20 April 2018

Wealth inequality in the U.S.

According to Torsten Sløk, the chief international economist at Deutsche Bank Securities, income inequality is a major factor that has been holding back the U.S. economy for nearly a decade.

“One important reason why the expansion since 2009 has been so weak is that wealth gains have been unevenly distributed,” he wrote. “A decline in the homeownership rate and the number of households holding stocks has dampened consumer spending growth for the bottom 90% of households.”

Per his data, the median net worth for all income percentiles except the wealthiest one dropped between 2007 and 2016, usually by double-digit amounts
The wealthy and the corporate CEOs continue to recite the mantra that wealth "trickles down."

"We must make our choice.  We may have democracy, or we may have wealth concentrated in the hands of a few, but we can't have both."
---- Supreme Court justice Louis Brandeis

9 comments:

  1. He's an additional perspective

    http://www.aei.org/publication/explaining-us-income-inequality-by-household-demographics-2016-edition/

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    Replies
    1. Correction, "Here's an additional perspective"

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    2. Thanks for posting that link, MJD. That article is, as you describe it, a "different perspective," but not a contradictory one. There are, as the article you linked notes, MANY reasons for being in one quintile or another. He discusses several (age, two earners, education) and there are probably dozens more reasons.

      Also, there is nothing evil about having a bottom quintile. It has to exist by simple definition of the term of what a quintile is.

      And there IS mobility through the quintiles. I personally (and my parents) have been in different quintiles during different stages of my (and their) lives. Not the top and bottom quintiles, but the others.

      I think one of the viewpoints to be gleaned from the graph and article I posted is that the quintiles are changing in different directions. When a country's economy is improving (or falling), there will still be 20% of the population in each quintile, but with an improving economy, each quintile should be improving (and vice versa in a recession). As this graph shows, the top quintile has improved dramatically in the past ten years; all the other quintiles have gotten worse.

      To me that would indicate structural faults in how the system is set up and anomalies in how economy is behaving.

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  2. As long as the Republicans are the majority in Congress, the inequality will continue to grow. Their tax cuts always favor the richest people.

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  3. I taught a graduate course on Poverty and Inequality for the first time last fall. I'm not an economist, but a social welfare researcher. I used a lot of graphs in my class, as one of the goals was for students to first understand the scope and nature of inequality. The graph I remember most is this one:

    https://commons.wikimedia.org/wiki/File:US_productivity_and_real_wages.jpg

    It shows, since 1948, the change in major sector productivity (output per worker/capital input) layered with the change in worker wages. It presents a pretty compelling argument that neoliberal economic policies largely created the type of wealth disparity we see today and that corporate profits do not ultimately trickle down to their employees.

    I think of this graph each time folks argue against raising the minimum wage or for giving tax cuts to corporations - clearly, corporations doing well is not translating into the rest of us doing well.

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    Replies
    1. That is a very dramatic graph! Were you able to define anything specific happening at the inflection point other than just "politics"?

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    2. There's no singular event I can think of, really, but rather a conflation of likely causes. It is interesting that there's an unnatural point at which the path changes, but I can't think of any specific policy or movement that would be responsible.

      Generally, I'd attribute the disparity to the decline of manufacturing and pension-earning jobs, the union-busting attitudes since the 70s, and the growth of the service economy/part-time jobs as replacements. A lot of the workers' rights movements were industry-specific, and those industries have been outsourced for cheaper labor.

      Of course, there were a lot of social changes that simultaneously occurred that allowed us to be accepting of this - i.e. the growth of the "culture of poverty" belief, worker support for "right to work" policies, public acceptance of outsourced products.

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    3. Thanks. I don't have an answer, either, but it is quite a graph. Glad you posted it.

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  4. I've always found it... amusing how so many people blame the poorest, most powerless people in the world for most of their woes. As if those on the bottom are the ones with all the money, pulling all the strings- they're the ones holding people back from their dreams and aspirations. And yet, that is exactly who gets blamed time and time again...


    Those in the middle seldom look up when daring to question or examine the monied power structure that separates and uses them as pawns, keeping their heads pointed at those who have even less. Decades past, people would tell me that if only those lowly bottom feeders weren't there, more deserving Americans would happily get their jobs with the vastly increased wages that would automatically ensue- simple logic!!!


    And yet... all I've seen over the decades are those on top sending as many of those very same jobs: first to Mexico for cheaper wages, then onward to China for yet cheaper wages, then onward to South Asia for cheaper wages still, all the while profits soar- profits kept off shore to avoid the very taxes that would strengthen infrastructure and job growth at home. And as for the jobs that are not outsourced... their hours and wages are continually cut, their benefits diminished! The one (1) percent is now even after worker tips- the fact is, US worker lives (or deaths) have now literally been declared... no longer even worth mention!

    https://www.politico.com/story/2017/08/25/osha-worker-deaths-website-242034

    And of course (U probably posted this before):

    https://www.youtube.com/watch?time_continue=3&v=QPKKQnijnsM

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