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There are lots of problems with this article. The basic assumption--that "spending power" is more important than "wealth" or "income"--is questionable, but the

There are lots of problems with this article. The basic assumption--that "spending power" is more important than "wealth" or "income"--is questionable, but the authors don't really spend any time defending it. The reason the richest 1 percent spent a lower percentage of their income is because they don't have to, and because they are able to re-invest their money (not counted as spending) in making themselves more money. The poorest 20% do not have that luxury. The arguments about how high taxes disincentivize work assume that income == work. But that's not correct. Productivity growth has been tremendous over the last two decades, and workers have been producing more and more, but that hasn't been translating into income gains, except for those in the top 2 or 3 percent, which is precisely what the income inequality gap reveals, which is apparently why the authors of this study chose to use a different standard. "Facts and figures are hard things. They upset prior views and demand attention." Say the people who came up with an alternative model of measuring inequality because the simpler model upsets their preferred policy, and would rather ignore the problematic numbers by creating new ones.

ams6110 11y ago
Productivity growth has been tremendous over the last two decades, and workers have been producing more and more, but that hasn't been translating into income gains People are (more or less) paid for their time and not their productivity. That they are not getting paid more suggests that the supply of worker hours has been more or less keeping up with the demand.
- mdorazio 11y ago
  Yes, but for what reason? If productivity is going up, that means fewer hours are needed to produce the same amount of products/services, so demand for worker hours has remained roughly fixed (if you factor in population increases) while production has been increasing. Who's been getting the benefit of that increased production? Not your median household, which is the whole crux of the problem.
  - ams6110 11y ago
    I think we all have. Many consumer products are far cheaper than they used to be for one thing. A computer workstation in 1990 was $10,000. Today one with far more computing power is under $1,000. A "family" color television in 1975 was similar to what they cost today ($500 - $1,000) but that's not adjusted for inflation, and the same money today will get one that's over twice the screen size, is far more reliable and has a far better picture. In constant dollars today's far better product costs over 75% less.
    - mdorazio 11y ago
      Fair enough, but every time I see examples like that, I have to ask - are those really standard of living increases, or just technology advances? Yes, electronics have gotten cheaper, but healthcare and education have gotten massively more expensive. More importantly, can the average worker today work less hours than his or her father did in order to live a middle class life? I would argue it's actually the opposite in many cases.
wtbob 11y ago
> The basic assumption--that "spending power" is more important than "wealth" or "income"--is questionable, but the authors don't really spend any time defending it. Do they need to? Spending power which includes the estate one leaves one's heirs represents one's total quality of life (measured in money, anyway).

ams6110 11y ago

Productivity growth has been tremendous over the last two decades, and workers have been producing more and more, but that hasn't been translating into income gains People are (more or less) paid for their time and not their productivity. That they are not getting paid more suggests that the supply of worker hours has been more or less keeping up with the demand.

mdorazio 11y ago
Yes, but for what reason? If productivity is going up, that means fewer hours are needed to produce the same amount of products/services, so demand for worker hours has remained roughly fixed (if you factor in population increases) while production has been increasing. Who's been getting the benefit of that increased production? Not your median household, which is the whole crux of the problem.
- ams6110 11y ago
  I think we all have. Many consumer products are far cheaper than they used to be for one thing. A computer workstation in 1990 was $10,000. Today one with far more computing power is under $1,000. A "family" color television in 1975 was similar to what they cost today ($500 - $1,000) but that's not adjusted for inflation, and the same money today will get one that's over twice the screen size, is far more reliable and has a far better picture. In constant dollars today's far better product costs over 75% less.
  - mdorazio 11y ago
    Fair enough, but every time I see examples like that, I have to ask - are those really standard of living increases, or just technology advances? Yes, electronics have gotten cheaper, but healthcare and education have gotten massively more expensive. More importantly, can the average worker today work less hours than his or her father did in order to live a middle class life? I would argue it's actually the opposite in many cases.

wtbob 11y ago

> The basic assumption--that "spending power" is more important than "wealth" or "income"--is questionable, but the authors don't really spend any time defending it. Do they need to? Spending power which includes the estate one leaves one's heirs represents one's total quality of life (measured in money, anyway).