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Shrinking Income Inequality
- dfgdghdf 6y agoI think this stuff all depends on where you draw the groupings https://www.theatlantic.com/magazine/archive/2018/06/the-birth-of-a-new-american-aristocracy/559130/ https://www.theatlantic.com/magazine/archive/2018/06/the-bir...
- throwawayfire 6y agoCounting [public] healthcare as "income" from labor seems extremely... Republican. Should we also count caring for relatives as 'income' to the people being cared for? (We don't.)
- cwhiz 6y agoWe don’t have free healthcare in the US. It’s disingenuous to not consider health care as a benefit with monetary value. These people would otherwise have to pay actual money for health care.
- xphos 6y agoI would agree with you but healthcare isn't a liquid/tangible asset like own stock or making cash is. I can't take out my healthcare the same way I can sell stock or collect a paycheck. Which in my opinion makes all the difference when calculating income. Its a much easy argument to make when healthcare's cost can be much greater than funds paid out. For instance if the equation for income was Income = Wages + Asset_growth (simplistic) but you could compare two people person A makes 10$ person B makes 100$. There is a lot of income inequality but if you add healthcare to that which is only "cashable when sick" of say 20$ both parties have a real delta of 100$ but there % difference lowered significantly in this case it went from 90% to 75% even though the actually income which people can choose how it is spent and use still has a 90% difference. Sounds like adding extraneous variables to mask more interesting differences
- cwhiz 6y agoYou’re making it way more complicated than it needs to be. Most everyone pays for healthcare with pre-tax dollars. Others get it for free outright from the government. The cash benefit of government paid insurance does not need to be more complicated than the median cost of healthcare for paying participants.
- Frost1x 6y agoWhile I do agree, it's also often incredibly difficult to compare monetarily. Plans vary in coverage and out of pocket expenses significantly combined with the fact you don't know what you will need to use the insurance for, if anything at all. When you're younger, it's less likely it's valuable, when you're older, it's more likely that it's valuable. If you have a preexisting condition (say someone needs dialysis), it's a little bit more straightforward because you already know what sort of services you need. Ultimately you don't know what you service provider will end up charging the insurance to cover costs, how little your insurance will try and provide, and what you'll have left to pickup on the tab. Furthermore, employers are known to shop the market for better deals, so the insurance you sign up for could shift in 6-12 months. I factor insurance into comp but I look at only the most general attributes and I don't weight these as directly as compensation because I (knock on wood) am fairly healthy and tend not to use my insurance.
- Ensorceled 6y agoIt's also disingenuous to not factor in the massive wealth transfer in progress via the US health care system in an article on income inequality that counts healthcare as income. The US pays almost double per capita for health care compared to its northern neighbour Canada.
- cwhiz 6y agoYou can’t make this argument and also make the argument that free healthcare is not a financial benefit. If US citizens pay twice as much as Canadian citizens, why can’t I argue that Medicaid is twice as valuable?
- refurb 6y agoI mean, it’s a part of your compensation package and isn’t a requirement for small companies, so yeah, it should be counted. You are receiving a benefit the company pays for. Edit: maybe OP was referring to public healthcare? In that case it depends on the methodology. Seems like this methodology subtracts taxes then adds back in what you receive. This doesn’t seem unreasonable as someone who isn’t making enough to pay taxes may get Medicaid coverage. That’s a direct transfer payment to that person.
- NoblePublius 6y agoEach of my employees receive about $7800 less per year in their paychecks because a Democrat made me buy them health insurance instead of giving them the money to buy their own healthcare.
- dudul 6y agoAnd if they each had to buy their own health care they would pay much more than $7800/yr. Negotiating premiums with carriers is easier as part of a group of EEs than as an individual.
- mustafa_pasi 6y agoExactly, and they'd get shittier insurance.
- NoblePublius 6y agoNo, they wouldn’t, until they are about 50 years old .
- throwawayfire 6y agoDid you reduce your employee wages each by $7800, at that time, or have you declined to give pay increases of $7800?
- NoblePublius 6y agoYou obviously don’t employ anybody
- NoblePublius 6y agoI reduced the wages of everyone I hired after that stupid law was passed.
- matwood 6y agoWhich state are you in that forces employers to buy insurance? I'd like to know the details why you can't just give people the $7800. Also, this may be state specific, but another benefit for the employee of doing it this way, is their portion is from pre-tax money.
- atlgator 6y agoIf I'm evaluating job offers that have identical salary/bonus and one company offers a copay plan and another has a high deductible plan of $2000, I'm absolutely treating the copay plan as $2000 more valuable. In fact, I'd probably gross it up given that's $2000 in after-tax dollars I would pay for healthcare each year. And that doesn't even count the 10%+ coinsurance on the backend once the deductible is met.
- throwawayfire 6y agoThat's your choice, but it might be useful for you to know: I checked some private healthcare insurance where I live, and the difference in cost between these plans was in fact only $800.
- atlgator 6y agoFor you. Premiums and deductible options on the open market are different between individuals. A 20 year old is going to pay a good deal less than a 50 year old. And it's not "my choice." That's mathematically how you evaluate different alternatives. All other things being equal, would you not value a house with a pool higher than one that doesn't?
- throwawayfire 6y agoAs such, we should also admit that this benefit is potentially worth $0 to a healthy person. I didn't do that calculation on a "for me" basis: I looked at the generally advertised cost. Paying in advance is cheaper for anyone taking out a policy.
- sokoloff 6y agoFor a person covered on a spouse’s better insurance, it’s possibly worth $0. If you’re going to be covered for catastrophic incidents, that’s economically worth more than $0 no matter how healthy you are.
- kasey_junk 6y ago
- cwhiz 6y ago>As government transfer payments to low-income households exploded, their labor-force participation collapsed and the percentage of income in the bottom quintile coming from government payments rose above 90%. Ding ding ding. Look at the sea of “help wanted” signs. But why would you go do actual work when you can ride fat unemployment checks and other benefits for 15 months?
- refurb 6y agoWell considering Government transfers like EITC arent included in many analyses of poverty or income inequality, this is a very different analysis than others. Seems reasonable? Compare what people end up with after al is said and done versus what their job pays them before taxes?
- eckmLJE 6y agoEspecially when the minimum wage is so low and going in to work to serve people refusing to wear masks could kill you or curse you with a constellation of life-ruining symptoms for the remainder of your life.
- cwhiz 6y agoEventually these pandemic unemployment checks are going to end, and reality will set in.
- neilwilson 6y agoHow about competing for the labour by offering better wages and conditions? Competition is good isn’t it? All you have to do to hire people is offer a decent deal. It’s not as if unemployment insurance is going to compete back.
- sokoloff 6y agoWhen you’re competing against another business, you’re on relatively even footing. When you’re competing against a government dropping taxpayer money out of metaphorical helicopters, it’s not exactly an even competition.
- adventured 6y ago> Not only is income inequality in America not growing, it is lower today than it was 50 years ago. Of course. This is common sense if you understand the US welfare state has expanded radically since the late 1960s, and nearly all of that is a financial transfer from the top 1/3 to the bottom 1/3. The US has an exceptionally progressive taxation system that puts much of Europe to shame. Our single greatest governmental flaw is that we spend such a large amount of money on our welfare state and get such poor results because we don't administer it well; affluent European nations largely embarrass the US at that. If you attempt to point any of this out using facts, you will be shouted down because it's against the popular narrative (which is to pretend that the US has no welfare state, no social safety net, the rich are evil and don't pay their "fair share" - whatever that means in a system where the top brackets pay nearly all the taxes).
- user-the-name 6y agoIs that why you didn't use a single fact to make these claims? Is that really supposed to go over better?
- LockAndLol 6y ago> If you attempt to point any of this out using facts, you will be shouted down because it's against the popular narrative Anybody can claim anything and it will turn into a shouting match unless reliable sources are cited (Breitbart, Alex Jones, Fox, etc. aren't reliable sources) Welfare: - what counts as welfare - how much of it do people get (percentage of GDP and per capita) - what percentage of coats does it cover - which people get it - how long do people get it Then there are questions of what poverty is defined as, how many people live in it, and how many live below the poverty line. The topic of healthcare is naturally important in all this. Taxes: - what is the rate (% paid by tax bracket) - is it actually paid - which percentage of the population is paying the highest rate And of course, how does this compare to Europe (since you say "it puts Europe to shame")? You can focus on one point, cite your source and contrast them.
- iso1210 6y agoMedicare costs $750b. Medicaid $597b That's $1347b a year. The US population is 330m, that's $4000 per person. The NHS in England costs £147b, or $200b. England's population is 56m. So the NHS in England, which costs the government 13% less than the cost of medicare/medicaid, manages to cover the entire population. My understanding is that medicare at least has extra charges for those who are covered too?
- mmcconnell1618 6y agoSounds like some serious manipulation of numbers to get the result you want. Open source the data, assumptions and formulas used and I might consider your argument WSJ
- refurb 6y agoAssumptions are laid out in the article. Are there any in particular you’re concerned about?
- mmcconnell1618 6y agoYes, they specifically mention "adjustments" due to changes in the way the Census collects data. They don't explain what those adjustments were and why they were needed. It all feels very much like adjusting the axis on a graph to make a big slope look smaller or to take small slope and make it look like a hockey stick. Smells very much like manipulating data to get the results you want.
- refurb 6y agoHe explains pretty directly why they were needed - current measures of inequality ignore significant government transfers to low income people. As to the details, yes, it would be interesting to dig into.
- crispyambulance 6y agoThe author is "Phil Gramm"-- former republican senator who has spent his entire political career pushing for lower taxes and standard Reagan era deregulation. He was involved in passing The Commodity Futures Modernization Act in 2000 which promptly paved the way for the Enron mess. He now works for UBS as a rich-people money shuffler.
- bobmaxup 6y agoSeems factually accurate, though the editorialized moniker of "rich-people money shuffler" is probably unnecessary. https://en.wikipedia.org/wiki/Phil_Gramm#Career_with_UBS https://en.wikipedia.org/wiki/Phil_Gramm#Career_with_UBS
- selimnairb 6y agoI don’t have access to the full article. However, from what I read, this seems like a tacit argument in favor of UBI.
- dsnr 6y agoHow is that? If anything it is an argument against UBI. From the article: „ As government transfer payments to low-income households exploded, their labor-force participation collapsed and the percentage of income in the bottom quintile coming from government payments rose above 90%.“ „We are debating the alleged injustice of a supposedly growing social problem when—for all the reasons outlined above—that problem isn’t growing, it’s shrinking. Those who want to transform the greatest economic system in the history of the world ought to get their facts straight first.“
- selimnairb 6y agoI guess my point is that by including government payments in calculation of income inequality they are legitimizing the use of government payments to reduce inequality.
- bobmaxup 6y agoPrior art: https://www.wsj.com/articles/the-truth-about-income-inequality-11572813786 https://www.wsj.com/articles/the-truth-about-income-inequali... (2019, same opinion piece authors)
- blunte 6y agoThere's a lot more of their prior art in WSJ. At this point you could just use tune an AI writer with appropriate prior works and churn out opinion pieces like this, each unique, to send to every right leaning newspaper. Oh wait, that is actually already being done.
- gregwebs 6y agoAccording to this article, income for the poorest has increased more via government programs than income has increased (minus taxation) for the wealthiest. But this can't be a healthy way for a society to operate: to have the rich get richer and transfer their money to the poor so they don't get poorer. A primary cause of this change to our society's structure is our monetary policy which ensures we will have massive trade deficits that ship our manufacturing jobs overseas [1]. [1] https://www.lynalden.com/fraying-petrodollar-system/ https://www.lynalden.com/fraying-petrodollar-system/
- awwaiid 6y agoUnless we do this on purpose -- UBI or purposeful unemployment with the target of utopia.
- refurb 6y agoRedistribution of wealth is pretty much the solution that’s been bandied about. And it’s the method by which many low inequality countries achieve low inequality.
- christiansakai 6y agoWhat’s your proposal? We have more unproductive people than productive people. We have more lazier people than dilligent people. We have more stupid people than smart people. Even free education doesn’t fix it because people are free not to study.
- JaimeThompson 6y agoHow are you defining lazier, diligent, unproductive?
- christiansakai 6y agoI know someone will reply this. But I’ll bite. Say, watch Netflix all day and play video games all day.
- UncleSlacky 6y agoI think the problem is more to do with wealth inequality than income inequality, though. http://metrocosm.com/wealth-vs-income-inequality/ http://metrocosm.com/wealth-vs-income-inequality/ https://www.theweek.com/articles/717294/wealth-inequality-even-worse-than-income-inequality https://www.theweek.com/articles/717294/wealth-inequality-ev... https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0154196 https://journals.plos.org/plosone/article?id=10.1371/journal...
- rorykoehler 6y agoI completely agree. Especially now with the significant asset inflation we’re experiencing.
- notahacker 6y agoThis. And correlation between the income/wealth spectrums, because if the higher incomes accrue mostly to the already-rich then wealth disparities can accelerate even if income disparities contract
- OscarCunningham 6y agoUltimately only consumption inequality can be a problem. Wealth only matters when it's spent.
- akvadrako 6y agoI care most about non-consumption spending. Having more money to invest means you decide what gets built.
- briefcomment 6y agoSure, but income doesn’t measure all consumption. How would you consider a third home in the Hamptons? Certainly not income, but definitely both wealth and consumption. Wealth is probably a better proxy for consumption.
- mustafa_pasi 6y agoNot exactly the sign of a healthy economy when the government has to make up for the lack of economic opportunities by taking my taxes and giving them to poor people, is it? I am more interested in why they publish these articles? Who are they trying to sell these ideas to, exactly? Certainly not the poor.
- blunte 6y agoThey write these pieces for the same audience who watches Fox News and listens to Sean Hannity. This helps keep their base supporters (or supporters of people and policies they align with) speaking the same language and believing the same things they have been told to believe for decades. "Poor people are poor because they are lazy or stupid." "Rich people are rich because they worked very hard and built great things." "Taxing the rich to pay the poor will destroy our economy." etc. etc. It is an important component of disinformation campaigns to reinforce the primary ideas periodically, because the audience is regularly encountering situations which disprove these lies. If the message isn't reinforced, the people will begin to question and doubt.
- dash2 6y agoAre you saying that any government redistribution is unhealthy? That seems a little extreme.
- danaris 6y agoI read it more as "it's unhealthy when, in the absence of government redistribution, some people are starving on the streets while others are making more money than God." Which I would think is an even bigger indictment of what we've got now, since we already have a moderate amount of government redistribution, but still have people starving in the streets and others making more money than God.
- dash2 6y agoTo expect nobody to starve in the absence of government redistribution, you'd have to be quite optimistic about private charity or voluntary community provision. For example, some people are born severely disabled. Others can't hold a job down. Not everybody saves enough for retirement. Etc.
- turing_complete 6y agoI don't understand why many people care so much about income inequality. Live has been improving for everyone for centuries. Why does it matter if some have more than others if everyone has more material wealth and, more importantly, more opportunities than ever before?
- mustafa_pasi 6y ago> Live has been improving for everyone for centuries. Not true. Life for the poor in the west has been getting worse.
- indymike 6y agoIn ever measure there is, life has been getting better for centuries. Life expectancy, abolishment of oppression (slavery, debtor's prisons, serfdom, involuntary servitude, military conscription in many countries), educational attainment, and even standard of living have all improved. Finally, the word "poor" needs to be retired. I've met lots of people with no money, and very few of them were poor people.
- mustafa_pasi 6y ago> Life expectancy, abolishment of oppression (slavery, debtor's prisons, serfdom, involuntary servitude, military conscription in many countries), educational attainment, and even standard of living have all improved What fancy measures you have. How about "cost of owning a house", "cost of getting an education", "cost of getting health care" instead of those banal measures you got there? Nobody cares that life is comparatively better than during Roman times. Our fathers and our grandfathers lived a better easier life. In particular they had much better economic opportunities. People are upset about those opportunities evaporating.
- pirocks 6y agoLife expectancy is down in the US pre-covid, driven in part by the opioid epidemic and in part by poor health/obesity,both of which are associated with poverty. Involuntary servitude is alive and well in US prisons which incidentally don't have a ton of high income people. So I don't think it's fair to say that life is necessarily getting better in the US for low income people.
- hahahahe 6y agoAnother garbage analysis from WSJ.
- deleted 6y ago[deleted]
- blunte 6y agoPhil Gramm and John Early have been trying to spin a story like this many times in the last several years on WSJ. Indeed there are always different numerical outcomes when you change your methods and definitions, so it is possible that by their definition things aren't as bad as the "other numbers" show. However if you look at the national minimum wage of $7.25/hr, compare that to inflation or productivity, you'll see that the lowest earners are worse now than they have been for decades. Ironically, they want to focus on "Medicare, Medicaid, food stamps and some 100 other government transfer payments". Those services aren't needed by people who earn enough to actually live on. The reason those services have increased is because the people who need them are not being paid reasonably. This is also why the top earners (particularly the top class who "earn" via capital gains instead of "income") have seen their wealth balloon over the same period that is being debated about. The authors can choose any definition they wish, but at the end of the day, there absolutely is a vast and growing disparity between the lifestyles of the <50% and those of the >10%. When we reach a point where one individual theoretically has $200 billion (not liquid of course, but plenty of that is), and there are still children without food, there is something wrong. What is considered fair will vary from person to person, but there are limits.
- mjburgess 6y agoThe problem with this analysis and others like it is it makes atemporal distributional claims as if they were temporal. And conflates unrelated measures. Eg., consider the claim that "college graduate salaries have stagnated" -- this is true, but in 1990 c., 10% were graduates; today that's c. 55%. So what's happening is this artificial grouping "college graduate" has massively expanded, whilst maintaining its average. That's a remarkable increase in wealth for the 40% "left out" three decades ago. Consider the claim about "productivity". The reason production has increases at a greater pace than wages is automation. No one is "missing out" on the benefits from automation; they correspond to massive increases in disposable income and time, as we benefit from those tools/products. > there absolutely is a vast and growing disparity between the lifestyles of the <50% and those of the >10% This is true only due to the extraordinary efficacy of capitalism. As in all of these cases it's the exceptional increases in abundance which have lead to this apparent "disparity in lifestyle". And if you chose different percentiles it would be false. The bottom 10% have seen their disposable income double in a time when the top 50% have seen it treble. Thus an apparent "gap". This is the duplicitous information missing from all these atemporal comparisons. Let's be clear. The top 1% in 1950 lived more differently than the rest of society in 1950; more so than the top 1% do of society today. Today the top 1% live much more like the top 10% who live much more like the top 50%, and so on. Much of the apparent difference is created from two effects, (1) the media and social media show the lifestyles of the very rich as if they were very common; and (2) people feel "the local rate of change of growth". The vast majority of this alleged "problem with inequality" is just that local rates of change of growth have been unstable since the financial crisis in 2008. Despite gains for everyone since then, people do not "remember the macroeconomy of 2008" and compare it today. Rather, all they see is the day-to-day negative news created by accelerating and decelerating growth. Even when growth is positive, if it is decelerating, people think the sky is falling. Nothing about the contemporary economy is much different, in distributional terms, than it was in 2006. Where then was this hysteria?
- dcolkitt 6y agoOne thing that’s not really appreciated is that the US has a very progressive income tax. In aggregate the top 10% account for 70% of federal income tax receipts at an average effective rate of 22%. The bottom 50% of households account for only 3% of federal income tax receipts, paying an effective rate of 4%. European economies manage to collect a higher tax base as a percent of GDP. Some of this comes from higher taxes on the very wealthy. But the vast majority comes from much higher tax rates on the middle class, particularly the upper middle class- those around the 75th percentile. This is done three ways. One middle class tax bracket rates are higher. In France, the 25k-35k bracket pays a 30% tax rate. The US equivalent is 12%. Two is having top rates start at much lower levels. In France, the top rate of 45% starts at 158k, versus the US top rate of 37% which starts at 518k. Finally a sizable percent of taxes are captured through regressive VAT taxes.
- dash2 6y agoI'd be fairly sceptical of something like this, given the source. Here's a better start for looking at inequality: the World Inequality Database's World Inequality Report 2018. Authors include Piketty, Saez and Zucman, who are heavyweights in the field: https://wid.world/document/world-inequality-report-2018-english/ https://wid.world/document/world-inequality-report-2018-engl... If anyone wants the full nerd treatment, I teach a class on this topic and can list a bunch of academic papers.
- akudha 6y agoCan you recommend some sources that will help a layperson understand this a bit more?
- dash2 6y agoUm... I was hoping the report was for a layperson... maybe I need to recalibrate a bit...! The https://wid.world https://wid.world website is quite a good start. And there's Piketty's book, it's a slog but is aimed at the intelligent general reader. I haven't read his new one.
- NiceWayToDoIT 6y agoSomewhere in the parallel universe, far far away ....
- redwood 6y agoLooks only at "income" while ignoring wealth
- neonate 6y agohttps://archive.is/0Sd4I https://archive.is/0Sd4I