgage/rent, your out-of-pocket medical costs, or for your childrens' education.
EDIT: I would add that I also recognize that the post WWII social contract wasn't (and still isn't) available to large sections of the population.
The problem is when people become rich by not producing any value or hampering future value. You either become rich by producing more wealth than your peers, suppressing wealth of your peers or force acquiring from your peers.
The 0.1% start engaging in suppressing and the dictators start engage in force acquiring.
I believe a healthy tax system and a healthy income gradient makes up for a long term prosperous country.
The problem with US and more pronounced by Trump administration is the big tax benefits to the 0.1%-ers, pulling out ACA, net neutrality e.t.c is going into the "suppressing your peers" area.
America may have a strong economy now, but its not sustainable for long term.
It's very easy to feel like a rational human when you have everything you need and more. It's too easy to blame the poor for making bad decisions. They are operating under an entirely different logic system and reality is bent in ways the upper 20% cannot fathom unless they've been there.
It's especially galling when success in this country is increasingly tied to a birth lottery that the winners justify the system with such disregard to the unfortunate.
If so, then any correlation between income inequality and all of those other things are likely a correlation between them and median income.
Do places with with high income inequality and high median income compare favorably or unfavorably with places with high income inequality and low median income?
Comparing quality of life today to quality of life in 1928 (or any other time) is not a simple exercise, there are a lot of variables to take into consideration.
Philosophy is really subject you need to study to understand this. On quality of life, economics is very superficial and unsophisticated (and honest economists have always admitted as much).
If you'd like to know more take a course in philosophy (or listen to the Philosophize This podcast)
This is astoundingly incorrect. Ask the people of Flint, MI. Income inequality directly impacts the length and quality of a person's life.
A quick glance at Wikipedia is all it takes to discover this. https://en.m.wikipedia.org/wiki/Economic_inequality
Those taxes fund defense, social security, national parks, interstate highways and many other services that benefit everyone.
[1] https://www.ft.com/content/d17e9240-c61e-11e7-b2bb-322b2cb39...
A) This only refers to income tax, and does not count more regressive federal taxes (FICA) or state taxes (sales tax). It's interesting that I can easily find sites with aggregate tax distribution by income level for income tax pretty easily (https://taxfoundation.org/summary-latest-federal-income-tax-...), but finding sites with aggregate tax distribution by income level for FICA seems difficult...
B) It's worth keeping in mind that the top 3.65% do earn 17.5% of aggregate income (https://en.wikipedia.org/wiki/Household_income_in_the_United...)
Obviously the United States is progressive taxation overall, but I feel that this oft-quoted bullet point way over-simplifies the American tax landscape.
As we see the top 1% decide to pay less and less of the tax burden (a burden they have placed on themselves), we'll see more crime and unrest and roads rot and the social safety net touted in this article begins to disappear.
While we talk about the "global economy" a lot here in the US, I believe that we only benefit because we have so much control over that global economy. As US control erodes it seems reasonable to assume that we'll start to be hit much harder and the top 1% will be well positioned to be insulated from that hit.
[0]: https://www.washingtonpost.com/world/the_americas/large-prot...
Interestingly, it seems to me that the current iteration of the oppression business can somehow always dismiss calls for justice as envy/jealousy, but never the previous ones.
That snark aside (sorry) I actually agree with you. relativism is all here, the mass inequality fuels dissent in unhelpful ways and the marginal freedoms of Moar Moar is actually low: if they paid more tax, the increment on society would be huge, and the decrement to their disposable income unimportant.
Envy!
Dead Comment
I agree with most of your comment, but everyone?
For sure, the mean and median purchasing power of people is way up, but the floor of human experience is as low as ever. Being poor today in North Korea, Iraq, or Syria is surely as miserable as human life has ever been.
> Inequality is only a problem in so much that it leads to higher crime rates and (eventually) civil instability in places where its most apparent. We haven't seen much of that (yet), but don't stop looking for it.
Our crime rates in the US are higher than most places in the world. For example, more than half the countries in the world have lower homicide rates than the US. I agree with your hypothesis that crime is linked with inequality and I think we are already seeing that.
Dead Comment
Dead Comment
Of course, this time the robber barons know what will happen if they delve too greedily and too deep. Unions, the New Deal... can't have that. This time they are making more clever investments in propaganda, government control, and distraction.
I grew up around a lot of rich people. Old money knew how to blend in. New money (nouveau riche) stood out. Then, it was just gauche. Now, I think the dummies flaunting their wealth engenders a lot of resentment.
I would be really interested in studying the breakdown of wealth within the top 1% in all the places listed. In my experience (here in India at least), most people in the top 1% are just as worried [about income inequality] as the rest of us. It's the people at the top 20% of the 1% that can live anywhere, but sure, journalists can still call them the 1%.
When I randomly recall old wealth families that I’m aware of, they pretty much all started from local business tycoons (newspapers, railroads, essential consumer products, etc.) that usually diversified through real estate. No different than the rest of the US.
It is the gateway to asian trade, Mediterranean climate, resource rich, has great ports, chokepoints east that make scaling business like railroads easier, etc. It was also empty during modern times.
That same defense contract money and influx of tech talent is largely responsible for the foundations of Silicon Valley as we know it today.
Agriculture and railroads followed the gold.
Dead Comment
If you overlay a chart of inflation on top of the chart of inequality you will find that maximum equality appears to correspond closely to periods of maximum inflation.
Governments from both sides of the argument have focused on reducing collective bargaining and on ensuring that efforts to rejuvenate economies, like quantitative easing via the financial sector and tax breaks are focused on the corporations and wealthy precisely because of the low impact this can have on inflation
The effect of these measures tends to pump money into the already wealthy while bulk of the population experience no-change.
The lack of inflation is making it easy to concentrate and safely hoard cash, which is cutting off the oxygen for everyone else. We've had 30 years of an ultra-safe, guaranteed strategy to make money -- move all value-added services to places with cheap labor and cheap money and export cash, facilitated by tithing a good portion of GDP to the OPEC producers. It's destroying western society.
The best thing that could happen to the west today would be a devaluation.
You can't have a non-capitalist society and also care about inflation, since inflation is a product of capital/money.
Remember, most of Marxism is based on a central pillar of "The cause of all the world's evils is the inequitable distribution of goods across needs." People are less likely cares about money/inflation if all their needs are being met.
Aside from that anachronism, I used the exact same term to describe where we’re at just a few weeks ago.
* New York
* Florida
* Connecticut
* Nevada
* Wyoming