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>The rich get richer. People claim this a lot, but for a half dozen datasets I've looked at over the years, the opposite is true. To prove this claim, make so

>The rich get richer. People claim this a lot, but for a half dozen datasets I've looked at over the years, the opposite is true. To prove this claim, make some definition of rich (income, wealth, top N, whatever), and see how many people in that class stay there. You'll find that most rich do not stay in the level of wealth you picked very long. A simple place to check is Forbes 400. The top 400 churns a lot. The next place is places like FRED data on mobility, where it's clear over the span of 10 years most of those in the top decile are no longer there, and those in the bottom are no longer there. Another place to look is how many millionaires in the US are first generation - last I checked it;s about 90% of them. So, for what reasonable metric of wealth can you demonstrate those people in that group stay there for a decade, or a generation? My experience is that your claim is made by people that believe it but have never measured it. Over the years I've ran across a few datasets for which it can be properly evaluated, and in each case, and for each definition of rich that could be answered by the datatset, the same pattern emerges: the people in the rich group get poorer and the people in the poor group get richer. Reversion to the mean is a much more powerful force than the ability to hoard wealth. >US households have changed dramatically since 1967 Yes; both places I linked made adjustments for such things, as I mentioned. Go ahead and read their methodology before arguing strawmen. >housing prices have gone up about (~800% https://dqydj.com/historical-home-prices/ https://dqydj.com/historical-home-prices/) From your link, inflation adjusted price was 162,915.87 for 1970 and was 271,768.42 for 2020, only a 67% increase. Why would you criticize my numbers above, which were inflation adjusted, then try to pull such a dishonest stunt as using the non-inflation adjusted prices, when they're right there? Over the same time, median house sizes have gone up nearly 200% from 1970 [1]. And they've gotten vastly safer, more energy efficient, and better in just about every possible way. So, given the inflation adjusted housing value and size, again things have gotten better, not worse, despite you trying to spin it so dishonestly. >home ownership being the hallmark of the middle class Home ownership Q1 1970 64.3%. Q2 2020 is 67.9% [2] First and second moment going upwards as well. Again not the direction you're claiming. >Once you obtain a home, you can springboard (in a generation or 5) into the wealthy class Income mobility in the US has not changed much in 50+ years as measured by investigating ALL IRS records [3]. FRED single generation income and wealth mobility [4] show that more than half of the bottom 20% move up and more than half of the top 20% move down in one generation. Doing a simple markov walk with the values they give shows nearly complete mixing in 3 generations. >by ensuring that entering the middle class is as difficult as possible, More than half of the poor do it every generation [4]. >The inflation has been due to US debt, Never had an econ course? >looking at you JPM Chase, Apple, Bank of America, etc The biggest three banks in the US have around 10% market share each, the 4th has < 5% market share, and they fall quickly after that. There's around 8000 different banks you can use in the US. These banks are not the size or massive control you imply they are. >That's what I believe based on my own observation (and experience) Using one's own experience and observation to make claims about complex issues like this is terribly and ridiculously incorrect, subject to ignorance, selection bias, and a host of other personal issues. That's why studying econ and reading proper data sources before making all the claims you are is very important if you want an accurate view of what is actually happening, instead of what one or another echo chamber has fed you. [1] https://www.newser.com/story/225645/average-size-of-us-homes-decade-by-decade.html https://www.newser.com/story/225645/average-size-of-us-homes... [2] https://fred.stlouisfed.org/series/RHORUSQ156N https://fred.stlouisfed.org/series/RHORUSQ156N [3] https://www.cfr.org/blog/new-harvard-study-us-social-mobility-not-decreasing https://www.cfr.org/blog/new-harvard-study-us-social-mobilit... [4] https://www.stlouisfed.org/publications/regional-economist/july-2016/which-persists-more-from-generation-to-generation-income-or-wealth https://www.stlouisfed.org/publications/regional-economist/j...

evilos 6y ago
This all seems irrelevant when the poorest 80% of Americans own about 7% of the nation's wealth. The top 1% owns 40% of the wealth. This statistic by itself would not be an existential problem if the poor weren't struggling to survive. But they are. And so it is. 12% of all Americans are below the poverty line, which for a single person is less than 12k USD a year. See pg10 for 40% net worth figure: https://www.nber.org/papers/w24085.pdf https://www.nber.org/papers/w24085.pdf
- ChrisLomont 6y ago
  Ha - I figured you'd cite a paper by Edward Wolff. All such wild claims trace back to him, despite dozens of economists in this space, and mostly because he defines wealth as not including houses, nor in retirement benefits, which is where the vast majority of Americans hold a lot of wealth. I've seen no other economist do it that way and still call it "wealth." Most would call it financial assets or something. The math is simple. "Rich value" / "poor value", if you can make "poor value" shrink even a little, causes the expression to blow up. This is his game. Every single time I've chased down the source of claims like these, they go back to this person, which is why I know his name and his shell game. Aha - scanning through his paper, there it is on page 6: "I also use a more restricted concept of wealth, which I call “financial resources” or FR. This is defined as net worth minus net equity in owner-occupied housing (the primary residence only)." He does this in each and every paper for decades now. His usual trick, done by pretty much no one else, to make the values more outrageous. Go read some other economists. As to wealth owned, it's nearly irrelevant to the average person if the top found companies and own incredible value in stock, since that value was not seized from the average person, and without the company, the average person would not be given that money. It's stock assets - completely made up as the value of a company. When Zuckerberg files an IPO and sells, say, 50% of Facebook and keeps 50%, if some buyer pays 1B for 1%, that makes FB worth 100 * 1B = 100B. Zuck just made 50 billion. If tomorrow during trading FB drops to 100K for 1%, then Zuck just lost around 50B. This money which is his wealth did not come from people when the price climbs just like it does not suddenly go back when the price drops. Now look at the Forbes 400 - majority of them first gen, their wealth is in stock in a company they founded, and the rest are almost exclusively 2nd gen with stock in a company their parents founded. The value of the company is a measure of how much their customers value them. These people are rich by owning something that people highly value. That is it. So it seems like petty jealously to worry about wealth in stock funny money, since it wasn't taken from you. And the evidence is that the US enjoys amoung the highest, if not the highest, amount of disposable income for any country on the planet. Our poor are rich by world standards. >if the poor weren't struggling to survive Here's what the poor own: [2] A lot of it is the reasons I posted in another answer in this thread: poverty includes college and grad students (not yet earning) and retired (well to do, low income since retired). This makes up a lot of those listed by Census as in poverty. The poor in the US are not poor by any other country, and after tax transfers, are bringing in pretty good money. >12% of all Americans are below the poverty line, which for a single person is less than 12k USD a year. For the US, poverty line is defined as (usually) 1/3 median income, so as all people get richer, so does the poverty line. For example, that line puts a person in poverty in the US at about to 85th percentile for world income. These incomes also are pre-tax transfer: they don't include values given via tax and welfare systems. The US spends around $60K per person in poverty on welfare programs. Last I could find numbers this averaged like $40K in transfers to a poor family per year. Also this line includes students, grad students, both classes have not yet earned, but will. It also includes old retired people that can have millions in assets, but no income, so now they're below the income poverty line. Both of these groups make up a big part of that 12%. Also it's a static snapshot - people ten to accumulate wealth as they age [1]. Median wealth for under 35 is $11K. For 65 and up it's over $200k. So a lot of those poor young people make some decent money, and eventually retire back to the poverty line, but with wealth amassed. For example, Turkey median income is ~$4000 USD in PPP equivalent. But they're not all dying from hunger. [1] https://www.nerdwallet.com/article/finance/average-net-worth-by-age https://www.nerdwallet.com/article/finance/average-net-worth... [2] https://www.heritage.org/poverty-and-inequality/report/air-conditioning-cable-tv-and-xbox-what-poverty-the-united-states https://www.heritage.org/poverty-and-inequality/report/air-c...

evilos 6y ago

This all seems irrelevant when the poorest 80% of Americans own about 7% of the nation's wealth. The top 1% owns 40% of the wealth. This statistic by itself would not be an existential problem if the poor weren't struggling to survive. But they are. And so it is. 12% of all Americans are below the poverty line, which for a single person is less than 12k USD a year. See pg10 for 40% net worth figure: https://www.nber.org/papers/w24085.pdf https://www.nber.org/papers/w24085.pdf

ChrisLomont 6y ago
Ha - I figured you'd cite a paper by Edward Wolff. All such wild claims trace back to him, despite dozens of economists in this space, and mostly because he defines wealth as not including houses, nor in retirement benefits, which is where the vast majority of Americans hold a lot of wealth. I've seen no other economist do it that way and still call it "wealth." Most would call it financial assets or something. The math is simple. "Rich value" / "poor value", if you can make "poor value" shrink even a little, causes the expression to blow up. This is his game. Every single time I've chased down the source of claims like these, they go back to this person, which is why I know his name and his shell game. Aha - scanning through his paper, there it is on page 6: "I also use a more restricted concept of wealth, which I call “financial resources” or FR. This is defined as net worth minus net equity in owner-occupied housing (the primary residence only)." He does this in each and every paper for decades now. His usual trick, done by pretty much no one else, to make the values more outrageous. Go read some other economists. As to wealth owned, it's nearly irrelevant to the average person if the top found companies and own incredible value in stock, since that value was not seized from the average person, and without the company, the average person would not be given that money. It's stock assets - completely made up as the value of a company. When Zuckerberg files an IPO and sells, say, 50% of Facebook and keeps 50%, if some buyer pays 1B for 1%, that makes FB worth 100 * 1B = 100B. Zuck just made 50 billion. If tomorrow during trading FB drops to 100K for 1%, then Zuck just lost around 50B. This money which is his wealth did not come from people when the price climbs just like it does not suddenly go back when the price drops. Now look at the Forbes 400 - majority of them first gen, their wealth is in stock in a company they founded, and the rest are almost exclusively 2nd gen with stock in a company their parents founded. The value of the company is a measure of how much their customers value them. These people are rich by owning something that people highly value. That is it. So it seems like petty jealously to worry about wealth in stock funny money, since it wasn't taken from you. And the evidence is that the US enjoys amoung the highest, if not the highest, amount of disposable income for any country on the planet. Our poor are rich by world standards. >if the poor weren't struggling to survive Here's what the poor own: [2] A lot of it is the reasons I posted in another answer in this thread: poverty includes college and grad students (not yet earning) and retired (well to do, low income since retired). This makes up a lot of those listed by Census as in poverty. The poor in the US are not poor by any other country, and after tax transfers, are bringing in pretty good money. >12% of all Americans are below the poverty line, which for a single person is less than 12k USD a year. For the US, poverty line is defined as (usually) 1/3 median income, so as all people get richer, so does the poverty line. For example, that line puts a person in poverty in the US at about to 85th percentile for world income. These incomes also are pre-tax transfer: they don't include values given via tax and welfare systems. The US spends around $60K per person in poverty on welfare programs. Last I could find numbers this averaged like $40K in transfers to a poor family per year. Also this line includes students, grad students, both classes have not yet earned, but will. It also includes old retired people that can have millions in assets, but no income, so now they're below the income poverty line. Both of these groups make up a big part of that 12%. Also it's a static snapshot - people ten to accumulate wealth as they age [1]. Median wealth for under 35 is $11K. For 65 and up it's over $200k. So a lot of those poor young people make some decent money, and eventually retire back to the poverty line, but with wealth amassed. For example, Turkey median income is ~$4000 USD in PPP equivalent. But they're not all dying from hunger. [1] https://www.nerdwallet.com/article/finance/average-net-worth-by-age https://www.nerdwallet.com/article/finance/average-net-worth... [2] https://www.heritage.org/poverty-and-inequality/report/air-conditioning-cable-tv-and-xbox-what-poverty-the-united-states https://www.heritage.org/poverty-and-inequality/report/air-c...