21 ms·

A Guide to Statistics on Historical Trends in Income Inequality

105 points by indigodaddy 8y ago

digitalmaster 8y ago
So looks like the 80s is when things start going south (increased income inequality) so I looked up who was president during that time, then looked at their wiki page to see their economic policy and found this gem of a quote: "Soon after taking office, Reagan began implementing sweeping new political and economic initiatives. His supply-side economic policies, dubbed "Reaganomics", advocated tax rate reduction to spur economic growth, economic deregulation, and reduction in government spending."
- maxxxxx 8y ago
  From what I have read a lot of those trends were already on the way in the 70s and before. Reagan certainly helped but the banks were looking for more money already before that.
- JustSomeNobody 8y ago
  It was sold to the middle class as "Trickle down economics". Basically, if you make the rich richer, your pie gets bigger too. Sadly, people bought that line.
  - csa 8y ago
    I’m not sure why you are getting downvotes, but that was precisely the line that was used. The economics and finance professors I took classes with had a good laugh at that idea.
    - digitalmaster 8y ago
      Yea also not sure why this is being downvoted. That was exactly the narrative at the time.
  - conanbatt 8y ago
    Trickle down economics is a pejorative term from the 30's. As a proposition it is as naive as trickle-up, which is what the other spectrum usually sells. ('if you give poor people more resources, its good for everyone') Economics, as the expression of human beings exchanging with each other, accepts neither.
    - djrobstep 8y ago
      > Economics, as the expression of human beings exchanging with each other, accepts neither. I will never understand how adults can believe that things like economics, journalism, central banking, and (especially) the US constitution can be non-political.
      - RobertoG 8y ago
        Because that idea (about economics) has been heavily, and successfully, pushed by interested parties: 'The economy' and 'the market' are sacred things that are disconnected from the dirty world, and work perfectly in their own if you don't bother them. No need for 'political economy' anymore, only 'economics'.
        conanbatt 8y ago
        Gotta answer that last sentence. Free market advocates are the exact opposite of disconnected with the dirty world: they advocate for allowing the dirtyness of reality sort itself out, without a neat central order. The most significant advocate for free markets, Milton Friedman, literally wrote the book on the application of Positive Economics: seeing things how they really are, use empiric data, make falsifiable predictions, etc. Free markets are pro-reality, pro-dirty world.
        RobertoG 8y ago
        Well, if you start with the idea that markets exist in the void, you are certainly avoiding the dirty world. For instance: assuming that property rights exist outside a political framework or power structures.
  - dragonwriter 8y ago
    > It was sold to the middle class as "Trickle down economics". No, it was sold as “supply-side economics”, “Trickle-down economics” was a hostile characterization (as was Geore H. W. Bush’s “Voodoo economics” characterization.)
- claudiawerner 8y ago
  David Harvey has a fantastic book on this, "A Brief History of Neoliberalism", it's quite a read but it's very well structured and I'd recommend it to anyone looking to investigate the recent (by this I mean second half of the 20th c.) trends in global capitalism and society.
  - FabHK 8y ago
    I think more pertinent are Economism by James Kwak (on the naive use of Econ 101), Global Inequality by Branko Milanovic (a better, or at least much more legible, analysis of inequality within and among countries than Piketty's tome), and maybe Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right by Jane Mayer (about campaign financing in the last two decades in the US).
- vondur 8y ago
  From the graph it looks like it really took off in the 90's and then again around 2010.
  - dragonwriter 8y ago
    Inequality also seems edged up noticeably just after 2000, though by the bottom dropping more than by the top rising.
- Just_Smith 8y ago
  It looks as if it began mid-70s. You can see the red and blue start diverging then, though the line stroke width causes some overlap. The heavy divergence begins in the 80's, as you pointed out. I think confirming your theory would be as simple as comparing the policies of "Reaganomics" with the policies that emerged in the 70's that caused the initial bump shown on the chart.
  - jnellis 8y ago
    There's a fellow that's discovered a piece of legislation in 1970 that was the turning point for all this lobbying taking over congress so heavily. The lynch pin of his argument is that we have to remove lobbyists from the actual physical galleries in congress and preserve the anonymous nature of how each congressman votes so they can vote their conscious and not how their lobbyist handlers choose. It's a counter-intuitive idea because everyone is already sold on wanting to know how their congressmen voted. https://www.youtube.com/results?search_query=cardboard+box+reform https://www.youtube.com/results?search_query=cardboard+box+r...
    - roenxi 8y ago
      As ideas go this is a bit of a non-starter. If you can't tell what your congressperson is voting for, how do you know if they are representing you? When you vote, how would it be even theoretically possible to make an informed decision of who you want as a representative? The only axis of discrimination between politicians would be charisma - which is no predictor at all of what someone will actually do. EDIT It might be even easier for handlers to corrupt the system, because they could make it known that if a bill gets through, they'll be generous with their largess to everyone - and there will be know way to verify which politicians are the ones who are being bought off.
      - zanny 8y ago
        Charisma is only a problem when your representative is a figure on a screen you never see or interact with. Its definitely fallen by the wayside in recent times with the explosive population and suffrage growth not corresponding to a larger legislature, but there is ample historic record of the aristocratic voters in the decades following the founding of the US also having close relations to their representatives. The voters (the <10% of the population eligible) often had regular, direct access to converse and interact with those they elected. In more modern terms it would be if you weren't electing a representative for every several hundred thousand people, but had one for every few hundred. Something constrained by Dunbars Number. You wouldn't be electing a caricature but someone you can actually interact with, especially in an era of total digital interconnection. Fixing representative democracy in the US and abroad is probably the most fundamental issue facing America and most of the world today. Getting back to actual representation by peers has to happen eventually or the widening divide between the political aristocracy and the commoner will revert most of western society back into a model more reminiscent of 16th century Britain.
- conanbatt 8y ago
  This is something that economists have debated over for decades since. Stiglitz specifically attacks Reagan on that front. Milton Friedman defends it. Reagan was the last president to make a deep impact change in how economics and politics relate. He was unique in the way he self-deprecated government, something that is truly rare for presidents. He would actively advocate the government was the problem not the solution, a famous line by Milton Friedman on his economic ideas. To this day, I am awed at the air-traffic controller firing. I am from a country with a pervasive strike culture, to the point that even cops strike, and it has been unfathomable for any president , of any ideology, from dictatorships to democratic socialists, to fire a swath of strikers.
  - dragonwriter 8y ago
    > He was unique in the way he self-deprecated government, This is false on two levels: First, Reagan was not a monarch who shared personality with the State, so any deprecation of government he did was not self-deprecation Second, he is not at all unique in that. Bush (43 more than 41) and Trump have done much the same, and even Clinton did it off and on.
    - darawk 8y ago
      > First, Reagan was not a monarch who shared personality with the State, so any deprecation of government he did was not self-deprecation It is absolutely legitimate to characterize the president denigrating government as self-deprecating, splitting hairs about this is silly. > Second, he is not at all unique in that. Bush (43 more than 41) and Trump have done much the same, and even Clinton did it off and on. Reagan was more unique in his ability to actually do it, though. The others had much less impact.
      - dragonwriter 8y ago
        > It is absolutely legitimate to characterize the president denigrating government as self-deprecating No, it's generally not (there may be specific cases where it is), especially when the President in question is selling himself as an ally of the people against government. > Reagan was more unique in his ability to actually do it Actually do what? If you mean literally denigrating the Government, no, Trump's done much more of that. If you meant reducing it's role.. Reagan didn't even do that; he shifted the burden of paying for it, sure. But it was much bigger, more intrusive, and more expensive when he left office than when he entered.
- will_brown 8y ago
  The irony is the right holds Reagan as a shining example of fiscal conservatism. However, Reagan ultimately tripled the debt while in office. The right loved saying Obama spent more than all other presidents before him combined (which he did, which Bush did...but Reagan the model of fiscal conservatism spent 2x as all presidents who served before him).
  - maxxxxx 8y ago
    Seems Trump is on the way to top that. That's one thing I never get about modern Republicans. When in opposition they throw a fit about deficits but as soon as they have power they forget these concerns but drive deficits up a lot. Reagan did it, Bush did it and now Trump is doing it too.
    - AcerbicZero 8y ago
      Its almost as if forcing (rational) people to select D or R via a number of single issue pivot points creates a situation where everyone is guilty of some level of hypocrisy.
    - dragonwriter 8y ago
      > When in opposition they throw a fit about deficits but as soon as they have power they forget these concerns but drive deficits up a lot. They don't care about deficits, they care about spending priorities. Deficits is just the argument they turn to when they don't have an argument against particular spending priorities.
  - conanbatt 8y ago
    Reagan's deficit increase comes mostly due to military spending, something that was regarded as extremely strategically important in an era of potential nuclear holocaust.
- rwcarlsen 8y ago
  As an engineer and computational scientist, drawing conclusions from correlations like this is absurd. Maybe Reagan was good for income inequality or maybe he was bad for it. Did you control for the other variables before drawing your conclusions? What about: * The governments' legislation and economic policies in countries like the USSR, China, etc. in the 80s * Changing technology especially communication technology * Changing levels of education in the world. * Lingering/diminishing trends/effects from wars like: Cold War, Korean War, Vietnam War, etc. * Changing age distribution of humans in western countries, And on and on. The world economy is extremely complex with heavy nonlinear feedback effects. How can you possibly state things like Reagan caused X w.r.t. the world wealth distribution with such confidence?
  - eecc 8y ago
    “As an engineer and computational scientist, drawing conclusions from correlations like this is absurd.” Tell that to Ruby developers... duck typing (if it quacks like a duck and walks like one, it’s definitely a duck)
  - eecc 8y ago
    Oh, and while throwing all sorts of alternative world scenarios in the wild hope one might make a reasonable argument that Neoliberal policies aren’t the driver of inequality... you forgot Occam’s Razor.
    - rwcarlsen 8y ago
      I didn't throw out any "alternative world scenarios". I was just pointing out that a lot of things were going on in the world that could easily have had a very significant impact on things such as income inequality. There are also many examples in economics where a simple/obvious solution actually has the opposite of the intended effect. Rent price control would be an obvious example (https://en.wikipedia.org/wiki/Rent_regulation#Economists'_views https://en.wikipedia.org/wiki/Rent_regulation#Economists'_vi...). If you want to dig in to the gory details of reaganomics, economists have researched and debated about its effects for decades. There are many economists who make cases both for and against it having appreciably affected income inequality in various ways.
- roenxi 8y ago
  :P Ouch, going right for the partisans. Presidents are important people, but they are a lot more reactive than is generally accepted - what about the theory that Reagan was reforming economics in response to some deeper underlying problem [0]? [0] https://assets.weforum.org/wp-content/uploads/2015/07/150710-US-petroleum-consumption-voxeu-chart.jpg https://assets.weforum.org/wp-content/uploads/2015/07/150710...
  - zanny 8y ago
    So the implication is that Reagan instituted broad and substantial tax reduction for the rich in combination with the institution of enormous federal deficit spending in order to offset rising oil consumption following two oil crisis the previous decade? We saw how oil turned out in the long run. Reagans policies, if anything, only gave dictatorships another two decades of unmitigated dominance in an industry we have seen the US itself rapidly commercialize internally. Most US consumed oil is now domestic, and most of the growth happened in the rebound from the 08 recession. I'd be really interested in comparing the economic policies of how Reaganomics protracted foreign dependence while the late Bush / Obama era bailouts and recovery stimulus somehow exploded the domestic market. Or that neither of those had anything to do with oil, and that the development of the market and industry as a whole was detached enough from federal law of the US that neither president is responsible for anything in that regard.
    - roenxi 8y ago
      The theme I'm replying to is 'Regan's stated policy objectives were implemented in the 70s and were probable causes of rising income inequality'. Maybe policy settings were twiddled, but the sudden stoppage of growth is probably linked to resource growth tapering off. In a counterfactual scenario where some other set of economic policies were in place, you'd probably have seen income growth trail off regardless. The 'fix' could well be rich people being worse off, not poor or middle income people being better off. Not much of a solution, that. A fun thought experiment, there are some good answers to this: at the end of the day, a different policy would be redistributing something real away from the rich. That wouldn't be food (rich people eat as much as everyone else), so what would it be? That is to day, what exactly are the rich securing that is unfair? (money isn't a valid answer, the answer is what the money is then used to buy)
WhompingWindows 8y ago
What's the best solution to this - if wealthy and high-income individuals get more power via political lobbying, they can then gain more wealth and higher incomes, gaining even more lobbying power. They can also flood the media with advertising money and propagandist messaging to convince voters to care more about less impactful issues. It feels like an endless cycle to me. Other than war or complete societal upheaval, what can actually be done to solve the problem?
- jjoonathan 8y ago
  I'm still amazed at how effectively we have collectively shunned thought along these lines by turning the founding father of the relevant branch of economical philosophy into a real life he-who-shall-not-be-named. Anyone who wants to talk about these problems either has to either re-invent the wheel or mention the unmentionable name and doom themselves to immediate dismissal as a kook.
  - danharaj 8y ago
    A spectre is haunting Hacker News...
  - csallen 8y ago
    Who are you talking about?
    - java_script 8y ago
      https://en.wikipedia.org/wiki/Marx_Brothers https://en.wikipedia.org/wiki/Marx_Brothers e: Oh shit I just realized who I'm replying to. Serious answer time. Socialism will be a disruptive new paradigm for start-ups and other businesses where (following the idea of a meritocracy) workers, and not stuffy old capitalists, each own an equal number of shares at their place of work. And even more innovative in structure than Zappos and Valve, it allows for capital investment decisions to be voted on by individual contributors, throwing away traditional management structures you see at crufty old firms. Pretty cool stuff! According to some dusty old theories it's the "Exit Strategy" for our largest firms.
hockeybias 8y ago
The wealthy tend not to stuff their dough under a mattress, but rather reinvest it. Might that not 'lift all boats'?
CryoLogic 8y ago
Another side of this to consider, is that low-skill many jobs today are literally not worth as much as they used to be. In labor economic there is a very well established understanding that jobs requiring high levels of skill are typically harder to fill hence corporations must pay more to get those individuals. But the reverse is true, low skill jobs are easy to fill so we don't have to pay as much. But here's the kicker, many branches of economics focus on technology as a eliminator of work. Basically, two guys becomes one guy and a machine. Eventually a machine might replace both of the guys. There is an intermediary between a job being automated entirely away though, where a physical human's work loses value. McDonalds for example has been rolling out automated ordering systems so that they don't have to employ as much "front-office" staff. If they keep those on payroll, there job brings much less value to the company than it did prior. Technology creates skilled jobs (aka maintain the robot) and eliminated unskilled jobs. But technology can also reduce the value-add of another unskilled employee. What I am getting at is the sad truth that it's totally possible unskilled labor is not worth as much as it used to be. If we continue to base our salaries entirely capitalistically, maybe these gaps will widen as low skill employees become less and less valuable while high skill employees gain value but less of them are required.
- bluGill 8y ago
  Moral of this story: become high skilled. If you are high skilled not only do you make more money in absolute dollars, but also the things you want to buy are cheaper in absolute dollars. There are plenty of things to automate for the foreseeable future. I don't know what the correct answer for kids 100 years from now will be: they have the figure out their own answers.
darkerside 8y ago
Is there an inherent problem with income inequality? Would you rather live in: * World 1, where everybody has x, except one person has 100x * World 2, where everybody has .5x and is thus totally equal (I realize assets and income are not equal, but I think the point stands)
- dragonwriter 8y ago
  > Is there an inherent problem with income inequality? Yes, because once you get past the truly abject absolute poverty (which isn't an issue for most of the developed world), there's a lot of indication that experienced utility or disutility is driven more by relative material position than absolute position. So, yes, outside of very poor economies (where absolute gains that increase inequality may still improve utility across the board), increases in inequality are very often utilitarian ills that are not compensated by absolute gains at the lower end.
  - commandlinefan 8y ago
    Well, I think what he's saying (which I don't necessarily disagree with) is that if I have everything I need, what difference does it make to me - besides jealousy - if the guy down the street has more than he needs?
    - dragonwriter 8y ago
      It's a common a priori moral argument about how many people think people should derive utility from material circumstances, sure, but “stop feeling pain from relative deprivation” is about as effective as “stop feeling pain from me twisting your arm”, even if you think it is morally obligatory for people to disregard having their arm twisted.
      - darkerside 8y ago
        Yeah, parent post expressed it well. Probably better than me. I purposefully didn't say anyone should feel anything (and got flamed for being an absolutist for it). While it's how I personally feel, I think others should decide how they feel about it. Funny enough, framing the problem in a slightly different moral perspective leads to vast differences in how people feel about the situation.
rb808 8y ago
This is a very US - centric view. With globalization I think a different picture emerges. Increasing global trade has hurt US (and Other Western) working classes with de-industrialization, where many more people foreign countries have been lifted out of poverty.
- munk-a 8y ago
  The US has, on a global scale, long had higher standards of living than a large remainder of the world so balancing US workers with foreign workers to elevate the standard of living in third world countries isn't a bad thing. The issue is more that while this process was happening a small segment of the US population has managed to sequester a nearly incomprehensible portion of that wealth for no good reason.
  - rb808 8y ago
    > long had higher standards of living than a large remainder of the world Not really 200 years ago most Americans were scratching a living in a new world fighting off the natives and importing slaves. >The issue is more that while this process was happening a small segment of the US population has managed to sequester a nearly incomprehensible portion of that wealth for no good reason. Agreed its a big change from the 60s and 70s.
    - munk-a 8y ago
      Sorry, to clarify here, long is defined as ~80 years, which, I'll grant, isn't actually very long. My apologies for the confusion.
b0bby_tabl3s 8y ago
I see opportunities to 'git-good'.
rukittenme 8y ago
Reganomics, the end of Breton Woods, the end of the "Gold Standard", "Stagflation", "Peak Oil", population growth, immigration, greying population, healthcare, welfare, tax cuts, globalization, capitalism, communism. Oh don't mind me, just pulling excuses out of my ass. I love posts like these and I especially love their graphs. Less so for the (little) content they contain. More so for people's reactions to the content. Its confirmation bias bait all the way down! I don't mean to be so negative and critical. I'm just tired of people trying to explain the state of the world from a single graph! Income inequality could be increasing for different reasons at different times. It might not be increasing at all (depending on how you define income)! --- Let's stop drooling over graphs and have an actual conversation about the "problem". Who am I richer than and why? Who is richer than me and why? Maybe if we answer these questions we can solve income inequality (assuming we still want to solve it all).
- 0181109 8y ago
  Considering that certain paths of inquiry are off limits socially, both Left and Right, I don't think you'll get that any time soon.
autokad 8y ago
i wish people would call out the fed. their primary metric for increasing interest rates is wage inflation. so they play wack a mole when people start seeing income growth, a recession comes, and employers have all the bargaining rights again. yet despite the fed's goal of smacking down wage growth ahem, inflation,, nobody points a finger at them.
maneesh 8y ago
I posted my take on this recently on Facebook. (And I recently gave a TedX talk on the same concept entitled "Money: The Greatest Story Ever Told" [1]) Here is an image of the entire world's Money supply [2]. In my eyes, the majority shift occurred due to two things: 1) Ending the gold standard peg 2) Creation of the derivative market 1 --- Ending the Gold Standard Peg In 1971, Nixon severed the connection between Gold and the US-Dollar. The USD now became purely fiat --- no actual resource backed the USD anymore. This allowed the dollar to change. Banks could create money -- really. Credit could be expanded and offered to customers. Debt could become an asset, and banks could trade. But the most interesting part is that it led to #2 --- the Derivate market 2 -- Creation of the Derivative Market By removing the gold standard tether, money became anything that people believe in In 1973, the first derivative began to trade. And banks utilized this to create futures, contracts, warrants, swaps --- bets against bets against bets against bets. The money isn't really there. It's just a financial instrument traded to hedge against fluctuations. It's a betting system. And it's turtles the whole way down. Here's the crazy part. The global derivatives market is 1.4 QUADRILLION dollars. That is, 20 times larger than the GDP of the entire WORLD. In the picture attached --- see that giganticly long section at the bottom? That is derivates. It outweighs the rest of the world's money by FAR. 1.4 Quadrillion USD are in derivatives. Guess how much money world-wide is in coins and banknotes? $5 trillion. That is --- derivatives are 280x the amount of coins and bank notes in THE ENTIRE WORLD. [1] https://www.youtube.com/watch?v=9G0F-VUPTa4 https://www.youtube.com/watch?v=9G0F-VUPTa4 [2] http://money.visualcapitalist.com/worlds-money-markets-one-visualization-2017/ http://money.visualcapitalist.com/worlds-money-markets-one-v...
- wuliwong 8y ago
  Glad to see someone mention the "temporary" cessation of the dollar's convertibility to gold. From my perspective that would mark the most important event for this topic but it is hardly discussed.
  - maneesh 8y ago
    I never understand why people see these actions all happening simultaneously -- a invention of infinite money will of course go to the top, and create inequality between the rich and poor -- because that's how compound interest works. But for some reason, that doesn't seem to even register on people's radar.

105 points by indigodaddy 8y ago

So looks like the 80s is when things start going south (increased income inequality) so I looked up who was president during that time, then looked at their wiki page to see their economic policy and found this gem of a quote: "Soon after taking office, Reagan began implementing sweeping new political and economic initiatives. His supply-side economic policies, dubbed "Reaganomics", advocated tax rate reduction to spur economic growth, economic deregulation, and reduction in government spending."

maxxxxx 8y ago
From what I have read a lot of those trends were already on the way in the 70s and before. Reagan certainly helped but the banks were looking for more money already before that.
JustSomeNobody 8y ago
It was sold to the middle class as "Trickle down economics". Basically, if you make the rich richer, your pie gets bigger too. Sadly, people bought that line.
- csa 8y ago
  I’m not sure why you are getting downvotes, but that was precisely the line that was used. The economics and finance professors I took classes with had a good laugh at that idea.
  - digitalmaster 8y ago
    Yea also not sure why this is being downvoted. That was exactly the narrative at the time.
- conanbatt 8y ago
  Trickle down economics is a pejorative term from the 30's. As a proposition it is as naive as trickle-up, which is what the other spectrum usually sells. ('if you give poor people more resources, its good for everyone') Economics, as the expression of human beings exchanging with each other, accepts neither.
  - djrobstep 8y ago
    > Economics, as the expression of human beings exchanging with each other, accepts neither. I will never understand how adults can believe that things like economics, journalism, central banking, and (especially) the US constitution can be non-political.
    - RobertoG 8y ago
      Because that idea (about economics) has been heavily, and successfully, pushed by interested parties: 'The economy' and 'the market' are sacred things that are disconnected from the dirty world, and work perfectly in their own if you don't bother them. No need for 'political economy' anymore, only 'economics'.
      - conanbatt 8y ago
        Gotta answer that last sentence. Free market advocates are the exact opposite of disconnected with the dirty world: they advocate for allowing the dirtyness of reality sort itself out, without a neat central order. The most significant advocate for free markets, Milton Friedman, literally wrote the book on the application of Positive Economics: seeing things how they really are, use empiric data, make falsifiable predictions, etc. Free markets are pro-reality, pro-dirty world.
        RobertoG 8y ago
        Well, if you start with the idea that markets exist in the void, you are certainly avoiding the dirty world. For instance: assuming that property rights exist outside a political framework or power structures.
- dragonwriter 8y ago
  > It was sold to the middle class as "Trickle down economics". No, it was sold as “supply-side economics”, “Trickle-down economics” was a hostile characterization (as was Geore H. W. Bush’s “Voodoo economics” characterization.)
claudiawerner 8y ago
David Harvey has a fantastic book on this, "A Brief History of Neoliberalism", it's quite a read but it's very well structured and I'd recommend it to anyone looking to investigate the recent (by this I mean second half of the 20th c.) trends in global capitalism and society.
- FabHK 8y ago
  I think more pertinent are Economism by James Kwak (on the naive use of Econ 101), Global Inequality by Branko Milanovic (a better, or at least much more legible, analysis of inequality within and among countries than Piketty's tome), and maybe Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right by Jane Mayer (about campaign financing in the last two decades in the US).
vondur 8y ago
From the graph it looks like it really took off in the 90's and then again around 2010.
- dragonwriter 8y ago
  Inequality also seems edged up noticeably just after 2000, though by the bottom dropping more than by the top rising.
Just_Smith 8y ago
It looks as if it began mid-70s. You can see the red and blue start diverging then, though the line stroke width causes some overlap. The heavy divergence begins in the 80's, as you pointed out. I think confirming your theory would be as simple as comparing the policies of "Reaganomics" with the policies that emerged in the 70's that caused the initial bump shown on the chart.
- jnellis 8y ago
  There's a fellow that's discovered a piece of legislation in 1970 that was the turning point for all this lobbying taking over congress so heavily. The lynch pin of his argument is that we have to remove lobbyists from the actual physical galleries in congress and preserve the anonymous nature of how each congressman votes so they can vote their conscious and not how their lobbyist handlers choose. It's a counter-intuitive idea because everyone is already sold on wanting to know how their congressmen voted. https://www.youtube.com/results?search_query=cardboard+box+reform https://www.youtube.com/results?search_query=cardboard+box+r...
  - roenxi 8y ago
    As ideas go this is a bit of a non-starter. If you can't tell what your congressperson is voting for, how do you know if they are representing you? When you vote, how would it be even theoretically possible to make an informed decision of who you want as a representative? The only axis of discrimination between politicians would be charisma - which is no predictor at all of what someone will actually do. EDIT It might be even easier for handlers to corrupt the system, because they could make it known that if a bill gets through, they'll be generous with their largess to everyone - and there will be know way to verify which politicians are the ones who are being bought off.
    - zanny 8y ago
      Charisma is only a problem when your representative is a figure on a screen you never see or interact with. Its definitely fallen by the wayside in recent times with the explosive population and suffrage growth not corresponding to a larger legislature, but there is ample historic record of the aristocratic voters in the decades following the founding of the US also having close relations to their representatives. The voters (the <10% of the population eligible) often had regular, direct access to converse and interact with those they elected. In more modern terms it would be if you weren't electing a representative for every several hundred thousand people, but had one for every few hundred. Something constrained by Dunbars Number. You wouldn't be electing a caricature but someone you can actually interact with, especially in an era of total digital interconnection. Fixing representative democracy in the US and abroad is probably the most fundamental issue facing America and most of the world today. Getting back to actual representation by peers has to happen eventually or the widening divide between the political aristocracy and the commoner will revert most of western society back into a model more reminiscent of 16th century Britain.
conanbatt 8y ago
This is something that economists have debated over for decades since. Stiglitz specifically attacks Reagan on that front. Milton Friedman defends it. Reagan was the last president to make a deep impact change in how economics and politics relate. He was unique in the way he self-deprecated government, something that is truly rare for presidents. He would actively advocate the government was the problem not the solution, a famous line by Milton Friedman on his economic ideas. To this day, I am awed at the air-traffic controller firing. I am from a country with a pervasive strike culture, to the point that even cops strike, and it has been unfathomable for any president , of any ideology, from dictatorships to democratic socialists, to fire a swath of strikers.
- dragonwriter 8y ago
  > He was unique in the way he self-deprecated government, This is false on two levels: First, Reagan was not a monarch who shared personality with the State, so any deprecation of government he did was not self-deprecation Second, he is not at all unique in that. Bush (43 more than 41) and Trump have done much the same, and even Clinton did it off and on.
  - darawk 8y ago
    > First, Reagan was not a monarch who shared personality with the State, so any deprecation of government he did was not self-deprecation It is absolutely legitimate to characterize the president denigrating government as self-deprecating, splitting hairs about this is silly. > Second, he is not at all unique in that. Bush (43 more than 41) and Trump have done much the same, and even Clinton did it off and on. Reagan was more unique in his ability to actually do it, though. The others had much less impact.
    - dragonwriter 8y ago
      > It is absolutely legitimate to characterize the president denigrating government as self-deprecating No, it's generally not (there may be specific cases where it is), especially when the President in question is selling himself as an ally of the people against government. > Reagan was more unique in his ability to actually do it Actually do what? If you mean literally denigrating the Government, no, Trump's done much more of that. If you meant reducing it's role.. Reagan didn't even do that; he shifted the burden of paying for it, sure. But it was much bigger, more intrusive, and more expensive when he left office than when he entered.
will_brown 8y ago
The irony is the right holds Reagan as a shining example of fiscal conservatism. However, Reagan ultimately tripled the debt while in office. The right loved saying Obama spent more than all other presidents before him combined (which he did, which Bush did...but Reagan the model of fiscal conservatism spent 2x as all presidents who served before him).
- maxxxxx 8y ago
  Seems Trump is on the way to top that. That's one thing I never get about modern Republicans. When in opposition they throw a fit about deficits but as soon as they have power they forget these concerns but drive deficits up a lot. Reagan did it, Bush did it and now Trump is doing it too.
  - AcerbicZero 8y ago
    Its almost as if forcing (rational) people to select D or R via a number of single issue pivot points creates a situation where everyone is guilty of some level of hypocrisy.
  - dragonwriter 8y ago
    > When in opposition they throw a fit about deficits but as soon as they have power they forget these concerns but drive deficits up a lot. They don't care about deficits, they care about spending priorities. Deficits is just the argument they turn to when they don't have an argument against particular spending priorities.
- conanbatt 8y ago
  Reagan's deficit increase comes mostly due to military spending, something that was regarded as extremely strategically important in an era of potential nuclear holocaust.
rwcarlsen 8y ago
As an engineer and computational scientist, drawing conclusions from correlations like this is absurd. Maybe Reagan was good for income inequality or maybe he was bad for it. Did you control for the other variables before drawing your conclusions? What about: * The governments' legislation and economic policies in countries like the USSR, China, etc. in the 80s * Changing technology especially communication technology * Changing levels of education in the world. * Lingering/diminishing trends/effects from wars like: Cold War, Korean War, Vietnam War, etc. * Changing age distribution of humans in western countries, And on and on. The world economy is extremely complex with heavy nonlinear feedback effects. How can you possibly state things like Reagan caused X w.r.t. the world wealth distribution with such confidence?
- eecc 8y ago
  “As an engineer and computational scientist, drawing conclusions from correlations like this is absurd.” Tell that to Ruby developers... duck typing (if it quacks like a duck and walks like one, it’s definitely a duck)
- eecc 8y ago
  Oh, and while throwing all sorts of alternative world scenarios in the wild hope one might make a reasonable argument that Neoliberal policies aren’t the driver of inequality... you forgot Occam’s Razor.
  - rwcarlsen 8y ago
    I didn't throw out any "alternative world scenarios". I was just pointing out that a lot of things were going on in the world that could easily have had a very significant impact on things such as income inequality. There are also many examples in economics where a simple/obvious solution actually has the opposite of the intended effect. Rent price control would be an obvious example (https://en.wikipedia.org/wiki/Rent_regulation#Economists'_views https://en.wikipedia.org/wiki/Rent_regulation#Economists'_vi...). If you want to dig in to the gory details of reaganomics, economists have researched and debated about its effects for decades. There are many economists who make cases both for and against it having appreciably affected income inequality in various ways.
roenxi 8y ago
:P Ouch, going right for the partisans. Presidents are important people, but they are a lot more reactive than is generally accepted - what about the theory that Reagan was reforming economics in response to some deeper underlying problem [0]? [0] https://assets.weforum.org/wp-content/uploads/2015/07/150710-US-petroleum-consumption-voxeu-chart.jpg https://assets.weforum.org/wp-content/uploads/2015/07/150710...
- zanny 8y ago
  So the implication is that Reagan instituted broad and substantial tax reduction for the rich in combination with the institution of enormous federal deficit spending in order to offset rising oil consumption following two oil crisis the previous decade? We saw how oil turned out in the long run. Reagans policies, if anything, only gave dictatorships another two decades of unmitigated dominance in an industry we have seen the US itself rapidly commercialize internally. Most US consumed oil is now domestic, and most of the growth happened in the rebound from the 08 recession. I'd be really interested in comparing the economic policies of how Reaganomics protracted foreign dependence while the late Bush / Obama era bailouts and recovery stimulus somehow exploded the domestic market. Or that neither of those had anything to do with oil, and that the development of the market and industry as a whole was detached enough from federal law of the US that neither president is responsible for anything in that regard.
  - roenxi 8y ago
    The theme I'm replying to is 'Regan's stated policy objectives were implemented in the 70s and were probable causes of rising income inequality'. Maybe policy settings were twiddled, but the sudden stoppage of growth is probably linked to resource growth tapering off. In a counterfactual scenario where some other set of economic policies were in place, you'd probably have seen income growth trail off regardless. The 'fix' could well be rich people being worse off, not poor or middle income people being better off. Not much of a solution, that. A fun thought experiment, there are some good answers to this: at the end of the day, a different policy would be redistributing something real away from the rich. That wouldn't be food (rich people eat as much as everyone else), so what would it be? That is to day, what exactly are the rich securing that is unfair? (money isn't a valid answer, the answer is what the money is then used to buy)

WhompingWindows 8y ago

What's the best solution to this - if wealthy and high-income individuals get more power via political lobbying, they can then gain more wealth and higher incomes, gaining even more lobbying power. They can also flood the media with advertising money and propagandist messaging to convince voters to care more about less impactful issues. It feels like an endless cycle to me. Other than war or complete societal upheaval, what can actually be done to solve the problem?

jjoonathan 8y ago
I'm still amazed at how effectively we have collectively shunned thought along these lines by turning the founding father of the relevant branch of economical philosophy into a real life he-who-shall-not-be-named. Anyone who wants to talk about these problems either has to either re-invent the wheel or mention the unmentionable name and doom themselves to immediate dismissal as a kook.
- danharaj 8y ago
  A spectre is haunting Hacker News...
- csallen 8y ago
  Who are you talking about?
  - java_script 8y ago
    https://en.wikipedia.org/wiki/Marx_Brothers https://en.wikipedia.org/wiki/Marx_Brothers e: Oh shit I just realized who I'm replying to. Serious answer time. Socialism will be a disruptive new paradigm for start-ups and other businesses where (following the idea of a meritocracy) workers, and not stuffy old capitalists, each own an equal number of shares at their place of work. And even more innovative in structure than Zappos and Valve, it allows for capital investment decisions to be voted on by individual contributors, throwing away traditional management structures you see at crufty old firms. Pretty cool stuff! According to some dusty old theories it's the "Exit Strategy" for our largest firms.

hockeybias 8y ago

The wealthy tend not to stuff their dough under a mattress, but rather reinvest it. Might that not 'lift all boats'?

CryoLogic 8y ago

Another side of this to consider, is that low-skill many jobs today are literally not worth as much as they used to be. In labor economic there is a very well established understanding that jobs requiring high levels of skill are typically harder to fill hence corporations must pay more to get those individuals. But the reverse is true, low skill jobs are easy to fill so we don't have to pay as much. But here's the kicker, many branches of economics focus on technology as a eliminator of work. Basically, two guys becomes one guy and a machine. Eventually a machine might replace both of the guys. There is an intermediary between a job being automated entirely away though, where a physical human's work loses value. McDonalds for example has been rolling out automated ordering systems so that they don't have to employ as much "front-office" staff. If they keep those on payroll, there job brings much less value to the company than it did prior. Technology creates skilled jobs (aka maintain the robot) and eliminated unskilled jobs. But technology can also reduce the value-add of another unskilled employee. What I am getting at is the sad truth that it's totally possible unskilled labor is not worth as much as it used to be. If we continue to base our salaries entirely capitalistically, maybe these gaps will widen as low skill employees become less and less valuable while high skill employees gain value but less of them are required.

bluGill 8y ago
Moral of this story: become high skilled. If you are high skilled not only do you make more money in absolute dollars, but also the things you want to buy are cheaper in absolute dollars. There are plenty of things to automate for the foreseeable future. I don't know what the correct answer for kids 100 years from now will be: they have the figure out their own answers.

darkerside 8y ago

Is there an inherent problem with income inequality? Would you rather live in: * World 1, where everybody has x, except one person has 100x * World 2, where everybody has .5x and is thus totally equal (I realize assets and income are not equal, but I think the point stands)

dragonwriter 8y ago
> Is there an inherent problem with income inequality? Yes, because once you get past the truly abject absolute poverty (which isn't an issue for most of the developed world), there's a lot of indication that experienced utility or disutility is driven more by relative material position than absolute position. So, yes, outside of very poor economies (where absolute gains that increase inequality may still improve utility across the board), increases in inequality are very often utilitarian ills that are not compensated by absolute gains at the lower end.
- commandlinefan 8y ago
  Well, I think what he's saying (which I don't necessarily disagree with) is that if I have everything I need, what difference does it make to me - besides jealousy - if the guy down the street has more than he needs?
  - dragonwriter 8y ago
    It's a common a priori moral argument about how many people think people should derive utility from material circumstances, sure, but “stop feeling pain from relative deprivation” is about as effective as “stop feeling pain from me twisting your arm”, even if you think it is morally obligatory for people to disregard having their arm twisted.
    - darkerside 8y ago
      Yeah, parent post expressed it well. Probably better than me. I purposefully didn't say anyone should feel anything (and got flamed for being an absolutist for it). While it's how I personally feel, I think others should decide how they feel about it. Funny enough, framing the problem in a slightly different moral perspective leads to vast differences in how people feel about the situation.

rb808 8y ago

This is a very US - centric view. With globalization I think a different picture emerges. Increasing global trade has hurt US (and Other Western) working classes with de-industrialization, where many more people foreign countries have been lifted out of poverty.

munk-a 8y ago
The US has, on a global scale, long had higher standards of living than a large remainder of the world so balancing US workers with foreign workers to elevate the standard of living in third world countries isn't a bad thing. The issue is more that while this process was happening a small segment of the US population has managed to sequester a nearly incomprehensible portion of that wealth for no good reason.
- rb808 8y ago
  > long had higher standards of living than a large remainder of the world Not really 200 years ago most Americans were scratching a living in a new world fighting off the natives and importing slaves. >The issue is more that while this process was happening a small segment of the US population has managed to sequester a nearly incomprehensible portion of that wealth for no good reason. Agreed its a big change from the 60s and 70s.
  - munk-a 8y ago
    Sorry, to clarify here, long is defined as ~80 years, which, I'll grant, isn't actually very long. My apologies for the confusion.

b0bby_tabl3s 8y ago

I see opportunities to 'git-good'.

rukittenme 8y ago

Reganomics, the end of Breton Woods, the end of the "Gold Standard", "Stagflation", "Peak Oil", population growth, immigration, greying population, healthcare, welfare, tax cuts, globalization, capitalism, communism. Oh don't mind me, just pulling excuses out of my ass. I love posts like these and I especially love their graphs. Less so for the (little) content they contain. More so for people's reactions to the content. Its confirmation bias bait all the way down! I don't mean to be so negative and critical. I'm just tired of people trying to explain the state of the world from a single graph! Income inequality could be increasing for different reasons at different times. It might not be increasing at all (depending on how you define income)! --- Let's stop drooling over graphs and have an actual conversation about the "problem". Who am I richer than and why? Who is richer than me and why? Maybe if we answer these questions we can solve income inequality (assuming we still want to solve it all).

0181109 8y ago
Considering that certain paths of inquiry are off limits socially, both Left and Right, I don't think you'll get that any time soon.

autokad 8y ago

i wish people would call out the fed. their primary metric for increasing interest rates is wage inflation. so they play wack a mole when people start seeing income growth, a recession comes, and employers have all the bargaining rights again. yet despite the fed's goal of smacking down wage growth ahem, inflation,, nobody points a finger at them.

maneesh 8y ago

I posted my take on this recently on Facebook. (And I recently gave a TedX talk on the same concept entitled "Money: The Greatest Story Ever Told" [1]) Here is an image of the entire world's Money supply [2]. In my eyes, the majority shift occurred due to two things: 1) Ending the gold standard peg 2) Creation of the derivative market 1 --- Ending the Gold Standard Peg In 1971, Nixon severed the connection between Gold and the US-Dollar. The USD now became purely fiat --- no actual resource backed the USD anymore. This allowed the dollar to change. Banks could create money -- really. Credit could be expanded and offered to customers. Debt could become an asset, and banks could trade. But the most interesting part is that it led to #2 --- the Derivate market 2 -- Creation of the Derivative Market By removing the gold standard tether, money became anything that people believe in In 1973, the first derivative began to trade. And banks utilized this to create futures, contracts, warrants, swaps --- bets against bets against bets against bets. The money isn't really there. It's just a financial instrument traded to hedge against fluctuations. It's a betting system. And it's turtles the whole way down. Here's the crazy part. The global derivatives market is 1.4 QUADRILLION dollars. That is, 20 times larger than the GDP of the entire WORLD. In the picture attached --- see that giganticly long section at the bottom? That is derivates. It outweighs the rest of the world's money by FAR. 1.4 Quadrillion USD are in derivatives. Guess how much money world-wide is in coins and banknotes? $5 trillion. That is --- derivatives are 280x the amount of coins and bank notes in THE ENTIRE WORLD. [1] https://www.youtube.com/watch?v=9G0F-VUPTa4 https://www.youtube.com/watch?v=9G0F-VUPTa4 [2] http://money.visualcapitalist.com/worlds-money-markets-one-visualization-2017/ http://money.visualcapitalist.com/worlds-money-markets-one-v...

wuliwong 8y ago
Glad to see someone mention the "temporary" cessation of the dollar's convertibility to gold. From my perspective that would mark the most important event for this topic but it is hardly discussed.
- maneesh 8y ago
  I never understand why people see these actions all happening simultaneously -- a invention of infinite money will of course go to the top, and create inequality between the rich and poor -- because that's how compound interest works. But for some reason, that doesn't seem to even register on people's radar.