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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 wik
by 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 agoFrom 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 agoIt 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 agoI’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 agoYea also not sure why this is being downvoted. That was exactly the narrative at the time.
- conanbatt 8y agoTrickle 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 agoBecause 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 agoGotta 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 agoWell, 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.
- conanbatt 8y agoThey don't exist in "the void". Property rights are fundamental to the free market ideology, as well as courts, police and military. It's the foundations of liberalism, with Locke, Adam Smith, etc. I reiterate that free market ideology is positive, while government intervention ideology is more normative: it says how things should be and tries to make it so. The best case of this has been obviously Communism and Fascism: they said this is best, and organized top to bottom how things should be, and ignored any evidence of the contrary.
- 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 agoDavid 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 agoI 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 agoFrom the graph it looks like it really took off in the 90's and then again around 2010.
- dragonwriter 8y agoInequality also seems edged up noticeably just after 2000, though by the bottom dropping more than by the top rising.
- Just_Smith 8y agoIt 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 agoThere'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 agoAs 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 agoCharisma 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 agoThis 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 agoThe 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 agoSeems 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 agoIts 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 agoReagan'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 agoAs 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 agoOh, 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 agoI 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 agoSo 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 agoThe 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)