4 ms·

Why have the poor gotten richer over time then? We don't have the same percentage of rich and poor as we always have had.

arcticbull 6y ago
I think what you've identified is that the poor have gotten better off due to technical innovations reducing the price of basic goods and enhancing their functionality -- while on average wages have tracked inflation. This is a systemic improvement. Meanwhile, the rich have gotten exponentially richer, as public policies have shifted ever more in their favor. For much the 1900s the top income tax bracket in the US was over 80%, peaking at 95%. Now its 37%. The estate tax for much of the 1900s was 80%. Now it's practically 0% for all intents and purposes. The poor have gotten slightly better off, the wealthy have gotten dramatically better off, and the gap between the two has widened. Systems designed to keep the two groups together have been chipped away at, and are buckling. This is a result of social policy.
- credit_guy 6y ago
  > The poor have gotten slightly better off, the wealthy have gotten dramatically better off, and the gap between the two has widened. That's a fairly common perception. Most often summarized in "the rich get richer, the poor poorer" (at least on a relative basis). I was born in a Communist country, and I have another perception. Poverty has different levels. The most abject poverty is when you go hungry. My family didn't experience that, but we experienced the next step: severe food rationing. War-style rationing in peace times. 90% of the population in my city being subjected to that (the elite party members were not, obviously). My parents driving to a neighboring city to be able to buy potatoes and onions. My kids nowadays spend too much time on iPads and Xbox, I was spending too much time waiting in line to buy bread. And I can only guess that there were hundreds of millions like me in all the Communist world (China included). For the most part this type of poverty has been eradicated. I for one celebrate that.
  - quercusgrisea 6y ago
    Food insecurity is not specific to communist countries, it's a massive problem in capitalist countries today. The US is the richest country in the world and 37 million people experienced food insecurity in 2018 - https://en.wikipedia.org/wiki/Hunger_in_the_United_States https://en.wikipedia.org/wiki/Hunger_in_the_United_States
    - missedthecue 6y ago
      "Food insecurity" is nowhere near the same thing as going to another city to stand in line for potatoes and onions. On the whole, decentralized distribution is always better than when centrally controlled
      - quercusgrisea 6y ago
        >"Food insecurity" is nowhere near the same thing as going to another city to stand in line for potatoes and onions. What's the difference? Millions of people in the US have to line up at soup kitchens and food banks in order to avoid starvation. >On the whole, decentralized distribution is always better than when centrally controlled That's a strong claim; I'd be interested to look at evidence for it if you have any. One major counterpoint would be the enormous reductions in poverty that China has achieved over the last decades. Quoting from Wikipedia here: >The dramatic progress in reducing poverty over the past three decades in China is well known. According to the World Bank, more than 850 million Chinese people have been lifted out of extreme poverty; China's poverty rate fell from 88 percent in 1981 to 0.7 percent in 2015, as measured by the percentage of people living on the equivalent of US$1.90 or less per day in 2011 purchasing price parity terms. https://en.wikipedia.org/wiki/Poverty_in_China https://en.wikipedia.org/wiki/Poverty_in_China
        missedthecue 6y ago
        What? China is not a command economy. It used to be, pre-1970s, but no longer is. Companies adjust production in accordance to price signals, not instructions from Beijing. This is not an appropriate counter-example in any sense.
- ChrisLomont 6y ago
  >For much the 1900s the top income tax bracket in the US was over 80%, Top tax is not the same as effective tax rate. For example, when Reagan lowered the top brack from 50% to 37% while also closing taxable shelters,the amount the rich paid actually went up. The CBO has all this type of data. >This is a result of social policy. It's more the result of changes in the world economy. Computers have made skilled jobs vastly more productive, while unskilled like making burgers or painting exteriors have not seen anywhere near the gains. And as the rest of the world is catching up quickly to first world quality of life, the advantage the poor in the US had on the world labor supply is much less. >while on average wages have tracked inflation Only for white men in the US (and most first world countries). Poor women and minorities have seen vast gains in income over the past 40 years in the first world. The rest of the world has seen a massive gain for the poor. Remember, the poverty line in the US is about the top 15% of incomes worldwide. Our poor are quite rich by world or historical standards. You used to be able to check this at globalrichlist.com, but it's now down. I suspect you can find this info elsewhere. As some easy evidence to check, poverty line for a household of three in the US is $21k (and that pre-tax transfer. Post transfer is about 40k). Here's per country median incomes. https://worldpopulationreview.com/country-rankings/median-income-by-country https://worldpopulationreview.com/country-rankings/median-in...
  - deleted 6y ago
    [deleted]
  - missedthecue 6y ago
    >Top tax is not the same as effective tax rate. For example, when Reagan lowered the top brack from 50% to 37% while also closing taxable shelters,the amount the rich paid actually went up. This is something a lot of folks miss. The US has the most progressive tax system in the western world. The top brackets pay a much larger percentage than anywhere else.
    - arcticbull 6y ago
      Yeah, no, they don't, and it isn't. Estate tax being practically zero means huge quantities of un-earned wealth are transmitted from generation to generation. This isn't true in most first-world countries. The top tax rate in the US isn't nearly as high as many European countries. The specific quantity of money that is collected as tax revenue has much more to do with just how successful the higher classes are in the US as compared to other countries. This is a function of (wealth inequality multiplied by the top tax rate) not of how progressive the system is -- certainly not at the federal level. If you have citations, they are much welcome. The post you're replying to missed many critical factors, such as the fact that the average salary in constant-dollar terms has remained the exact same since 1964 in the US. [1] [1] https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/ https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us...
ipnon 6y ago
Consider the inverse: Why has life gotten cheaper?
tstrimple 6y ago
Poor people aren't really poor because they almost all have a refrigerator and an iPhone is not as compelling an argument as you may think. There are very real and very extreme examples* of poverty in this country that are inexcusable. * https://www.theguardian.com/us-news/2017/sep/05/hookworm-lowndes-county-alabama-water-waste-treatment-poverty https://www.theguardian.com/us-news/2017/sep/05/hookworm-low...
- bumby 6y ago
  What do you personally think is a better metric for poverty? Something like access to quality healthcare? https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(18)30994-2/fulltext https://www.thelancet.com/journals/lancet/article/PIIS0140-6...
adamredwoods 6y ago
I think we need to define terms. What is poor, what is rich. Are we measuring the delta between rich and poor? Over what time frame? https://ourworldindata.org/a-history-of-global-living-conditions-in-5-charts https://ourworldindata.org/a-history-of-global-living-condit... https://ourworldindata.org/human-development-index https://ourworldindata.org/human-development-index

arcticbull 6y ago

I think what you've identified is that the poor have gotten better off due to technical innovations reducing the price of basic goods and enhancing their functionality -- while on average wages have tracked inflation. This is a systemic improvement. Meanwhile, the rich have gotten exponentially richer, as public policies have shifted ever more in their favor. For much the 1900s the top income tax bracket in the US was over 80%, peaking at 95%. Now its 37%. The estate tax for much of the 1900s was 80%. Now it's practically 0% for all intents and purposes. The poor have gotten slightly better off, the wealthy have gotten dramatically better off, and the gap between the two has widened. Systems designed to keep the two groups together have been chipped away at, and are buckling. This is a result of social policy.

credit_guy 6y ago
> The poor have gotten slightly better off, the wealthy have gotten dramatically better off, and the gap between the two has widened. That's a fairly common perception. Most often summarized in "the rich get richer, the poor poorer" (at least on a relative basis). I was born in a Communist country, and I have another perception. Poverty has different levels. The most abject poverty is when you go hungry. My family didn't experience that, but we experienced the next step: severe food rationing. War-style rationing in peace times. 90% of the population in my city being subjected to that (the elite party members were not, obviously). My parents driving to a neighboring city to be able to buy potatoes and onions. My kids nowadays spend too much time on iPads and Xbox, I was spending too much time waiting in line to buy bread. And I can only guess that there were hundreds of millions like me in all the Communist world (China included). For the most part this type of poverty has been eradicated. I for one celebrate that.
- quercusgrisea 6y ago
  Food insecurity is not specific to communist countries, it's a massive problem in capitalist countries today. The US is the richest country in the world and 37 million people experienced food insecurity in 2018 - https://en.wikipedia.org/wiki/Hunger_in_the_United_States https://en.wikipedia.org/wiki/Hunger_in_the_United_States
  - missedthecue 6y ago
    "Food insecurity" is nowhere near the same thing as going to another city to stand in line for potatoes and onions. On the whole, decentralized distribution is always better than when centrally controlled
    - quercusgrisea 6y ago
      >"Food insecurity" is nowhere near the same thing as going to another city to stand in line for potatoes and onions. What's the difference? Millions of people in the US have to line up at soup kitchens and food banks in order to avoid starvation. >On the whole, decentralized distribution is always better than when centrally controlled That's a strong claim; I'd be interested to look at evidence for it if you have any. One major counterpoint would be the enormous reductions in poverty that China has achieved over the last decades. Quoting from Wikipedia here: >The dramatic progress in reducing poverty over the past three decades in China is well known. According to the World Bank, more than 850 million Chinese people have been lifted out of extreme poverty; China's poverty rate fell from 88 percent in 1981 to 0.7 percent in 2015, as measured by the percentage of people living on the equivalent of US$1.90 or less per day in 2011 purchasing price parity terms. https://en.wikipedia.org/wiki/Poverty_in_China https://en.wikipedia.org/wiki/Poverty_in_China
      - missedthecue 6y ago
        What? China is not a command economy. It used to be, pre-1970s, but no longer is. Companies adjust production in accordance to price signals, not instructions from Beijing. This is not an appropriate counter-example in any sense.
ChrisLomont 6y ago
>For much the 1900s the top income tax bracket in the US was over 80%, Top tax is not the same as effective tax rate. For example, when Reagan lowered the top brack from 50% to 37% while also closing taxable shelters,the amount the rich paid actually went up. The CBO has all this type of data. >This is a result of social policy. It's more the result of changes in the world economy. Computers have made skilled jobs vastly more productive, while unskilled like making burgers or painting exteriors have not seen anywhere near the gains. And as the rest of the world is catching up quickly to first world quality of life, the advantage the poor in the US had on the world labor supply is much less. >while on average wages have tracked inflation Only for white men in the US (and most first world countries). Poor women and minorities have seen vast gains in income over the past 40 years in the first world. The rest of the world has seen a massive gain for the poor. Remember, the poverty line in the US is about the top 15% of incomes worldwide. Our poor are quite rich by world or historical standards. You used to be able to check this at globalrichlist.com, but it's now down. I suspect you can find this info elsewhere. As some easy evidence to check, poverty line for a household of three in the US is $21k (and that pre-tax transfer. Post transfer is about 40k). Here's per country median incomes. https://worldpopulationreview.com/country-rankings/median-income-by-country https://worldpopulationreview.com/country-rankings/median-in...
- deleted 6y ago
  [deleted]
- missedthecue 6y ago
  >Top tax is not the same as effective tax rate. For example, when Reagan lowered the top brack from 50% to 37% while also closing taxable shelters,the amount the rich paid actually went up. This is something a lot of folks miss. The US has the most progressive tax system in the western world. The top brackets pay a much larger percentage than anywhere else.
  - arcticbull 6y ago
    Yeah, no, they don't, and it isn't. Estate tax being practically zero means huge quantities of un-earned wealth are transmitted from generation to generation. This isn't true in most first-world countries. The top tax rate in the US isn't nearly as high as many European countries. The specific quantity of money that is collected as tax revenue has much more to do with just how successful the higher classes are in the US as compared to other countries. This is a function of (wealth inequality multiplied by the top tax rate) not of how progressive the system is -- certainly not at the federal level. If you have citations, they are much welcome. The post you're replying to missed many critical factors, such as the fact that the average salary in constant-dollar terms has remained the exact same since 1964 in the US. [1] [1] https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/ https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us...

ipnon 6y ago

Consider the inverse: Why has life gotten cheaper?

tstrimple 6y ago

Poor people aren't really poor because they almost all have a refrigerator and an iPhone is not as compelling an argument as you may think. There are very real and very extreme examples* of poverty in this country that are inexcusable. * https://www.theguardian.com/us-news/2017/sep/05/hookworm-lowndes-county-alabama-water-waste-treatment-poverty https://www.theguardian.com/us-news/2017/sep/05/hookworm-low...

bumby 6y ago
What do you personally think is a better metric for poverty? Something like access to quality healthcare? https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(18)30994-2/fulltext https://www.thelancet.com/journals/lancet/article/PIIS0140-6...

adamredwoods 6y ago

I think we need to define terms. What is poor, what is rich. Are we measuring the delta between rich and poor? Over what time frame? https://ourworldindata.org/a-history-of-global-living-conditions-in-5-charts https://ourworldindata.org/a-history-of-global-living-condit... https://ourworldindata.org/human-development-index https://ourworldindata.org/human-development-index