[Gothmog]

Interesting data on US economy. Mental food for those who believes that under capitalism, income of both poor and rich are always on rise

http://www.leftbusinessobserver.com/IncPov01.html

[Boondock Saint]

Doesnt seem to say much of anything to me ... the wealthy have more security for several reasons ... odds are they are proffesionals ... a Dr. has better job security then a plumber ... a lawyer has better job security then a retail clerk ...

It only makes sense ... someone has to clean out the bathrooms ... someone has to mow the lawn ... someone has to pick up the garbage (which is a rather good job btw thanks to the unions) ...

At the same time someone needs to be a Dr. someone needs to be a lawyer ... someone needs to run the companies that the other people work for ... and these people make the big money ... why? Because their daily job is more important then taking out the feckin trash ...

Any idiot can do most jobs ... so they the idiot gets the idiots wage ... those who arent idiots get to work their way up from the idiots wage to the 'almost a movie star wage'.

[Gothmog]

Doesnt seem to say much of anything to me ... the wealthy have more security for several reasons ... odds are they are proffesionals ... a Dr. has better job security then a plumber ... a lawyer has better job security then a retail clerk ...

It only makes sense ... someone has to clean out the bathrooms ... someone has to mow the lawn ... someone has to pick up the garbage (which is a rather good job btw thanks to the unions) ...

At the same time someone needs to be a Dr. someone needs to be a lawyer ... someone needs to run the companies that the other people work for ... and these people make the big money ... why? Because their daily job is more important then taking out the feckin trash ...

Any idiot can do most jobs ... so they the idiot gets the idiots wage ... those who arent idiots get to work their way up from the idiots wage to the 'almost a movie star wage'.

-Hmmm....you are missing a main point. Despite the impressive US economy growth in the las 10 years (which now seems to be over), the botton 80% of population gained very little. As for social division of labor, they already existed 30 years ago, when unequality wasn´t so high. And those people who "has the most important jobs and so gain more" are those managers of Enron and other extremely well managed companies. You also miss the point that the 5% richer aren usually owners and not employees, they live on other people´s work. Another point. In Europe you have diferent jobs too....but the relation between earnings of top fifth and bottom fifth is near 5:1 while in the USA is near 10:1. Are American rich more productive? Or maybe European bathroom cleaners are more productive?

[Il Porko]

bottom fifth is near 5:1 while in the USA is near 10:1

Nope..... Inequality in the distribution of income in measured by the gini coefficient, derived from the Lorenz curve. America's gini is abput 4.5, meaning that the top 10 percent of people earn about 4.5 times more than the bottom 10 percent of earners. Most of Europe has a gini of 3.5 or thereabouts.This site should be useful. BTW, gini is measured as a decimal, so 4.5 becomes .45

http://www.clev.frb.org/Research/Et2000/0700/labmkt.pdf

[Gothmog]

bottom fifth is near 5:1 while in the USA is near 10:1

Nope..... Inequality in the distribution of income in measured by the gini coefficient, derived from the Lorenz curve. America's gini is abput 4.5, meaning that the top 10 percent of people earn about 4.5 times more than the bottom 10 percent of earners. Most of Europe has a gini of 3.5 or thereabouts.This site should be useful. BTW, gini is measured as a decimal, so 4.5 becomes .45

http://www.clev.frb.org/Research/Et2000/0700/labmkt.pdf

-You´re wrong in one important aspect. Ginni index is a measure of dispersion, where 0 is a completely equal distribution while 1 is all the income in the hands of one person. The index is measured by the diference between area under curve for the ideal distribution and area under curve of the observed distribution. The second measure of inequality is Income from 1st quintile divided by income of 5th quintile. This measure has no direct mathematical realation with Ginni (with provide worse data on the extremes of income). My country has the worst Ginni of the world (0,60) and the 1st quintiles income is 20 times higher than that of the 5th quintile. If you´re right, it would be possible to have Ginni over 1,00, but it isn´t. I sugest you to go to the website of World Bank to look for Ginni indexes for most countries I will try to get it to you, since it is hidden somewhere in my old HD.

Look at this

http://www.leftbusinessobserver.com/Gin ... ement.html


The US Ginni is 0,45 (you´re right on the right way to report it), but looking at the table of quintiles, the Q1/Q5 relation is 12,3/1.

[Il Porko]

You´re wrong in one important aspect.

Well... quintile division is a different method of calculating income inequality, but the gini is more often used than quintile measurements.

If you´re right, it would be possible to have Ginni over 1,00, but it isn´t.

Sorry, but I never said that, or implied that.

I sugest you to go to the website of World Bank to look for Ginni indexes for most countries

I've already got a subscription to the World Bank indicators. I got my gini info from there.

[Gothmog]

Sorry, but I never said that, or implied that.

-Well, you said that a Ginni of 0,45 implies in the fact that the 10% richer earns 4,5 the income of 10% poorer, suggesting a mathematical relation between Ginni and quintiles (or in your case deciles) calculation that don´t exists. If your equation was right, then, a 20:1 difference would give you a Ginni of 2,00. This don´t exists. The only point I´m disagreeing from you is that you cannot take conclusions about quintiles diferences of income by looking at Ginni index, because that relation don´t exist. Those measures are diferent, and, althought highers Ginni numbers usually give you higher Q1:Q5, the relation is not linear. Look at those examples. And of course, if you use D1:D10 instead of Q1:Q5, then you will get much higher values, because you are using more extreme values for income.

Sweeden: Ginni=0,25 Q1:Q5=5 Q1:Q5/Ginni=20
Brazil: Ginni=0,60 Q1:Q5=20 Q1/Q5/Ginni=33,3
USA: Ginni=0,45 Q1:Q5=12 Q1/Q5/Ginni=26,6

[Noumenon]

1973-2001: poor +14.4 %. Rich +86.7%

I know theres a huge gap in how much rich and poor grow in wealth...but thats not what matters. What matters is that all parts of society are always improving. This proves that capitalism can benefit the poor, even if it doesn't benefit them as much as the rich.

[Boondock Saint]

Despite the impressive US economy growth in the las 10 years (which now seems to be over), the botton 80% of population gained very little

Say what now?

80%?

Wow ... eighty?

Funny ... I guess the entire 20% lives where I live then ...

The base lifestyle of an American has raised amazingly ... you have more people who can actually afford things these days ... and I am talking about luxory items and high educations ... I think its 50% of the American population is on the internet ... poor people dont have cpu's in their homes and internet connections to boot ....

Everyone owns a car ... other then the people who live in the cities ... since mass transit is easier and more conveinent.

Higher education ... everyone I know has gone to at least two years of college or tech school ...

Labor unions have provided extremely comfortable lives for their workers ... almost to the point where 'work' is a 'four letter word'.

When I was younger my family was as poor as poor can be ... we ate rice for breakfast lunch and dinner ... but here I am at 25 with a Masters degree with the potential to make more money in a year then my father would have made in five ...

I got that because i busted my ass ... something that the poor in this nation are free to do ... but since entitlement is a very popular feeling around these parts many would rather just complain about how they arent given enough free handouts ...

And those people who "has the most important jobs and so gain more" are those managers of Enron and other extremely well managed companies

Believe it or not, those people arent who I was talking about ... I am talking about the professional class ... not the executive class. The working class also makes enough money to survive and the poor ... well, I cant consider someone who has a cell phone and G'd out Maxima poor ... regardless of what he says and how big his gold toothed grin is ...

You also miss the point that the 5% richer aren usually owners and not employees, they live on other people´s work

Yep ... I know that. I also dont understand what the problem is ... they own the company ... why shouldnt they control the money of said company? And why shouldnt they make the most money? They OWN it! If the workers dont like it ... let them form a union.

Are American rich more productive? Or maybe European bathroom cleaners are more productive?

I have no idea ... the wealthy make all the big business deals ... or they are in the entertainment or sports industry ... thats the way the game is played ... there is a demand for it ... so ... charge for the supply ...

I really dont see the problem ... are there people who take advantage of the system? Sure ... of course ... Are there people who 'coast' through life? Sure ...

But ... the poor have plenty of choices and opportunity ... just as the workers do, the professionals and the executives ... the only difference is that certain classes look for opportunity and certain classes expect hand outs ...

[ahab]

Despite the impressive US economy growth in the las 10 years (which now seems to be over), the botton 80% of population gained very little

Say what now?

80%?

Wow ... eighty?

Funny ... I guess the entire 20% lives where I live then ...

Really? I thought they all lived out here with me...

Higher education ... everyone I know has gone to at least two years of college or tech school ...

not true here, I'm from a town of 1000 people, a huge number of them stayed at home. Cities are where the better education pays off, not in some rinky dink town like mine.

When I was younger my family was as poor as poor can be ... we ate rice for breakfast lunch and dinner ... but here I am at 25 with a Masters degree with the potential to make more money in a year then my father would have made in five ...

Same boat here, except we ate lamb, because I live on a sheep farm, but not getting my masters quite yet though, depends on what happens with my employment.

[Gothmog]

1973-2001: poor +14.4 %. Rich +86.7%

I know theres a huge gap in how much rich and poor grow in wealth...but thats not what matters. What matters is that all parts of society are always improving. This proves that capitalism can benefit the poor, even if it doesn't benefit them as much as the rich.

-Sorry, but the improvement for poor here is ridiculous. An improvement of 14,4% in 30 years is equal to an improvement of less then 0,5% yearly. And the middle class also have a mediocre performance here (improvement of 0,5-0,6% yearly). If you think this proofs how wonderful capitalism is....good luck, but the increasing gap between rich and poor is intolerable in the long run. Even worse, this small improvement in 30 years (who is essentially equal to stagnation) was the result of an unsustainable boom in the 90´s. Withouth the results of this boom, the MEDIAN income for US individuals would be under the 1973 income. As the boom is over, it is quite possible that the American poor (and also the middle class) can lose his gains from the 90´s, thus essentially returning to 1970 levels.

[Gothmog]

Despite the impressive US economy growth in the las 10 years (which now seems to be over), the botton 80% of population gained very little

Say what now?

80%?

Wow ... eighty?

Funny ... I guess the entire 20% lives where I live then ...

-Official US data tells us the opposite, considering the 1973 as being the baseline. Remeber that the median US worker income WORSENED from 1973 to 1991 (again based in official data), that´s why the 90´s seemed to be years of so impressive improvement.
For data on 1967-73 look at:
http://www.panix.com/~dhenwood/Stats_incpov.html

The base lifestyle of an American has raised amazingly ... you have more people who can actually afford things these days ... and I am talking about luxory items and high educations ... I think its 50% of the American population is on the internet ... poor people dont have cpu's in their homes and internet connections to boot ....

-US median living standards were already very high in 1973. They didn´t improve too much since then, at least when you consider real income

Higher education ... everyone I know has gone to at least two years of college or tech school ...

-The improvement of educational standards is happening in many countries. This not always led to higher wages, since the minimum standards for obtaining certain jobs also increased. Improvement of access to higher education also was quite impressive in Brazil in the 90´s, but this in´t improve overall wages.

When I was younger my family was as poor as poor can be ... we ate rice for breakfast lunch and dinner ... but here I am at 25 with a Masters degree with the potential to make more money in a year then my father would have made in five ...

-This proves nothing. We are talking in populational terms

Yep ... I know that. I also dont understand what the problem is ... they own the company ... why shouldnt they control the money of said company? And why shouldnt they make the most money? They OWN it! If the workers dont like it ... let them form a union.

Are American rich more productive? Or maybe European bathroom cleaners are more productive?

[Gothmog]

-I will add a few remarks to that topic

1-It is quite stupid to say that capitalism didn´t improve the life of poor people. Under capitalism, there were dramatic decreasing in poverty levels, in Europe, USA and Asia (socialist countries also had impressive improvements in the 50-70´s)
2-However, since the end of we call the golden age (1948-73), when capitalism (or better said, mixed economy) seemed to be able to provide unending economic growth and benefits for all, we are seeing not only decreasing growth rates in the central capitalist countries, but also a impressive worseing of income unequality
3-Increasing income unequalities can be tolerated in an environment of high economic growth, however, they are quite harmful when growth stalls. That is the main trouble the USA faces. As the poor gained almost nothing in the good times, they are not well prepared for the hard times, this is even worse when we consider the very small savings rates for US families, as a whole.
4-If you want to keep current levels of unequality, then the gains from poor and rich in a given time must be the same. The extreme diference verified in the tables I put here points to a long term worsening of US unequality (unlike what happened in the Golden Age)
5-What are the maximum tolerated levels of unequality, beyond which we start to see high levels of social disruption (crime, civil unrest, rising alcoholism, decreasing living expectancy and so on)? That´s a good question. From my personal experience, I would say the current level of unequalities we enjoy in Brazil is intolerable, in an environment of low growth. I think you Americans will be able to answer this question in a few years.
6-This growing inability of capitalism to share the fruits of economic growth is not exclusive of USA, but in the USA this tendency seems to be more pronounced than in Europe and Japan. In other anglophone countries this tendency is stronger too (mainly in New Zealand)

-So I ask you, fellow Americans, two things.
1-To what extent do you thing the unequality will be tolerated by the US society.
2-Why capitalism seems to be unable to share the benefits of economic growth as it was from 1948 to 1973? Does it points to a decline of the system as a whole, or it simply don´t matter, as far as economic growth goes on?

[Noumenon]

1-To what extent do you thing the unequality will be tolerated by the US society.

Polls show that inequality in income is not something that matters to Americans. If theres already such a huge gap, and Americans don't care, it could get a lot bigger without Americans noticing it.

Sorry, but the improvement for poor here is ridiculous. An improvement of 14,4% in 30 years is equal to an improvement of less then 0,5% yearly. And the middle class also have a mediocre performance here (improvement of 0,5-0,6% yearly). If you think this proofs how wonderful capitalism is....good luck, but the increasing gap between rich and poor is intolerable in the long run. Even worse, this small improvement in 30 years (who is essentially equal to stagnation) was the result of an unsustainable boom in the 90´s. Withouth the results of this boom, the MEDIAN income for US individuals would be under the 1973 income. As the boom is over, it is quite possible that the American poor (and also the middle class) can lose his gains from the 90´s, thus essentially returning to 1970 levels.

Who cares how much the rich are making when the middle class and poor are still improving? The world is unfair, you just worry about yourself. I honestly don't care if some rich guy's income is increasing exponentially every year, as long as I have a steady middle class income. In fact, I should be thankful that the rich guy is getting so rich, because he uses it to invest, which creates more jobs for people like me. And improvement of .5% per year isn't bad. At least its not decreasing.

[Gothmog]

Polls show that inequality in income is not something that matters to Americans. If theres already such a huge gap, and Americans don't care, it could get a lot bigger without Americans noticing it.

-This clarifies the point. A few years ago, I´ve read an article about what was called the "Brazilianization" of America. Brazil, as you know, is one of the most unequal societies in the world, and a society that have an incredibly high tolerance towards unequality. Are you following the same way? Not a very pleasing way to go....

Who cares how much the rich are making when the middle class and poor are still improving? The world is unfair, you just worry about yourself. I honestly don't care if some rich guy's income is increasing exponentially every year, as long as I have a steady middle class income. In fact, I should be thankful that the rich guy is getting so rich, because he uses it to invest, which creates more jobs for people like me. And improvement of .5% per year isn't bad. At least its not decreasing.

-If the US economy growth declines, this will become a huge headache to you, since those 0,5% will become -0,5%. I don´t discard the possibility of gains made from 1973 to 2003 being lost if the US growth stalls. A 30 year stagnation for middle class and poorest people? Not good. On the other hand unequality is increasing in Europe too. I will try to get some data on Europe income and unequality growth