Wrong

by Russ Roberts on June 12, 2009

in Data, Inequality

Over at Freakonomics (HT: Planet Money), Justin Wolfers cites this graph as proof that the rich have gotten most of the income gains in the last 35 years:

Agraph 

This alas, is a meaningless chart. It tells you nothing about who got the gains of the last 35 years. Why? Because they're not the same people in the quintiles. Starting in 1973, and it's not a coincidence, the divorce rate in the United States began to rise. The number of families increased dramatically simply because of divorce. There was also an increase in the number of families headed by single women with children. The quintile breaks-points changed, not because the economy was growing or shrinking but simply because of changes in the types of families.

The chart is highly misleading. It implies that poor people have done poorly while rich people have thrived. Rich people have thrived. But so have poor people. If you look at longitudinal studies of the same people (the Michigan PSID for example) you get a totally different picture than this one. And that's because this one is designed to fulfill a political agenda. It's a beautiful example of how facts by themselves are not meaningful. There is nothing dishonest about the chart, just its interpretation.

I invite my students from last semester to remember what else we came up with when talking about a graph just like this one.

In the comments to Wolfers post, nosybear writes:

Shows what we know – some time in the last three decades we as a nation
decided the rich should get richer, the poor, well, not so much.
Education alone doesn’t account for it. Taxation does. We’ve apparently
decided generational wealth is a good thing and oligarchies should run
the country.

But this isn't true. There is no "we." This isn't explained by taxation. How would that work? The left is angry about measured inequality but they can't point to the mechanism that leads to all the poor people being held down. Especially when we know that educational attainment is growing in America and education does lead to higher income.

I'm suggesting that there is no explanation because there is nothing to be explained. the phenomenon that the rich "have gotten almost all of the gains" is a statistical artifact.

There have been changes in the distribution of income, the amount of inequality, and the returns to education since 1973. This chart distorts what really happened.

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Daniel Kuehn June 12, 2009 at 5:23 pm

It doesn't necessarily say that the rich are raking it in, because as you point out there is no accounting for inter-quintile mobility in this simple presentation. But if the mean income in the lowest quintile is lagging and the mean income of the highest quintile is growing faster it's still an indication that the dispersion of income is widening, right? That doesn't seem like a meaningless interpretation to me at all. Is that an inaccurate read fo the data?

But yes – you need to be careful about how much you pull out of this.

Ike June 12, 2009 at 5:37 pm

If journalists could do math, they wouldn't go into journalism.

Rule #1: Never let the truth get in the way of a good story.

(and as the rare ex-journalist with more than 40 credit hours in hard sciences and math, I speak from knowledge.)

Seth June 12, 2009 at 5:44 pm

Daniel – Even if dispersion is increasing, it doesn't say whether it's due to changes in the numerator or denominator.

I agree that having the full picture is important, but even if this truly showed growing income inequality I'm not sure why I should care. Perhaps the highest earners are adding more value and deserve it.

Lee Kelly June 12, 2009 at 5:56 pm

This alas, is a meaningless chart. – Russ

Exactly, but it's not just this chart, because all charts are meaningless.A meaning emerges from the interaction of a chart with an interpretor. It doesn't just sit there waiting for someone with a penetrating intellect to discern.

The meaning of a chart, fact, datum, or whatever, is the totality of consequences derived from its interpretation. But since interpretors and possible interpretations are many (infinite, in the latter case), the chart itself doesn't really mean anything.

SaulOhio June 12, 2009 at 6:19 pm

And these statistics are meaningless because they measure money, who has how much money. It doesn't say how much there is to buy with that money, or what people are buying with it. Some may have been buying way overpriced homes. Others were buying capital goods, either through their own businesses, or through stocks. Others may have been spending a lot fo their money on consumer goods. I would guess that in some ways this is a good sign, that more has been invested, since it is the rich that have more money to invest. But a lot of it may be a consequence of inflation and the Austrian trade cycle theory. Too much money has been made available for investment and malinvestment. Its the rich that mostly get a lot of this new money.

Of course, since there are so many equally valid ways to interpret the data, what good is it?

Morgan June 12, 2009 at 6:28 pm

Here are a few things that can throw a monkey wrench in the statistical works when you're trying to measure inequality (as valid to this chart as to the Gini):

1) If the cost of maintaining an independent household decreases (e.g. interest rates decline, real rents decrease, home purchases are subsidized), inequality measured at the household/family unit will increase because more "low income" families will be able to maintain an independent existence.

2) If people live longer, healthier lives – and hence more years as retirees – then inequality will increase because there will be more zero-earner families.

3) If housing prices increase more rapidly than has historically been the case then inequality will increase because one-time gains on home sales will cause the incomes of families who sell to be more inflated than they would have been in normal times.

Panel data has none of these problems, because you can see what happens to an individual unit over time – if they have a one-time spike in income, you know it, if they retire, you know that, too. It's clearly a superior way of looking at the questions of interest, and I have to agree with Dr. Roberts – if we have it (which we do) there is no excuse for not using it.

Kevin P. June 12, 2009 at 6:39 pm

"This chart distorts what really happened."

To what extent? Can you quantify it?

During the 1947-1973 period, 2-parent single-income households were much more common, with fewer women in the workforce. Over time, increasingly dual-income households bid up house prices. You'd expect the single-income households in the latter period to have less buying power than typical households did in the previous period as a result (because having 2 middle class salaries effectively became a requirement for affording a house, subprime fiasco aside).

dg lesvic June 12, 2009 at 7:55 pm

You're still missing the point. For, regardless of whether the income disparity is growing or not, the usual antidote for it, taking from the rich to give to the poor, will only make it greater.

And you know that's right, because Daniel says it's wrong.

Methinks June 12, 2009 at 8:20 pm

Dan,

So what if the dispersion is widening? That says nothing meaningful. One way to narrow that dispersion is disallow impoverished immigrants such as myself to come into the country. We literally arrived with the shirts on our backs, importing our poverty with us. Now that my entire family has moved into the top quintile, a new pack of impoverished immigrants has made its way into the country to take our place. That's not a bad thing.

Ray Gardner June 12, 2009 at 8:37 pm

Daniel:
You acknowledged that Russ is largely correct, and then turned around and did the exact thing that made Freakonomics post false.

The lowest quintile that we have now is not made up of the same people. The demographics have changed drastically due to circumstances Russ already covered, not to mention the changes in immigrant labor, etc.

Jeffrey edelman June 12, 2009 at 8:56 pm

Russ makes a great point in his last paragraph, one which could use someone smarter than me to flesh out. He says that there has been no diminution in returns from education since 1973, which seems eminently logical to me

I don't understand the charts in the Goldin/Katz post within the Freakonomics post. I also don't intuitively understand how increasing the amount of education- even in a significant manner- in terms of diplomas awarded, would have an effect on the lowest 2 quintiles, and probably the lowest 3 i.e. wouldn't inequality INCREASE in those groups as they were left further behind?

I simply don't understand these statistics.

dg lesvic June 12, 2009 at 9:48 pm

An increasing income disparity is not an impossibility. So, the question remains: if that should actually occur, what would you do about it?

If nothing, why even talk about it?

The very fact that you're talking about it implies that it is a bad thing, and that there's something that you could do about it.

What?

I'll bet my mortgaged to the hilt hovel that there won't be a single answer.

Miko June 12, 2009 at 11:14 pm

"The left is angry about measured inequality but they can't point to the mechanism that leads to all the poor people being held down"

1) Inflation is harmful for those on a fixed income and also makes it more difficult to begin saving, especially when combined with Fed policy that keeps interest rates artificially low. The rich benefit from the low rates while protecting their capital through inflation-hedged investments; the poor don't. The rich are likely to get annual raises; the poor less likely.

2) Regulations create hoops one needs to jump through before creating a new business. The rich can afford licenses as well as lawyers and accountants to deal with the regulations; the poor can't. Especially when combined with the difficulties in accumulating capital caused by (1), this makes entrepreneurship among the poor difficult.

3) The lack of self-employment caused by (2) creates more demand for low wage jobs, thus keeping salaries lower.

The mechanism is clear: it's regulation by the government thwarting the natural tendency of free markets to bring about a higher standard of living for all. Of course, the ironic thing is that the Left is, in fact, a large part of the mechanism that angers them.

Gil June 12, 2009 at 11:18 pm

"The left is angry about measured inequality but they can't point to the mechanism that leads to all the poor people being held down." – R. Roberts.

Perhaps there is no mechanism keep the poor 'poor'. Poor people are poor because they're non-productive. How exactly are poor banished from opportunity except through the efforts of other poor people? It's just like poor nations – the West isn't 'keeping them down' they're keeping themselves down with tribal conflicts, sticking to outdated traditions and punishing those who dare to bring about change. Even African-Americans have pointed out that glorify gang violence, drugs, geting rich through drugs/sports/music whilst disparing those who simply want to study and join the middle class as 'oreos' really helps to keep African-Americans in the ranks of the poor.

dg lesvic – if in one year's time a bum stays a bum whereas Bill Gates increases his nett worth by 10% then inequality has increased 10% without any force. If a government takes from the rich and gives to the poor till the rich give up and join the ranks of the poor then you have more equality except everyone's poor. It's not hard to understand.

dg lesvic June 12, 2009 at 11:52 pm

Gil,

You, of all people, are beginning to see the light, and may be the one to lead others to it, the blind, as it were, leading the insightful.

Now, just try to think it through a bit more thoroughly, and I'll follow you.

muirgeo June 13, 2009 at 12:31 am

" If you look at longitudinal studies of the same people (the Michigan PSID for example) you get a totally different picture than this one. "
RR

" This increasing disparity was a significant reversal of
the U.S. experience between 1950 and 1970, when rapid economic growth occurred along with a decrease in the difference between the incomes of the rich and poor. Moreover, the pattern stands virtually undisputed among researchers. No matter what data are used, whether looking at individuals or families, incomes in the United States have
become increasingly unequal over the past quarter-century."

Based on their paper analyzing data from the Michigan PSID;

Katharine Bradbury and Jane Katz, “Women’s Labor Market Involvement and Family Income Mobility When Marriages End,” New England
Economic ReviewQ4 2002

dg lesvic June 13, 2009 at 12:54 am

Muirgeo,

You wrote,

"No matter what data are used, whether looking at individuals or families, incomes in the United States have
become increasingly unequal over the past quarter-century."

So, what are you going to do about it?

muirgeo June 13, 2009 at 12:59 am

"The left is angry about measured inequality but they can't point to the mechanism that leads to all the poor people being held down."

RR

I'm not so sure about that. It appears most of it is policy driven. Tax cuts favoring the rich, changes in trade laws, weakening of unions, stagnant minimum wages, corporate laws favoring CEO's wages over corporate fiduciary duty. The difference in CEO compensation over average worker compensation is clear as well.

Also when seeing the major swing in share of corporate profits going to the finance sector from 10% to over 35% over the same time frame and we see rules set up to reward speculation over productive activities it's clear that inequality has not only increased but wealth to value has also taken a major leap.

If history is any predictor of the future and Obama is successful instituting liberal policies we will see a more even distribution of earnings and wealth. And likely with no ill effect on the overall economy or freedom…. rather likely both will be enhanced.

dg lesvic June 13, 2009 at 1:00 am

Gil,

You're on the right track, but you're not all the way home yet.

Here's the first obstacle for you.

You wrote,

"If a government takes from the rich and gives to the poor till the rich give up and join the ranks of the poor then you have more equality except everyone's poor."

But what happens in the meantime, before Bill Gates has thrown in the towel and joined the bread line?

Has the redistribution up to that point made the poor richer or poorer?

dg lesvic June 13, 2009 at 1:05 am

Muirgeo,

Oh, now we see what you would do about it, the inequality, that is:

"a more even distribution of earnings and wealth."

But, like all interference with the market, that will be completely counterproductive, not reducing but increasing the inequality.

And, everyone here, even Gil, and with the exception only of Daniel and yourself, sees that.

muirgeo June 13, 2009 at 1:18 am

But, like all interference with the market, that will be completely counterproductive, not reducing but increasing the inequality.

Posted by: dg lesvic

But your claim is contrary to the facts of history.
From 1946 to 1976 when policy changes resulted in more equitable incomes the economy grew BETTER then in the subsequent 30 year period when inequality was let loose by changes in policy in the opposite direction.

http://www.cbpp.org/archiveSite/3-27-08tax2-f2.jpg

muirgeo June 13, 2009 at 1:29 am

More evidence that the chart is NOT meaningless. Something very real both in policy and results for the 2 time periods that matters to the average person.

http://s.wsj.net/media/home-ownership_c_20070925155559.jpg

vikingvista June 13, 2009 at 1:33 am

Some people might think that a society which offers more rapid income advancement over an individual's working life, starting from the same youthful point, would, all else be equal, be a better society.

Not so the Left. To them it represents a growing income disparity and something that must be destroyed. Opportunity must be destroyed.

vikingvista June 13, 2009 at 1:41 am

"Poor people are poor because they're non-productive."

Yeah. They are young, untrained, and inexperienced. And they are still more prosperous than their counterparts 50 years ago.

That is why the Gini coefficient is always age-adjusted. /sarcasm

Gil June 13, 2009 at 2:16 am

"Yeah. They are young, untrained, and inexperienced. And they are still more prosperous than their counterparts 50 years ago." – vikingvista.

Actually, I was referring to the world as a whole and am including people of all ages of all nations. The Libertarian notion of "free the market, squawk, free the market" is akin to the Lefist approach of supporting someone as a victim so they can further wallow in their victimhood. Not to mention outright cultural standards that try to maintain the status quo of centuries ago in the modern day.

Or to put it another way, poor people can have impedients in their way to exit poverty but not so much so that it's impossible. Many families that are rich had the same obstacles, if not worse, and overcame them. To complain that poor nations are ruled by nepotistic, crony dictatorships hence they can't escape is bunk as all wealthy nations used to be nepotistic, crony dictatorships but the wealthy nations broke out of the cycle.

Or put it another way again, how is that Methinks can be the standard down&out immigrant and get somewhere in the U.S.A. when the native-born yanks apparently can't?

richard June 13, 2009 at 3:14 am

Russel,

Do you have a comparable graph with the correct data?

dg lesvic June 13, 2009 at 3:54 am

Muirgeo,

Your anecdotes without logic are like those of the ballplayers who won't change their socks so long as they keep getting hits, except that, in the one case, we call it superstition, and, in the other, the facts of history.

I'm not disputing your facts any more than the ballplayer's. But, I'm asking if you have anything more, any reason, science, and economics.

John Galt June 13, 2009 at 7:04 am

Gil,

I for one am impressed. Truly. Amazed.

Do you realize that you are now smarter than Paul Krugman?

Congratulations!

LowcountryJoe June 13, 2009 at 7:58 am

I've gotta hand it to the folks who come up with such data, graphs, and "WE need to do something about inequality" arguments, they do tend to recycle — recycle the same garbage that is. Oh look, the packaging is different on this garbage.

I think I'll hope on the recycling bandwagon and select those blog entries with the Standard of Living tag to see what's been discussed.

What this here? Hmm, July 31st of 2008. A link to an article by W. Michael Cox and Richard Alms titled How Are We Doing? There are so many good posts to choose from on that tag. The one above really does cover so much, though.

I have not made a chart or organized the data ino a nice neat little table so it's still annecdotal but why is it that when this kind of garbage is refuted there are far less comments?

And why don't all these people who care about such inequality so much spend there time and energies into fighting it and its causes? And is it too much to ask to do this with with their own resources? There's enough of them who could indiscriminately dispurse their own money around equitably so that these graphs (and the tired arguments that follow them) would seem so heartbreaking, right?

muirgeo June 13, 2009 at 9:17 am

I'm not disputing your facts any more than the ballplayer's. But, I'm asking if you have anything more, any reason, science, and economics.

Posted by: dg lesvic

Yeah. The facts are that supply side economics is baloney. Also policy matters. If you set up the rules to favor the wealthy and decrease class mobility your society will look more like an aristocracy rewarding birth privilege over productivity. When wealth accumulates at the tops less money is invested and spent and the economy stalls, productivity stalls and so does risk taking and entrepreneurism.

There is a logic to why the numbers play out the way they do and they do so in a some what of a predictable fashion.

See as a pediatrician I don't look at the end results I tend to look at the starting conditions. Every baby is the next potential Einstein. Unregulated markets severely mis-allocate human capitol and reward privilege over true talent and ability.

A past Nobel Prize-winning economist Herbert Simon has noted that 90% of the variation in incomes can be explained by social capital.

Jeffrey Edelman June 13, 2009 at 9:20 am

"I'm not so sure about that. It appears most of it is policy driven. Tax cuts favoring the rich, changes in trade laws, weakening of unions, stagnant minimum wages, corporate laws favoring CEO's wages over corporate fiduciary duty. The difference in CEO compensation over average worker compensation is clear as well."

I somewhat agree with muirgeo on this, but it's got to be pinpointed with greater precision. The tax cut deal is fairly simple- if you're going to cut them, those that pay the lion's share are the ones who will be "rewarded." So instead of saying tax cuts favoring the rich, we should just say tax cuts increase inequality. Which seems necessarily true, but alas is probably the right "price" to pay in a real economy.

Probably changes in trade law and the weakening of unions are closely interrelated i.e. if I can get a product of roughly equal quality at a cheaper price from a nonunion supplier, I will. This scenario seems to have largely played out in the realm of international consumer goods trade, right? So protectionism would be the answer to the strengthening of unions, but of course at the expense of exporters (could we unionize THOSE?)

The stagnant minimum wage thing, I don't know. It simply seems like real, live American minimum wagers are so unskilled and so interchangeable that it's simply impossible to settle on a wage for them that would both significantly impact inequality on the one hand and NOT drastically increase it due to the enormous increase in unemployment i.e. the dependence of direct aid.

The CEO thing has been truly bizarre; we had a chance to drive a stake into it's atrium, if not it's left ventricle, with the dissolution of AIG and Goldman but, alas, it was a bridge too far. If those companies CEOs would have disappeared into oblivion, the signal would have been different.

Ray Gardner June 13, 2009 at 9:36 am

RE: Education

Those with college degrees have higher average incomes.

Therefore, if more people in that lowest quintile had a college degree. . .

I read a small piece in Scientific American years ago by a professor from Yale (don't remember the name) that addressed the fact that smoking is much more prevalent among the poor. He proposed supplementing the incomes of these poorer people in order to decrease the amount of smokers overall.

John Galt June 13, 2009 at 9:59 am

Muirgeo:
"See as a pediatrician I don't look at the end results I tend to look at the starting conditions. Every baby is the next potential Einstein. Unregulated markets severely mis-allocate human capitol and reward privilege over true talent and ability."

Are you saying you don't actually deserve to be a pediatrician, or that you don't deserve to be paid so much for being a pediatrician? Did you work for your position, or did you inherit it? What is your proof that you did not simply inherit a good work ethic — would that make you less deserving, since other people inherited more laziness?

"When wealth accumulates at the tops less money is invested"

Wealth, as it is accumulated "at the tops" is primarily in the form of investment. In fact, no other level of society invests so much, meaning that everything you say from that point on is based on an erroneous premise.

Martin Brock June 13, 2009 at 10:10 am

Wolfers' graph may not make his point effectively, but other measures of individual income show the widening gap that he laments. It's not just a statistical illusion created by changing household composition, and it's not all about immigration, demographics and income progression across lifetimes either.

According to the Cato Institute, Federal Employee compensation has risen much faster than private sector compensation for decades, so that Federal Employees now earn twice the average income of private sector employees.

Is that all about "market forces", or is it about an authority granting greater entitlement to consume to its favored title holders regardless of any measured or measurable productivity?

I suppose it's about the authority, and I suppose that most nominal "libertarians" would agree, but they won't express much agreement here in this forum, because we're all about apologizing for particular beneficiaries of the state's forcible propriety here. We're just another lot of statist partisans.

I also suppose that many income categories other than Federal Employee compensation are more about authoritarian entitlement than liberal market forces. Does a rising Gini coefficient in the U.S. signal growing strength of forcible propriety or something more defensible in libertarian terms?

The answer is not obvious to me, but it is obvious to me that many nominal "libertarians" only pretend to resist a growing state while reflexively defending the moneyed interests most benefiting from it.

I make this point every time we discuss this subject, for what it's worth, which isn't much since we're discussing quasi-religious ideologies here and not any factual assertion. I discuss Federal Employee compensation in this context for the same reason that I discuss Treasury securities (entitlement to tax revenue) when discussing statist "capital", not because it's the only illustration of the point but because it's the least easily refuted.

Jeffrey Edelman June 13, 2009 at 10:12 am

"Unregulated markets severely mis-allocate human capitol and reward privilege over true talent and ability."

I think this statement, though, is the absolute converse of what it should be: Regulated markets severely mis-allocate human capitol and reward privilege over true talent and ability.

The obvious factor is that we have regulated markets- obviously- and the regulators are also the rewardees. Why else is the US Treasury/Fed a branch of Goldman Sachs, or vice versa?

vidyohs June 13, 2009 at 10:18 am

Gil(no-huahua),

I suspected you could write absolute mainstream conservative stuff with authority if you stayed clean and sober.

Your post here draws kudos:

"How exactly are poor banished from opportunity except through the efforts of other poor people? It's just like poor nations – the West isn't 'keeping them down' they're keeping themselves down with tribal conflicts, sticking to outdated traditions and punishing those who dare to bring about change. Even African-Americans have pointed out that glorify gang violence, drugs, geting rich through drugs/sports/music whilst disparing those who simply want to study and join the middle class as 'oreos' really helps to keep African-Americans in the ranks of the poor.

dg lesvic – if in one year's time a bum stays a bum whereas Bill Gates increases his nett worth by 10% then inequality has increased 10% without any force. If a government takes from the rich and gives to the poor till the rich give up and join the ranks of the poor then you have more equality except everyone's poor. It's not hard to understand.

Posted by: Gil | Jun 12, 2009 11:18:24 PM"

However, one quibble is the question you opened with: "How exactly are poor banished from opportunity except through the efforts of other poor people?"

May I answer that? Yes, thank you. It isn't "just" the efforts of others that keep poor people from opportunity, it is also that many give up when the going gets tough and they see others benefiting from privilege without effort.

Wasn't it your Winston Churchill that gave a commencement address by walking to the podium, taking the microphone, looking the graduates in the eyes and saying, "Never, never, never, never, never, never, never, never give up." Then setting the microphone down and walking off stage to thunderous applause.

I am sure that you realize that we individuals tend to do ourselves more damage than others do to us, and typically the motivation for this self inflicted harm is just pure plain ignorance and/or lack of solid character.

Anyway, kudos on a fine post.

Crusader June 13, 2009 at 10:18 am

Wow just wow. Muirduck thinks resources are better allocated by Big Brother…

Jeffrey Edelman June 13, 2009 at 10:35 am

"According to the Cato Institute, Federal Employee compensation has risen much faster than private sector compensation for decades, so that Federal Employees now earn twice the average income of private sector employees."

Oh, the humanity! The State thus increasing inequality!!!

muirgeo June 13, 2009 at 10:50 am

Wow just wow. Muirduck thinks resources are better allocated by Big Brother…

Posted by: Crusader

And you think the Invisible Hand God is all just. I don't see equal democracy as Big Brother. I think equal democracy is the best way to allocate resources. The biggest problem is lobbyist, political conflicts of interest and monied interest interfering with the process.

I can only assume you favor privilege, birth right and aristocracy as the best way to allocate money. Again unregulated markets result in those things much more then meritocratic distribution of resources.

As far as I can see our modern social democracies are far more efficient then the 19th century laissez faire economies Dickens and Marx wrote of. I can never understand why you all want to return to the 19th century.

Martin Brock June 13, 2009 at 10:54 am

Oh, the humanity! The State thus increasing inequality!!!

The State practically always increases inequality, because it is the monopoly enforcing all the other monopolies.

muirgeo June 13, 2009 at 11:06 am

There is nothing wrong with some degrees even significant degrees of inequality. But at very large degrees it is economically inefficient and liberty-robbing of the greater population as far as I can see. If it's less efficient and if the average decent hardworking person is having to work harder and harder to make ends meet or even to enjoy in the advances of modern technology then I'd suggest society is heading toward a more dreary outlook.

The Founding Fathers disliked great accumulations of wealth because with them always comes great accumulation of power. I thought we all agreed 200 plus years ago that we don't want any more Kings.

muirgeo June 13, 2009 at 11:12 am

The State practically always increases inequality, because it is the monopoly enforcing all the other monopolies.
Posted by: Martin Brock

Sure as opposed to tribal societies. But the type of state and the rules it has markedly effect degrees of inequality. The best societies to live in… the ones where people on the whole are happiest our the democracies that have lesser degrees of inequality. Hasn't the whole goal of modern society been to somewhat decrease and diffuse massive accumulations of power and wealth.

And I personally am very tired of the idea that wealth has no relation to power or any ability to influence the daily lives of the not so wealthy. Especially in our unequal democracy that allows those with extreme wealth disproportionate access to power and the political process.

S Andrews June 13, 2009 at 11:19 am

as far as I can see

YOu need an optometrist. YOu are not seeing very far.

S Andrews June 13, 2009 at 11:23 am

the ones where people on the whole are happiest

Happiness is subjective and there is no way to measure it. THe whole idea of some societies being happier than others is silly. If you are such a believer in these lies, damn lies and stats, then explain to us how happiness is measured, what is the margin of error, what are the other alternate ways of measuring happiness, and why pick your method over the other ones?

Martin Brock June 13, 2009 at 11:40 am

Hasn't the whole goal of modern society been to somewhat decrease and diffuse massive accumulations of power and wealth.

No. The U.S. is the quintessentially "modern society", and it certainly hasn't decreased or diffused massive accumulations of wealth and power.

And I personally am very tired of the idea that wealth has no relation to power or any ability to influence the daily lives of the not so wealthy.

What we typically call "wealth" is state power, and powerful statesmen typically are the wealthiest actors. That Barack Obama is nominally "less wealthy" than Bill Gates only demonstrates the poverty of common language.

Gates didn't just fire the CEO of General Motors or orchestrate the expenditure of a trillion dollar "stimulus" in a single year, and Gates couldn't do either of these things without being elected head statesman. Obama is far wealthier than Gates in reality, even if we don't describe his condition this way.

Especially in our unequal democracy that allows those with extreme wealth disproportionate access to power and the political process.

Extreme wealth doesn't allow access to political power. Extreme wealth is political power. The idea that wealthy lords of propriety are not themselves statesmen is a modern construct. The classical liberals would find this idea very strange.

Sam Grove June 13, 2009 at 11:58 am

Again unregulated markets result in those things much more then meritocratic distribution of resources.

As you have repeatedly claimed that there have never been unregulated markets, I can only suppose that this assertion is based entirely on your own mental construct.

As far as I can see our modern social democracies are far more efficient then the 19th century laissez faire economies Dickens and Marx wrote of.

As you have repeatedly claimed that there have never been laissez faire markets, I can only suppose that this assertion is based entirely on your own mental construct.

Sam Grove June 13, 2009 at 12:03 pm

Martin, I agree with you. We can have no idea how much current income distribution reflects political intervention and how much truly reflects earned entitlement.

I agree with George that we have never had, under any state, a true free market, where income distribution truly reflects earned entitlement.

There is only one way to find out.

IAC, HISAFI

Sam Grove June 13, 2009 at 12:05 pm

Every baby is the next potential Einstein.

Are you claiming intelligence has no genetic factor?

Andrew_M_Garland June 13, 2009 at 12:27 pm

Is this whole controversy motivated by a pun?

The meaning of "distribution of income" in statistics is merely the title of a graph, how income varies according to some other factor. I know this isn't new to most people here.

I could graph income according to the number of years of piano lessons. That would be a "Distribution of Income". Who knows what it would mean?

It seems that there are many people who take the phrase literally. They think or feel that "distribution" really means that everyone should be getting the same income, distributed from the environment or community. Any deviation from flat-line is an injustice. Someone is stealing their share.

muirgeo June 13, 2009 at 12:52 pm

Extreme wealth doesn't allow access to political power. Extreme wealth is political power. The idea that wealthy lords of propriety are not themselves statesmen is a modern construct. The classical liberals would find this idea very strange.
Posted by: Martin Brock

I'm not much interested in word games. The libertarians argue that just because we've never truly had free markets doesn't mean they wouldn't be better.

It's a reasonable point as there was likely once a time when separation of church and state seemed impossible but now that we have it it's worked pretty good.

I simply envision a separation of state and money as being the next step in social evolution. I think it's more doable and likely to be a success then the libertarian state.

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