The rich are getting richer -- right? Steven Cunningham: Gazette News Online

[The Evil Genius]

Of the 1%, by the 1%, for the 1%

http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105

It’s no use pretending that what has obviously happened has not in fact happened. The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. One response might be to celebrate the ingenuity and drive that brought good fortune to these people, and to contend that a rising tide lifts all boats. That response would be misguided. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. For men with only high-school degrees, the decline has been precipitous—12 percent in the last quarter-century alone. All the growth in recent decades—and more—has gone to those at the top. In terms of income equality, America lags behind any country in the old, ossified Europe that President George W. Bush used to deride. Among our closest counterparts are Russia with its oligarchs and Iran. While many of the old centers of inequality in Latin America, such as Brazil, have been striving in recent years, rather successfully, to improve the plight of the poor and reduce gaps in income, America has allowed inequality to grow.

Economists long ago tried to justify the vast inequalities that seemed so troubling in the mid-19th century—inequalities that are but a pale shadow of what we are seeing in America today. The justification they came up with was called “marginal-productivity theory.” In a nutshell, this theory associated higher incomes with higher productivity and a greater contribution to society. It is a theory that has always been cherished by the rich. Evidence for its validity, however, remains thin. The corporate executives who helped bring on the recession of the past three years—whose contribution to our society, and to their own companies, has been massively negative—went on to receive large bonuses. In some cases, companies were so embarrassed about calling such rewards “performance bonuses” that they felt compelled to change the name to “retention bonuses” (even if the only thing being retained was bad performance). Those who have contributed great positive innovations to our society, from the pioneers of genetic understanding to the pioneers of the Information Age, have received a pittance compared with those responsible for the financial innovations that brought our global economy to the brink of ruin.

Some people look at income inequality and shrug their shoulders. So what if this person gains and that person loses? What matters, they argue, is not how the pie is divided but the size of the pie. That argument is fundamentally wrong. An economy in which most citizens are doing worse year after year—an economy like America’s—is not likely to do well over the long haul. There are several reasons for this.

MORE AFTER LINK

[mcsluggo]

plus his social security, plus his pension.

plus, he's got his house paid off and kids are grown up. Plus his wife's retirement and social security. So he's making $80,000+ a year with no mortgage. I bet he drives a nice car.

But even forgetting all that. Let's just say that this $1million is all he has. This absurd example above somehow takes as fact that the principal should not be touched.

If you retire at 65 with $1 million in the bank, that's $40,000 a year until the age of 90. Add in social security, and again, that's a damn nice living with no kids to support. What is it, $70k a year or so?

And that's not even taking interest into account. I'm too lazy to do the math, interest on a declining principal. But it would be substantial.

Therefore, I refuse to read this article any further than what is in the OP. It's a steaming turd.

...

did I just post this... because i was about to... right down to the steaming turd visualization

but.. I DID to bother to read the link... I don't know why. for now lets just focus on the excerpt, which i assume was meant to be illuminating in some way...? Right?

Please lell me how it is illuminating to point out that people THAT DON"T WORK (in their 70s) have less income than people that DO WORK (30s and 40s) ????

and what the implication of that is for whether or not the rich are getting richer ?????

I am in my 40s, and working to save money, so that while I am in my 70s I will spend those savings, that is how the life cycle of savings works.... we can all agree on this pedantic point.

but the article takes this pedantic fact and then uses it to blow smoke up our asses -- while SIMULTANEUSLY purposely pointing out their own made-up strawman mis-uses of statistics.

It is true that x% of the population will move from one wealth quintile to the next as they age and gradually save towards towards their own retirement. This is fact. The article points this out. Fine. This is true of EVERY country, so it only becomes interesting if you compare this migration across wealth quintiles in the US to either other countries, or to the US's own history..... THERE the fact is that the US has moved from being the MOST socially mobile society on the earth to one of the LEAST socially mobile when compared to other developed countries-- or our own past.

that is sad, but also fact.

what (if anything) to do about it is an entirely different discussion. But to blow a smokescreen of BS on the basic underlying FACTS that is designed to appeal to the thought-challenged but ideologically pure ... is irritating.

[zoony]

3. There is very little upward mobility in America.

That's not systemic. Rather, I think its basic human nature. there are exceptionally few people who want to go to college for 6-8 years and then put in 85 hour weeks until they retire.

However, if you're willing to do the above, you can advance to just about any social class you want. This is one of the few countries that it is possible. Then you can procreate and have kids who take it for granted. But that's not their fault.

[Madison Redskin]

Some people look at income inequality and shrug their shoulders. So what if this person gains and that person loses? What matters, they argue, is not how the pie is divided but the size of the pie. That argument is fundamentally wrong. An economy in which most citizens are doing worse year after year--an economy like America's--is not likely to do well over the long haul.

I don't have a problem with the richest 1% of Americans taking in a bigger portion of the pie, as long as the pie and everyone's slices keep getting bigger. With that said, are slices of the pie (i.e., standard of living) being eaten by the poor and middle class actually getting smaller, or are they just getting a smaller percentage of the pie?

End pie analogy.....

[shk75]

I don't have a problem with the richest 1% of Americans taking in a bigger portion of the pie, as long as the pie and everyone's slices keep getting bigger. With that said, are slices of the pie (i.e., standard of living) being eaten by the poor and middle class actually getting smaller, or are they just getting a smaller percentage of the pie?

End pie analogy.....

They are getting smaller since wages are decreasing in relation to inflation

[Lombardi's_kid_brother]

That's not systemic. Rather, I think its basic human nature. there are exceptionally few people who want to go to college for 6-8 years and then put in 85 hour weeks until they retire.

However, if you're willing to do the above, you can advance to just about any social class you want. This is one of the few countries that it is possible. Then you can procreate and have kids who take it for granted. But that's not their fault.

That's likely true.

I just think that this idea of the American Dream, where you can be born to a single mother in a project in - like - Dayton and rise to be CEO of - like - Arbys with nothing but hard work and moxie is a myth.

I just got my annual list of local kids who got accepted to Princeton (I'm 0-15 as an interviewer by the way. Not sure what that means). 18 kids in the Houston region got in. 9 of those attended two highly exclusive schools. From what I can tell, 0 of the 202,000 students in the Houston Independent School District were accepted this year.

[mcsluggo]

That's not systemic. Rather, I think its basic human nature. there are exceptionally few people who want to go to college for 6-8 years and then put in 85 hour weeks until they retire.

However, if you're willing to do the above, you can advance to just about any social class you want. This is one of the few countries that it is possible. Then you can procreate and have kids who take it for granted. But that's not their fault.

you appear to be talking about the ability to muscle your way into the top 1% here... but that is only one small part of social mobility.

how likely is a kid whose parents were in the bottom quintile [when they reached the age of sixty] to end up in the 3rd quintile [when he reaches the age of 60]? it turns out that recently it has been less likely in the USA than in jolly old aristocratic landed-gentry England (and basically all of the rest of the rich world). this hasn't always been the case, and is a big blow to the Horatio Alger self-image that most most Americans hold of our country.

[mardi gras skin]

how likely is a kid whose parents were in the bottom quintile [when they reached the age of sixty] to end up in the 3rd quintile [when he reaches the age of 60]?

My 59 year old mom was feeling reflective about her own upward mobility past weekend. She noted that she didn't have indoor plumbing until she was 18 and now she has 5 toilets in her house.

People measure upward mobility differently I guess.

[mcsluggo]

My 59 year old mom was feeling reflective about her own upward mobility past weekend. She noted that she didn't have indoor plumbing until she was 18 and now she has 5 toilets in her house.

People measure upward mobility differently I guess.

AND.... how does that experience measure up against other countries? and other times in American History?

if you asked a 60 year old Japanese or Korean the same question.... what do you think THEIR answer would be? (hint:: 60 years ago Korea had a lower income per capita than most African countries)

[mardi gras skin]

AND.... how does that experience measure up against other countries? and other times in American History?

if you asked a 60 year old Japanese or Korean the same question.... what do you think THEIR answer would be?

:whoknows:

I really didn't intent to imply that middle class Koreans have fewer toilets than middle class Americans. I defer to your superior knowledge of Korean toilets.

[zoony]

you appear to be talking about the ability to muscle your way into the top 1% here... but that is only one small part of social mobility.

how likely is a kid whose parents were in the bottom quintile [when they reached the age of sixty] to end up in the 3rd quintile [when he reaches the age of 60]? it turns out that recently it has been less likely in the USA than in jolly old aristocratic landed-gentry England (and basically all of the rest of the rich world). this hasn't always been the case, and is a big blow to the Horatio Alger self-image that most most Americans hold of our country.

I still say the basic problem is one of motivation. And it is definitely a problem, I'll give you that.

I have a good friend who is in law enforcement. He is extremely conservative. I often hear him rant about all the lazy bums in the projects that do nothing and collect a check from the government. You know what I tell him? "You're right"

But what I don't normally say, because I'm not interested in him shooting me, is "now what are you going to do about it?" Being right about something doesn't do anything to fix the issue. Take all of them off welfare and they'll start rioting. You'll be "right" while your city is burning to the ground.

Our lower classes in this country really suffer with a distrust of the system, and a refusal to play ball. They are not trying to better themselves, by and large.

I propose that the problem with welfare and social programs is not that they are too radical... but not nearly radical enough. I think we need to go in and break the chain by any means necessary. That includes taking children out of these situations they are born into.

[Hubbs]

I propose that the problem with welfare and social programs is not that they are too radical... but not nearly radical enough. I think we need to go in and break the chain by any means necessary. That includes taking children out of these situations they are born into.

Erm... you expect riots over checks, but not over taking kids away from their parents?

[zoony]

Erm... you expect riots over checks, but not over taking kids away from their parents?

Let's face it. Kids who have parents in the picture aren't the problem.

[The Evil Genius]

Didn't want to start a new thread..but this kind of fits the mold of this thread. Maybe its jealousy

But how many average unwed & uneducated 20-year old mothers make this kind of dough?

http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2011/04/05/state/n105834D65.DTL&tsp=1

Bristol Palin earns $262K for teen pregnancy work

By RACHEL D'ORO, Associated Press

Tuesday, April 5, 2011

(04-05) 10:58 PDT Anchorage, Alaska (AP) --

Tax documents show unwed mother Bristol Palin earned more than $262,000 for her role helping raise awareness for teen pregnancy prevention in 2009.

The most recent data for The Candie's Foundation that's posted online by research firm GuideStar shows compensation at $262,500 for the now-20-year-old daughter of former Alaska Gov. Sarah Palin, the 2008 Republican vice presidential nominee.

Bristol Palin earns $262K for teen pregnancy work

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2011/04/05/state/n105834D65.DTL#ixzz1Ig9LdAe0

[@DCGoldPants]

Didn't want to start a new thread..but this kind of fits the mold of this thread. Maybe its jealousy

But how many average unwed & uneducated 20-year old mothers make this kind of dough?

http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2011/04/05/state/n105834D65.DTL&tsp=1

Bristol Palin earns $262K for teen pregnancy work

By RACHEL D'ORO, Associated Press

Tuesday, April 5, 2011

(04-05) 10:58 PDT Anchorage, Alaska (AP) --

Tax documents show unwed mother Bristol Palin earned more than $262,000 for her role helping raise awareness for teen pregnancy prevention in 2009.

The most recent data for The Candie's Foundation that's posted online by research firm GuideStar shows compensation at $262,500 for the now-20-year-old daughter of former Alaska Gov. Sarah Palin, the 2008 Republican vice presidential nominee.

Bristol Palin earns $262K for teen pregnancy work

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2011/04/05/state/n105834D65.DTL#ixzz1Ig9LdAe0

Uneducated mother of two. Just one is acknowledged.

[shk75]

I remember reading this one stat in class a while back that stated that 90% of a person's upward mobility is decided by uncontrollable factors (where you are born, what school you go to, if you have two parents, etc.) and on average you can only control about 10% through hard work and dedication. Obviously I would have to find the study to try to understand how he calculated that stat but I think is main point is agreed on by many, which is that it takes much more than just hard work and dedication to move upwards in society.

[endzone_dave]

I remember reading this one stat in class a while back that stated that 90% of a person's upward mobility is decided by uncontrollable factors (where you are born, what school you go to, if you have two parents, etc.) and on average you can only control about 10% through hard work and dedication. Obviously I would have to find the study to try to understand how he calculated that stat but I think is main point is agreed on by many, which is that it takes much more than just hard work and dedication to move upwards in society.

Basically, the apple doesn't fall far from the tree. If you are born into a single parent home and your parent is uneducated and on welfare, you probably aren't going to turn out much better.

If you are born into a two-parent home, your parents both have advanced degrees, and you try to emulate their work ethic, you probably aren't going to turn out much worse.

[zoony]

Where did Sara Palin start off in life?

[Popeman38]

You follow this:

I am surprised this hasn't become a conservative talking point on Fox News yet, consider AIER (source of the original opinion piece) is affiliated with conservative think tanks.

with this:

Of the 1%, by the 1%, for the 1%

http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105

? You dismiss a link because it is affiliated with conservative think tanks and then link to an article in Vanity Fair? Seriously?

[Fresh8686]

I propose that the problem with welfare and social programs is not that they are too radical... but not nearly radical enough. I think we need to go in and break the chain by any means necessary. That includes taking children out of these situations they are born into.

You do know that the definition of welfare is any government subsidy provided to a person who would otherwise not have that money in a normal market economy right?

Seems to me that there are far worse offenders of our welfare system among our elites then those below the poverty line, especially since you consider all the money we provide for those below the poverty line gets pumped back into the economy since those people are in no position to be saving anything.

Ever heard the saying "socialism for the rich, capitalism for the poor"? ? Some what facetious maybe, but in many ways that's what we got going on nowadays.

[Predicto]

You follow this:with this:? You dismiss a link because it is affiliated with conservative think tanks and then link to an article in Vanity Fair? Seriously?

You mean the article in Vanity Fair written by Nobel Prize Winning Economist Joseph Stiglitz?

I mean, cmon. I'm known for attacking the messenger now and then around here, but at least I make sure I know who the messenger is before I criticize it.

[karmacop]

There is great income disparity between the top 1% of earners and everyone else.

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The gap has gotten much wider in the past 30 years.

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[The Sisko]

The productivity gap is also growing between the top 20% and bottom 80%. The guy putting burritos together at taco bell or the guy driving a forklift are probably more efficient than they used to be but the people designing computer chips, designing spacecraft, performing medical operations, building computer networks, writing software... are producing at a rate many times more than 20 years ago.

I absolutely agree. I don't care if the gap between rich and poor is growing. Isn't it a good thing if society has a lot more multi-millionaires and billionaires? I don't care if other people are getting insanely rich. Good for them. I just want to make sure the standard of living and income for the poor and middle class is stable or growing too.

There's a great article here that discusses in depth these and many of the other points made in this thread. Now the tone and some of the conclusions of the article are a bit far left. Even so it's pretty hard to argue with some of the author's points as well as some of the data. It's a long article so I'll limit it to just the part about executive compensation:

CEO's pay as a multiple of the average worker's pay, 1960-2007

If you wonder how such a large gap could develop, the proximate, or most immediate, factor involves the way in which CEOs now are able to rig things so that the board of directors, which they help select -- and which includes some fellow CEOs on whose boards they sit -- gives them the pay they want. The trick is in hiring outside experts, called "compensation consultants," who give the process a thin veneer of economic respectability.

The process has been explained in detail by a retired CEO of DuPont, Edgar S. Woolard, Jr., who is now chair of the New York Stock Exchange's executive compensation committee. His experience suggests that he knows whereof he speaks, and he speaks because he's concerned that corporate leaders are losing respect in the public mind. He says that the business page chatter about CEO salaries being set by the competition for their services in the executive labor market is "bull." As to the claim that CEOs deserve ever higher salaries because they "create wealth," he describes that rationale as a "joke," says the New York Times (Morgenson, 2005, Section 3, p. 1).

Here's how it works, according to Woolard:

The compensation committee [of the board of directors] talks to an outside consultant who has surveys you could drive a truck through and pay anything you want to pay, to be perfectly honest. The outside consultant talks to the human resources vice president, who talks to the CEO. The CEO says what he'd like to receive. It gets to the human resources person who tells the outside consultant. And it pretty well works out that the CEO gets what he's implied he thinks he deserves, so he will be respected by his peers. (Morgenson, 2005.)

But what I don't normally say, because I'm not interested in him shooting me, is "now what are you going to do about it?" Being right about something doesn't do anything to fix the issue. Take all of them off welfare and they'll start rioting. You'll be "right" while your city is burning to the ground.

Our lower classes in this country really suffer with a distrust of the system, and a refusal to play ball. They are not trying to better themselves, by and large.

I propose that the problem with welfare and social programs is not that they are too radical... but not nearly radical enough. I think we need to go in and break the chain by any means necessary. That includes taking children out of these situations they are born into.

We're not too far apart in our thinking about this. Like you, there's a part of me that supports transfer payments for the purely self-interested reason that I don't want to have to live in a fortress or worry too much about riots, getting robbed, carjacked, etc. Sure we have crime now but without those transfer payments, it could very well be all out chaos.

However where we differ to a degree is in your characterization of the poor. I agree that many of them don't trust the system much and suffer from low motivation. However I'd argue that to some degree it's a mistrust learned from a lifetime of experience, some of which is the fault of their parents/themselves and some of which has to do with the lack of upward mobility referred to earlier in the thread and in the article I linked to above.

I've seen some of this firsthand. I grew up poor and was fortunate enough to live in a school district that put me in schools with kids from very affluent families. I had friends from other parts of town and we'd sometimes compare the resources available at our respective schools and obviously there were huge differences-not in their favor. Later I moved to the DC area for my senior year of HS. The dropoff in resources and to a degree the quality of teachers at my new school in P.G. County was so dramatic that I screwed around, at best lightly attended classes, almost never studied, and still performed so well that I my GPA was something north of a 3.5.

In short I think the ever growing power/influence/wealth of the upper classes has removed much of the possibility of upward mobility thus inducing a sense of learned helplessness in the poor/lower class.

[Predicto]

I'd just like to note that mcsluggo is completely eating every else's lunch in this thread.

Which is not surprising, because he is a Phd Economist. You might want to listen to him when he discusses areas of his expertise. It beats the crud out of the anecdotal stuff some of us bring to the table.

[The Evil Genius]

You follow this:with this:? You dismiss a link because it is affiliated with conservative think tanks and then link to an article in Vanity Fair? Seriously?

Hey, I never claimed to be fair.

I assumed everyone knew the source (VF) was liberal (if not the author). Not everyone though, knows who and what AEIR stands for.