WP: Angry about inequality? Don’t blame the rich

[BRAVEONAWARPATH]

Click on the link to read the rest.

http://www.washingtonpost.com/opinions/angry-about-inequality-dont-blame-the-rich/2012/01/03/gIQA9S2fTQ_singlePage.html

.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?

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.

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.

[TheGoodBits]

Right. So we shouldn't 'blame the rich' for implementing their version of the tax code that allows them to keep more of their money at the expense of poor and middle class people. Because surely letting poor people keep less of their money really helps out with the social mobility thing the author was getting at. :sarcasm:

[Commander PK]

Half of the upper 1% in 1996 weren't still there in 2005? Those poor people, they must have dropped down (gasp).... to the upper 5%. Oh the humanity! Times got tough for them so they had to sell a couple of homes and their fleet of private jets "just to make ends meet.

The problem with the rich, is that when they drop from 1% to upper 5%, they lay off 5,000 people because the percentages aren't what they should be. They take a drop in income...the middle-class and poor lose all of theirs.

"You know Burke, I don't know which species is worse...you don't see them (Zenomorphs) ****ing each other over for a god damn percentage"

Ripley (Aliens)

Edit: and the best part of all this...the rich lay the middle-class and the poor off when THEY the RICH run the company into the ground through mismanagement. They mismange...the middle and lower classes pay for it.

[mjah]

Personally, I don't blame the rich for taking what is given to them and then holding their hands out for more (which they also get). They have been conditioned to expect more and more government handouts in the form of tax breaks, loopholes, etc. In the same position, would you really refuse to take advantage of all of the options legally laid out before you? Particularly in a realm like personal finance, where the impact to others of (say) your comparatively low tax rate on interest/dividend vs. salary income is abstract and indirect?

Instead I blame those select millions among the larger mass of the less-fortunate, who unwisely decide to install many of the most egregious corporate-avatar politicians into our government. These are the people with sufficient numbers to truly keep that corrupting corporate influence in good health (and lucrative insider trading).

Among those one-percenters who actually take an active part in successfully buying handouts from the biggest wealth-concentration enablers in government, I suspect there is a good degree of relieved head shaking and wonderment (as opposed to top-hatted cackling) when so many of the nation's economic water-treaders continue to vote substantially against their own economic best interests -- thanks in large part to "ban this and that" social issues and the never-ending rage chatter of cable news and radio.

Not to let wealth off the hook on the issues of "preserve the margin" layoffs, absurd executive salaries, etc. But its infiltration of government is the greater danger.

[elkabong82]

Inequality in income is going to exist in a competitive economy. But I do blame the super rich for widening the gap. Unless it's poor people funding the lobbyists and lining politician's pockets to create tax loopholes and institute terrible policies.

Not all rich people are responsible obviously, but money talks and carries the big stick in this country, hence those with the most are the responsible party for the changes which have created the widening gap. They are the ones with the motivation to do so after all.

[Larry]

Just looking at the sections Brave quoted, anybody else notice what the author is doing?

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.

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.

Here's what the author has presented:

• (More than) half of the top 1% "move" within 10 years.
  
• (Nearly) half of the bottom 20% "move" within six years.
  
• Many of the bottom 20% don't move

Therefore, it's all the fault of those lazy, stupid poor folks?

He looks at the top 1%. Sees that half of them are "transients", while some are "permanent residents", and concludes that "this proves that there is mobility".

He looks at the bottom 20%. (A group which, I'll point out, is 20 times larger, and which, therefore, ought to be considerably harder to move into or out of.) Sees that half of them are "transients", while some are "permanent residents", points at the permanent residents, and yells "it's their fault!"

[endzone_dave]

We have problems at both ends. We have CEOs, athletes, and entertainers making $10M+ per year and that number is only getting bigger, and their tax rate isn't any higher than mine. Then on the other end you have waves and waves of people going through our education system ending up with no skills other than being able to stock shelves at Walmart. The people stocking shelves used to be able to get a job at the local factory and own a house, car and have their medical expnses paid for - those days are gone.

[Thiebear]

Partial Quote to be used for my own selfish needs:

The problem with the rich, is that when they drop from 1% to upper 5%, they lay off 5,000 people because the percentages aren't what they should be. They take a drop in income...the middle-class and poor lose all of theirs.

Edit: and the best part of all this...the rich lay the middle-class and the poor off when THEY the RICH run the company into the ground through mismanagement. They mismange...the middle and lower classes pay for it.

I've been hearing for 2 years that the 1% don't provide jobs.

[Larry]

I've been hearing for 2 years that the 1% don't provide jobs.

You've been hearing for 20 years that the rich haven't been providing jobs.

:secret:That's because they haven't been.

But yep, they sure can get rid of them. That, they've shown, they're willing and able to do.

[Jeeb]

We have problems at both ends. We have CEOs, athletes, and entertainers making $10M+ per year and that number is only getting bigger, and their tax rate isn't any higher than mine. Then on the other end you have waves and waves of people going through our education system ending up with no skills other than being able to stock shelves at Walmart. The people stocking shelves used to be able to get a job at the local factory and own a house, car and have their medical expnses paid for - those days are gone.

but if they just worked harder, all of that stuff would magically happen for them!!!!!

[GibbsFactor]

Someone needs to send this author the meaning of "the rich get richer".

[PeterMP]

Someone needs to send this author the meaning of "the rich get richer".

This.

The biggest problem is income mobility (though it is a problem) it is the changes in the numbers that get lost when you look at percentiles.

The top 1% are getting a larger and larger piece of the pie. Whether they get that piece of the pie for 2 years or 20 years is irrelevant to a certain extent.

Even having in an economy with GREAT economic mobility, that wouldn't be a good thing.

[Thiebear]

You've been hearing for 20 years that the rich haven't been providing jobs.

:secret:That's because they haven't been.

But yep, they sure can get rid of them. That, they've shown, they're willing and able to do.

i hate it when i misquote people incorrectly... gets me every time.

[SWFLSkins]

Partial Quote to be used for my own selfish needs:

I've been hearing for 2 years that the 1% don't provide jobs.

Providing jobs in East Asia is disqualified, cue the jeopardy music. And btw, define jobs, you mean service sector jobs paying less than $10. an hour? Jobs or gainful employment, there is a difference. But that's okay we can always eat the rich.

[NoCalMike]

the first quoted piece cites "purchasing power" as some type of argument that income inequality is ok, but wouldn't the counter to that be to suggest that over the past 20/30 years REAL buying power based on your actual wealth or equity has decreased, while purchasing power based on credit under the "I can't really afford it, but I don't have to buy it now, I can make tiny payments on it for the next 30 years" is really what is allowing a lot of folks to keep buying stuff?

[Prosperity]

We don't have the sort of economy that can organically support a middle class. We have professionals (bankers, lawyers, doctors etc), wealth managers (people that live off of capital gains), and content producers (media). Everyone else has to serve these folks. Through being a waitress, mechanic, barista, cook, clean, cater, protect etc. The information economy just does not require hundreds of millions of people. It can use them in marginal roles but not as a principle part of production.

[Popeman38]

You've been hearing for 20 years that the rich haven't been providing jobs.

:secret:That's because they haven't been.

But yep, they sure can get rid of them. That, they've shown, they're willing and able to do.

Psssst, Larry, if you don't provide a job, you can't eliminate a job.

[Corcaigh]

Psssst, Larry, if you don't provide a job, you can't eliminate a job.

The outsourcers might disagree.

[Popeman38]

the first quoted piece cites "purchasing power" as some type of argument that income inequality is ok, but wouldn't the counter to that be to suggest that over the past 20/30 years REAL buying power based on your actual wealth or equity has decreased, while purchasing power based on credit under the "I can't really afford it, but I don't have to buy it now, I can make tiny payments on it for the next 30 years" is really what is allowing a lot of folks to keep buying stuff?

The original article provides another way of looking at reality. The poor in 1970 were worse off than they are today. Today, the poor have TV, A/C, and clothes dryers in their homes. I have been saying for years, America thinks they know poor but know nothing. Go to eastern Europe and see how the poor live. Go to South America and see how the poor live. Some of the poor in eastern Europe would like to be homeless in America.

We have income equality in America. But it is FAR from the greatest evil, and far from the greatest threat to the poor.

---------- Post added January-31st-2012 at 09:34 AM ----------

The outsourcers might disagree.

Agree with outsourcing or not, in order to outsource a job that job must first exist. Who created that job?

[Corcaigh]

[/color]Agree with outsourcing or not, in order to outsource a job that job must first exist. Who created that job?

It depends. If you're a private equity firm flipping the company, probably not you.

[artmonkforHOF]

that is an opinion piece in the Washington Post? my God how journalism has suffered, this is a gentle brow beating of "be more like me, a rich person, and then you won't be poor. Get married, go to school and for God's sake be white if you can"

[Corcaigh]

Get married, go to school and for God's sake be white if you can"

Look, if people aren't self-motivated enough to go and get rich, white parents, then they don't deserve help.

[Tulane Skins Fan]

I blame Obama.

[GibbsFactor]

I blame Obama.

You would. Everything is Obama's fault to you progressives.

ETA: and seriously????

The government faces a fourth year of trillion-plus deficits in 2012, according to new projections released Tuesday—numbers which also show little relief in the future unless Washington comes to grips with needed changes in its tax and spending policies.

Like Aunt Cassandra coming down from the attic, the Congressional Budget Office steps square into the 2012 campaign season with the 147-page report which might have been subtitled “It’s not just the economy stupid, it’s also the debt.”

The $1.079 trillion deficit now projected for this fiscal year ending Sept. 30 is actually worse than what CBO had predicted in August. And to punch home its message, the non-partisan agency outlines an especially grim scenario in which Congress not only extends all the current tax cuts but pulls the plug on the $1.2 trillion in sequester set in motion by the Budget Control Act last summer.

Under this scenario—which can’t be ruled out politically—deficits would stubbornly hover just under $1 trillion through 2017 adding another $4.7 trillion altogether to the mounting federal debt.

http://www.politico.com/news/stories/0112/72205.html

[endzone_dave]

We don't have the sort of economy that can organically support a middle class. We have professionals (bankers, lawyers, doctors etc), wealth managers (people that live off of capital gains), and content producers (media). Everyone else has to serve these folks. Through being a waitress, mechanic, barista, cook, clean, cater, protect etc. The information economy just does not require hundreds of millions of people. It can use them in marginal roles but not as a principle part of production.

There are plenty of other industries...aerospace, energy, DoD, biotech... where people can make a good living. Even a good plumber or electrician can make a good living. I bet the guy that hit a couple of buttons to get me my MRI makes a good living.

The rate at which the top 1% earners is pulling away from the rest of us is alarming but that doesn't mean we are all doomed to poverty. I still think if a person works hard to make themselves valuable in the workplace, they can afford a house, car, iPad, HDTV, PS3 and a Disney vacation.

Americans on a whole own bigger houses, nicer cars, more electronic gadgets and spend more on entertainment than they ever had. The doom and gloom crap has gotten old. I've heard it for the last 20 years.