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I don't see anything wrong with the paper, just with the conclusion of the BI article. If you look at table C1b, to keep up with 118% GDP growth, you would hav

I don't see anything wrong with the paper, just with the conclusion of the BI article. If you look at table C1b, to keep up with 118% GDP growth, you would have to be in the top 1%, in which case your income growth would've been 138.8%. We can then see that redistribution of those extra 20% among the bottom 99% could not possibly turn a median of $50,000 into a median of $102,000.

projektfu 6y ago
In your calculation using that table you are leaving out the income of the top 1%. The 99%ile represents the income of the top of "the 99%". In table 2.b, in the main article, you get a taste of the size of the 1% income, which is on average twice the 99%ile. In the paper I didn't find figures that I could use to reconstruct how much money would have to end up in someone else's hands to achieve the counterfactual, just that it's obvious that the 1% average going from $1,384,000 to $630,000 would represent a lot on its own. The other groups above the median would also have received less of a share. Also note that it may have happened that between 2007 and 2018 the 90-98%iles may have already received some of the money that used to accrue to the 99%ile, who knows why. I think BI properly quoted the article, but there would be a lot of work to do to contextualize the whole thing. If growth were more shared, would there be more or less growth? That depends on whether the top 1% are actually creating GDP or whether they are just better at capturing the income from it. If there was a system in place that had paid the bottom 98% more, would there have been more inflation, eating away at real GDP growth? What does that big swing from 2007 to 2018 really mean for the 99%ile in C1b, not reflected in C1a? Honestly, this paper raises more questions to me than it answers.
- gridlockd 6y ago
  > In your calculation using that table you are leaving out the income of the top 1%. The 99%ile represents the income of the top of "the 99%". In table 2.b, in the main article, you get a taste of the size of the 1% income, which is on average twice the 99%ile. I am not leaving anything out, I am using the same table that the BI article used, the one with the $102,000 counterfactual representing "Full-Year, Full-Time, Prime-Aged Workers". The one you mentioned yourself. If I were to instead use Table 2b, the median counterfactual would only be $57,000 and I would be making the same argument with different numbers. > In the paper I didn't find figures that I could use to reconstruct how much money would have to end up in someone else's hands to achieve the counterfactual. All the figures are there. Just take the delta for every percentile and add it all up. If the sum is negative, you can't achieve the counterfactual by income redistribution. (Spoiler: The sum is negative) Why the huge disparity? It's because the GDP and income are only loosely related. The US has collectively been spending more than it earned for decades, and all that spending goes into the GDP. > I think BI properly quoted the article, but there would be a lot of work to do to contextualize the whole thing. They may have "properly quoted" the article, but they came to a wrong conclusion that feeds into the popular "the rich are taking all our money" narrative.
  - projektfu 6y ago
    The 99th percentile leaves out the income of the top 1 percent. And, in any event, none of these graphs are really representing the size of each slice of the pie for a group of people, they're just looking at the income at that level. I guess we'll have to agree to disagree. I don't find the paper very informative, but I find the BI article to be an accurate representation of what the author is trying to say.
    - gridlockd 6y ago
      > The 99th percentile leaves out the income of the top 1 percent. Again, you could use table 2a, which specifies the top 1%. You would have to come to the same conclusion, if you do the math. Of course the top 1% did disproportionately grow their income relative to GDP growth, it's just not enough to redistribute to make everyone else fall in line with GDP growth. Not even close. > And, in any event, none of these graphs are really representing the size of each slice of the pie for a group of people, they're just looking at the income at that level. The tables give you all the information you need to infer the slice of the pie. Just add up all the incomes for every percentile and you have the size of the pie, add up the incomes for a percentile group and you have the size of the slice. For table 2a, the size of the pie is $8,529,000. The bottom 25% earn $375,000, or less than 5% of that. The top 1% on the other hand earn 13% of it. I'm not questioning the existence of income inequality. That's not the point. The point is that this income inequality is not the reason for why GDP growth is so detached from income growth. Incomes didn't grow in tandem with GDP for almost every income group. For those income groups that did surpass GDP growth, it didn't surpass by the amount necessary to make up for lack of growth for everyone else. Yet, this is the conclusion that the BI insider wants to draw. The paper doesn't draw this conclusion, probably because it is obviously wrong. > I don't find the paper very informative, but I find the BI article to be an accurate representation of what the author is trying to say. It's a misrepresentation. Do the math!

projektfu 6y ago

In your calculation using that table you are leaving out the income of the top 1%. The 99%ile represents the income of the top of "the 99%". In table 2.b, in the main article, you get a taste of the size of the 1% income, which is on average twice the 99%ile. In the paper I didn't find figures that I could use to reconstruct how much money would have to end up in someone else's hands to achieve the counterfactual, just that it's obvious that the 1% average going from $1,384,000 to $630,000 would represent a lot on its own. The other groups above the median would also have received less of a share. Also note that it may have happened that between 2007 and 2018 the 90-98%iles may have already received some of the money that used to accrue to the 99%ile, who knows why. I think BI properly quoted the article, but there would be a lot of work to do to contextualize the whole thing. If growth were more shared, would there be more or less growth? That depends on whether the top 1% are actually creating GDP or whether they are just better at capturing the income from it. If there was a system in place that had paid the bottom 98% more, would there have been more inflation, eating away at real GDP growth? What does that big swing from 2007 to 2018 really mean for the 99%ile in C1b, not reflected in C1a? Honestly, this paper raises more questions to me than it answers.

gridlockd 6y ago
> In your calculation using that table you are leaving out the income of the top 1%. The 99%ile represents the income of the top of "the 99%". In table 2.b, in the main article, you get a taste of the size of the 1% income, which is on average twice the 99%ile. I am not leaving anything out, I am using the same table that the BI article used, the one with the $102,000 counterfactual representing "Full-Year, Full-Time, Prime-Aged Workers". The one you mentioned yourself. If I were to instead use Table 2b, the median counterfactual would only be $57,000 and I would be making the same argument with different numbers. > In the paper I didn't find figures that I could use to reconstruct how much money would have to end up in someone else's hands to achieve the counterfactual. All the figures are there. Just take the delta for every percentile and add it all up. If the sum is negative, you can't achieve the counterfactual by income redistribution. (Spoiler: The sum is negative) Why the huge disparity? It's because the GDP and income are only loosely related. The US has collectively been spending more than it earned for decades, and all that spending goes into the GDP. > I think BI properly quoted the article, but there would be a lot of work to do to contextualize the whole thing. They may have "properly quoted" the article, but they came to a wrong conclusion that feeds into the popular "the rich are taking all our money" narrative.
- projektfu 6y ago
  The 99th percentile leaves out the income of the top 1 percent. And, in any event, none of these graphs are really representing the size of each slice of the pie for a group of people, they're just looking at the income at that level. I guess we'll have to agree to disagree. I don't find the paper very informative, but I find the BI article to be an accurate representation of what the author is trying to say.
  - gridlockd 6y ago
    > The 99th percentile leaves out the income of the top 1 percent. Again, you could use table 2a, which specifies the top 1%. You would have to come to the same conclusion, if you do the math. Of course the top 1% did disproportionately grow their income relative to GDP growth, it's just not enough to redistribute to make everyone else fall in line with GDP growth. Not even close. > And, in any event, none of these graphs are really representing the size of each slice of the pie for a group of people, they're just looking at the income at that level. The tables give you all the information you need to infer the slice of the pie. Just add up all the incomes for every percentile and you have the size of the pie, add up the incomes for a percentile group and you have the size of the slice. For table 2a, the size of the pie is $8,529,000. The bottom 25% earn $375,000, or less than 5% of that. The top 1% on the other hand earn 13% of it. I'm not questioning the existence of income inequality. That's not the point. The point is that this income inequality is not the reason for why GDP growth is so detached from income growth. Incomes didn't grow in tandem with GDP for almost every income group. For those income groups that did surpass GDP growth, it didn't surpass by the amount necessary to make up for lack of growth for everyone else. Yet, this is the conclusion that the BI insider wants to draw. The paper doesn't draw this conclusion, probably because it is obviously wrong. > I don't find the paper very informative, but I find the BI article to be an accurate representation of what the author is trying to say. It's a misrepresentation. Do the math!