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quote: tax payments and the share of the tax burden borne by the top 1 percent climbed sharply This is the reason for that phrase lies, damned lies and statist

by jbooth 16y ago

quote: tax payments and the share of the tax burden borne by the top 1 percent climbed sharply This is the reason for that phrase lies, damned lies and statistics. The top 1 percent have been getting an ever-increasing share of gross national income, so their share of gross national taxed income, hence gross tax take, correspondingly went up. Meanwhile, we're staring at a total meltdown on the demand side of the equation -- people who aren't in that top tier have seen their real wages fall consistently since the 1980s. What happens to a consumer economy when you've starved all the consumers? I'm not saying that the tax code created that upward aggregation - technology, globalization and outsourcing labor are probably the biggest factors in that order. But it seems like a solution addressing the exact opposite of the problem.

yummyfajitas 16y ago
...people who aren't in that top tier have seen their real wages fall consistently since the 1980s. This claim doesn't pass the smell test. Can you name a single good or service (note: not a category of goods/services) which is less available today than it was in the 80's? If not, then real wages (i.e., wages measured in terms of the amount of stuff they can buy) have not gone down.
- jbooth 16y ago
  I know you know the definition of real wages, and it's nothing to do with what you said -- it's wages indexed by BLS inflation numbers. http://en.wikipedia.org/wiki/File:United_States_Income_Distribution_1967-2003.svg http://en.wikipedia.org/wiki/File:United_States_Income_Distr... I overspoke. They've stagnated for the bottom 4 quintiles since the early 80s, and declined since 2000. For future trends, I'd extrapolate from the current U-3 and more importantly U-6 figures (they don't look good).
  - yummyfajitas 16y ago
    In general, the definition of economic concepts does not include references to specific government agencies. Are "real wages" not a meaningful concept in Mexico, beyond the reach of the BLS? If you look at the definition of inflation (keep track of units!), you can immediately see that wages indexed by inflation == amount of stuff you can buy. As for BLS inflation numbers, I agree that by that specific measurement, real wages appear to have stagnated. On the other hand, people today have more stuff than they did in the 80's. That suggests the BLS inflation numbers might not mean what you think they mean. (It's actually pretty clear why they don't quite match up if you look closely at the methodology of the BLS. The basket of goods used to compute inflation today is larger than the basket of goods in 1980. A proper measure of inflation would take a fixed basket of goods at t[0] and measure the cost of the same basket of goods at t[1]. But that would require different inflation measures based on the starting year. This would be too complicated to give to politicians, so the BLS doesn't bother. )
    - jbooth 16y ago
      Ok, so let's throw out the BLS inflation numbers even though they're the standard for basically everyone in academia and industry because you don't like what they say in this case? What's the alternative? I wasn't talking about Mexico, I'd defer to the canonical inflation figure for there if I were. If you want to kibbitz about the basket of goods, fine.. but that conversation's gonna go right to "fix our egregiously broken healthcare system".
      - yummyfajitas 16y ago
        The BLS numbers are not as good as you seem to think, and many people are aware of their flaws. For example, the Boskin Commission (in 1996) concluded that inflation was overstated by about 1.3%/year (up to 1996, which includes about 16 years of the period you are interested in). http://en.wikipedia.org/wiki/Boskin_Commission http://en.wikipedia.org/wiki/Boskin_Commission Regardless of your argumentum ad populum, do you disagree with my claim that a correct measure of inflation should not use an expanding basket of goods? If so, please explain why we should care about this quantity: BLS-adjusted wage = (nominal wage) x (cost of smaller basket A in 1980) / (cost of bigger basket B in 2010)
        jbooth 16y ago
        So did you cancel your subscription to the Economist and the WSJ? Because they cite the BLS inflation numbers all the time, like multiple times per week.
        lotharbot 16y ago
        BLS inflation numbers get cited all the time. That doesn't mean they actually show what [random pundit X] thinks they show. In particular, they don't support the claim that people have less purchasing power now than they did 30 years ago. They don't directly measure purchasing power; "real wages" is a misnomer, and a decrease in "real wages" doesn't necessarily correspond to "starving" the consumers as you claimed in an ancestor post. When asked to directly measure purchasing power, why do you instead go for the "appeal to authority" regarding an indirect and clearly flawed method? Why not try to actually directly answer the question at hand: name one good or service that is less available now than it was 20-30 years ago, thereby establishing an actual decrease in purchasing power for the consumers you claim are being "starved".
- Symmetry 16y ago
  But its not too far from being true, wages have increased very slowly vs. GDP. What _has_ risen at the same rate as the GDP is the amount spent on employee compensation, but that includes wages, benefits, and the costs of administering the first two. A lot of this is rising health-care costs that have been increasingly been met by employer provided health insurance, but part of it is just companies preferring to give compensation in ways that won't be taxed.
- hackinthebochs 16y ago
  I think the point that jbooth is trying to make is that, the wealth of the country has measurably increased since the 1980's but that increase is going mostly to the wealthy. The problem is jbooth is trying to prove this using inflation data. Indexing purchasing power to a constant basket of goods is missing the point because our production has become more efficient over that time. But this is exactly the point he's trying to make: While productivity has increased across the board, the wealthy are gaining disproportionately from that increase in productivity. I think this is indisputable. The middle class is shrinking precisely because what it means to be "middle class" should reasonably grow with increases in productivity. However, this isn't happening. And by many measures its decreasing (say health care, college education). The question should be then: is it in societies interest to make sure that the benefits of increased productivity are distributed more proportionally, and should government attempt to accomplish this.
  - yummyfajitas 16y ago
    The middle class is shrinking precisely because what it means to be "middle class" should reasonably grow with increases in productivity. And it has. Every decile has considerably more stuff today than they did in 1980. More cars, bigger houses, more food, more medicine, and more education [1]. Jbooth is making the fallacy of measuring income in non-constant baskets of goods. His claim is that in 1980, median wages bought you 1 basket of goods, and in 2010, median wages still buys only 1 basket of goods. He is deliberately ignoring the fact that the basket in 2010 is bigger. However, this isn't happening. And by many measures its decreasing (say health care, college education). College consumption has increased: http://www.childstats.gov/americaschildren/edu6.asp http://www.childstats.gov/americaschildren/edu6.asp The same is true of medicine - we consume more drugs, visit the doctor more, and get more treatments. According to a quick google search, the % of the labor force producing health care has gone up considerably: http://www.doctorhousingbubble.com/wp-content/uploads/2009/10/chart-10-healtcare-employment.png http://www.doctorhousingbubble.com/wp-content/uploads/2009/1... You might want to argue that consumption should have increased more, but it's nonsensical to argue that consumption has not increased significantly (as jbooth is). [1] I don't like treating education as a consumption good, since it's primarily purpose is to gain credentials/skills so you can get a job.
lucasjung 16y ago
"The top 1 percent have been getting an ever-increasing share of gross national income, so their share of gross national taxed income...people who aren't in that top tier have seen their real wages fall consistently since the 1980s." Actually, I find this side of the argument to fall under the heading of "lies, damn lies, and statistics." The problem with this argument is that it conflates "population segment" with "particular individuals." You see that the top one percent get a larger share and conclude that the rich keep getting richer while everyone else gets poorer. If those population segments were static, this would be true. In reality, these groups are very dynamic and people move between them throughout their lives, so when you look at "the bottom twenty percent" over a multi-decade period, you're not looking at a fifth of the population permanently trapped at the bottom of the totem pole, you're looking at many different people starting out in that position before moving up. Certainly some of them are stuck there, but most of them aren't. The top 1% is extremely volatile: I don't have any statistics handy but I have read more than once that the percentage of the top 1% who were up there ten years prior has fallen dramatically since the '70s. It's not the same people getting richer, it's new people (who used to be well below that top tier) getting even richer than the last set of top earners. As an example, consider a typical middle-class American family: they start out as two individuals fresh out of college each earning thirty or forty thousand dollars a year: nowhere near the top 1%. As they gain experience they begin to earn more and more each year, moving up into higher earning segments. At some point they meet each other and get married, dramatically increasing their "household" income (and creating difficulties for economists trying to make apples-to-apples comparisons). In their fifties they hit their peak earning years and spend half a decade or so in the highest tax bracket: not in the top 1% of earners, but probably in the top 10% or some other arbitrary slice frequently villified as earning more than their "fare share" of income. Then their income tapers off as they transition into retirement and they fall back into the next quintile down, maybe even two quintiles down. For their entire working lives prior to retirement they saw their income grow steadily, but by taking a snapshot of their income when they were twenty-five and comparing it to the income of twenty-five year-olds from three decades earlier you come to the conclusion that "people" are earning less than they used to. I'd like to see some statistics on lifetime real compensation (not just income, but ALL compensation). I'd be willing to bet that it would show that the middle class has done quite well by themselves in the last three decades.

by jbooth 16y ago

yummyfajitas 16y ago

...people who aren't in that top tier have seen their real wages fall consistently since the 1980s. This claim doesn't pass the smell test. Can you name a single good or service (note: not a category of goods/services) which is less available today than it was in the 80's? If not, then real wages (i.e., wages measured in terms of the amount of stuff they can buy) have not gone down.

jbooth 16y ago
I know you know the definition of real wages, and it's nothing to do with what you said -- it's wages indexed by BLS inflation numbers. http://en.wikipedia.org/wiki/File:United_States_Income_Distribution_1967-2003.svg http://en.wikipedia.org/wiki/File:United_States_Income_Distr... I overspoke. They've stagnated for the bottom 4 quintiles since the early 80s, and declined since 2000. For future trends, I'd extrapolate from the current U-3 and more importantly U-6 figures (they don't look good).
- yummyfajitas 16y ago
  In general, the definition of economic concepts does not include references to specific government agencies. Are "real wages" not a meaningful concept in Mexico, beyond the reach of the BLS? If you look at the definition of inflation (keep track of units!), you can immediately see that wages indexed by inflation == amount of stuff you can buy. As for BLS inflation numbers, I agree that by that specific measurement, real wages appear to have stagnated. On the other hand, people today have more stuff than they did in the 80's. That suggests the BLS inflation numbers might not mean what you think they mean. (It's actually pretty clear why they don't quite match up if you look closely at the methodology of the BLS. The basket of goods used to compute inflation today is larger than the basket of goods in 1980. A proper measure of inflation would take a fixed basket of goods at t[0] and measure the cost of the same basket of goods at t[1]. But that would require different inflation measures based on the starting year. This would be too complicated to give to politicians, so the BLS doesn't bother. )
  - jbooth 16y ago
    Ok, so let's throw out the BLS inflation numbers even though they're the standard for basically everyone in academia and industry because you don't like what they say in this case? What's the alternative? I wasn't talking about Mexico, I'd defer to the canonical inflation figure for there if I were. If you want to kibbitz about the basket of goods, fine.. but that conversation's gonna go right to "fix our egregiously broken healthcare system".
    - yummyfajitas 16y ago
      The BLS numbers are not as good as you seem to think, and many people are aware of their flaws. For example, the Boskin Commission (in 1996) concluded that inflation was overstated by about 1.3%/year (up to 1996, which includes about 16 years of the period you are interested in). http://en.wikipedia.org/wiki/Boskin_Commission http://en.wikipedia.org/wiki/Boskin_Commission Regardless of your argumentum ad populum, do you disagree with my claim that a correct measure of inflation should not use an expanding basket of goods? If so, please explain why we should care about this quantity: BLS-adjusted wage = (nominal wage) x (cost of smaller basket A in 1980) / (cost of bigger basket B in 2010)
      - jbooth 16y ago
        So did you cancel your subscription to the Economist and the WSJ? Because they cite the BLS inflation numbers all the time, like multiple times per week.
        lotharbot 16y ago
        BLS inflation numbers get cited all the time. That doesn't mean they actually show what [random pundit X] thinks they show. In particular, they don't support the claim that people have less purchasing power now than they did 30 years ago. They don't directly measure purchasing power; "real wages" is a misnomer, and a decrease in "real wages" doesn't necessarily correspond to "starving" the consumers as you claimed in an ancestor post. When asked to directly measure purchasing power, why do you instead go for the "appeal to authority" regarding an indirect and clearly flawed method? Why not try to actually directly answer the question at hand: name one good or service that is less available now than it was 20-30 years ago, thereby establishing an actual decrease in purchasing power for the consumers you claim are being "starved".
Symmetry 16y ago
But its not too far from being true, wages have increased very slowly vs. GDP. What _has_ risen at the same rate as the GDP is the amount spent on employee compensation, but that includes wages, benefits, and the costs of administering the first two. A lot of this is rising health-care costs that have been increasingly been met by employer provided health insurance, but part of it is just companies preferring to give compensation in ways that won't be taxed.
hackinthebochs 16y ago
I think the point that jbooth is trying to make is that, the wealth of the country has measurably increased since the 1980's but that increase is going mostly to the wealthy. The problem is jbooth is trying to prove this using inflation data. Indexing purchasing power to a constant basket of goods is missing the point because our production has become more efficient over that time. But this is exactly the point he's trying to make: While productivity has increased across the board, the wealthy are gaining disproportionately from that increase in productivity. I think this is indisputable. The middle class is shrinking precisely because what it means to be "middle class" should reasonably grow with increases in productivity. However, this isn't happening. And by many measures its decreasing (say health care, college education). The question should be then: is it in societies interest to make sure that the benefits of increased productivity are distributed more proportionally, and should government attempt to accomplish this.
- yummyfajitas 16y ago
  The middle class is shrinking precisely because what it means to be "middle class" should reasonably grow with increases in productivity. And it has. Every decile has considerably more stuff today than they did in 1980. More cars, bigger houses, more food, more medicine, and more education [1]. Jbooth is making the fallacy of measuring income in non-constant baskets of goods. His claim is that in 1980, median wages bought you 1 basket of goods, and in 2010, median wages still buys only 1 basket of goods. He is deliberately ignoring the fact that the basket in 2010 is bigger. However, this isn't happening. And by many measures its decreasing (say health care, college education). College consumption has increased: http://www.childstats.gov/americaschildren/edu6.asp http://www.childstats.gov/americaschildren/edu6.asp The same is true of medicine - we consume more drugs, visit the doctor more, and get more treatments. According to a quick google search, the % of the labor force producing health care has gone up considerably: http://www.doctorhousingbubble.com/wp-content/uploads/2009/10/chart-10-healtcare-employment.png http://www.doctorhousingbubble.com/wp-content/uploads/2009/1... You might want to argue that consumption should have increased more, but it's nonsensical to argue that consumption has not increased significantly (as jbooth is). [1] I don't like treating education as a consumption good, since it's primarily purpose is to gain credentials/skills so you can get a job.

lucasjung 16y ago

"The top 1 percent have been getting an ever-increasing share of gross national income, so their share of gross national taxed income...people who aren't in that top tier have seen their real wages fall consistently since the 1980s." Actually, I find this side of the argument to fall under the heading of "lies, damn lies, and statistics." The problem with this argument is that it conflates "population segment" with "particular individuals." You see that the top one percent get a larger share and conclude that the rich keep getting richer while everyone else gets poorer. If those population segments were static, this would be true. In reality, these groups are very dynamic and people move between them throughout their lives, so when you look at "the bottom twenty percent" over a multi-decade period, you're not looking at a fifth of the population permanently trapped at the bottom of the totem pole, you're looking at many different people starting out in that position before moving up. Certainly some of them are stuck there, but most of them aren't. The top 1% is extremely volatile: I don't have any statistics handy but I have read more than once that the percentage of the top 1% who were up there ten years prior has fallen dramatically since the '70s. It's not the same people getting richer, it's new people (who used to be well below that top tier) getting even richer than the last set of top earners. As an example, consider a typical middle-class American family: they start out as two individuals fresh out of college each earning thirty or forty thousand dollars a year: nowhere near the top 1%. As they gain experience they begin to earn more and more each year, moving up into higher earning segments. At some point they meet each other and get married, dramatically increasing their "household" income (and creating difficulties for economists trying to make apples-to-apples comparisons). In their fifties they hit their peak earning years and spend half a decade or so in the highest tax bracket: not in the top 1% of earners, but probably in the top 10% or some other arbitrary slice frequently villified as earning more than their "fare share" of income. Then their income tapers off as they transition into retirement and they fall back into the next quintile down, maybe even two quintiles down. For their entire working lives prior to retirement they saw their income grow steadily, but by taking a snapshot of their income when they were twenty-five and comparing it to the income of twenty-five year-olds from three decades earlier you come to the conclusion that "people" are earning less than they used to. I'd like to see some statistics on lifetime real compensation (not just income, but ALL compensation). I'd be willing to bet that it would show that the middle class has done quite well by themselves in the last three decades.