Incomes in America

"Diana Furchtgott-Roth"

Hyphenated surnames are already becoming passe' with the increasing acceptance of triple hyphenated surnames, such as Teresa Jones-Hampton-Crawley. Pretty difficult to tell where it will all stop.

Amazing how everyone here is so concerned about whether inequality is rising or falling, but not about the significance of it. and about whether or not there had been a prior distribution of redistributed income, but not about the consequences of the policy.

Prior distribution or not, and inequality rising or not, all that matters is that taking from the rich to give to the poor can not reduce but only increase inequality.

All the other talk is not just a waste of time and a distraction, but a capitulation.

To those who think there's no ambiguity in the meaning of "income-distribution", try a Google search. Here's what I got when I added the word 'fair' --

The Progress Report

Economist calls for fair income distribution in China

Income distribution, socioeconomic status, and self rated health in the United States: multilevel analysis

FAIR AND EQUITABLE DISTRIBUTION OF INCOME

Is the income distribution in the United States fair? Why or why not?

The term 'distribution' is frequently used in a non-mathematical sense. Nobody is referring to a "fair" distribution of data points -- they're not talking about making an observation, they're talking about taking action. Even more disturbing -- check how often the word "economist" shows up in the articles.

Of course it's used in a non-mathematical sense. But if the context is the distribution of income over time, you're talking about the distribution of datapoints.

"Of course it's used in a non-mathematical sense. But if the context is the distribution of income over time, you're talking about the distribution of datapoints."

I get it.

The fair and equitable distribution of data points -- over time.

Certainly I'm the one who is thinking in a fog.

Well yes - in your particular google search. I'm not talking about your google search.

I saw in my e mail that somewhere hereabouts Daniel is still babbling about mathematics in economics.

I cannot tell you how many times I have explained to him, without rebuttal, in the final analysis, that there is no such thing, but, apparently, you couldn't penetrate his skull with an atomic-powered harpoon.

Don,

I think the term 'Distribution' is used for its mathematical meaning. Distribution as in frequency or probability density functions etc.

By my calculations, using US census figures from 2005, different numbers of earners per household is a major contributor to observed household inequality. In fact, even if all jobs paid exactly the same, and there were no other sources of income, the GINI in the US would be 38.8.

All other factors - those that inflate it (like actual differences in wages, investment returns, an observed association between earnings potential and number of earners in the household) and those that deflate it (transfer payments, substitution of investment income for earnings from work when possible) - combine to shift it from that baseline 38.8 to 40.8, according to the UN's human development report.

Make of it what you will.

"incomes in market economies are not “distributed”"

No scare quotes necessary. Any property of a population has a distribution. It refers to an observation, not action. But the double meaning does provide a nice opportunity to clear a misconception about incomes, anyway.

What good does it do to deny greater inequality of incomes? If there was greater inequality, the Right would get the blame, and, if greater equality, the Left would take the credit. All that you do is tacitly admit that inequality per se was evil and communism good.

All you can say about inequality is that the market, always tending toward equilibirum, always tends towards the inequalities that would bring it about, and that any abitrary reductions of them will be like any other interventions in the market, completely counterproductive, bringing about the exact opposite result of what was intended, and not reducing but increasing inequality and "social injustice."

Markets imply inequalities, but inequalities do not imply markets.

"incomes in market economies are not “distributed”; they’re produced and earned"

Don, that's not really true. Much "income" is from production, honest work and trade, but much is from political activity. And that's the breakdown I'd like to see.

Randy, My post replying to geckonomist was meant to reply to you.

Today, I read that the FDIC may soon "borrow" funds from the Treasury to avoid increasing "deposit insurance premiums" paid by U.S. banks, thus enabling U.S. bankers to pay higher interest rates on deposits, attract more deposits, increase their nominal assets through fractional reserve lending, report higher, short term profits as borrowers effectively repay the loans from the funds borrowed in the short term, and thus award themselves bonuses until the next meltdown.

So is this bonus income "produced and earned' or not? Are these financial machinations "market economics"?

If these questions go unasked in this forum, amid the abstract talk of "market income", they certainly also go unanswered.

I figured :)

See above

I don't really see the relevance of the introduction there, namely to point to a "democrat" belief.

Are there no independents, centrist politicians, republicans, anarchists, greens, who might also believe one or more of those 3 theses? Why is there no mention of those?

Furthermore, it is supposed to be an article about statistics and econometric empirical data.
But for the opening sentence: "Ask almost any Democratic politician the most important economic facts about income distribution in America, and you are almost certain to hear..."
Diana forgets to provide any data or statistical analysis or evidence supporting the accuracy of that claim.
That's lousy statistics.
Sounds more like the unfounded political claims and beliefs she hates so much.

I know a hypocrite when I see one.

It's true if it's a truism (or a tautology), i.e. it's true insofar as "market economy" implies "produced income" and "earned income" by definition. The statement doesn't assert that the U.S. economy or any other, existing economy is a "market economy" or to what degree any real economy is a "market economy", so the statement is simply utopian.

Roperts reports only yesterday that the Post Office will "defer" payment for its employees' entitlement to pension income to the tune four billion dollars this year alone. So is this income "produced" and "earned" or not? Am I supposed to believe that corporate apparatchiks (including trade unionists) never play similar financial games when constructing their own entitlements?

The question is: How am I supposed to know which income is "earned" or "produced", and thus which income is "market income" in Don's way of thinking, and why should I believe that trade unionists and state employees are the only recipients of "non-market" income? After all, CEOs and other corporate executives and "private" proprietors are parties to the negotiations establishing the pension benefits and other income of trade unionists, and they're far more influential within the state than I am.

"it's true insofar as "market economy" implies "produced income" and "earned income" by definition."

True, Don did say "Market" economy, while I was of course referring to the real economy.

"The question is: How am I supposed to know which income is "earned" or "produced", and thus which income is "market income"

Yes, that is the question. The answer is not easy, but its still the question, because the method is relevant and the quantity is not.

so what are we to conclude? that the monetary ,fiscal and trade policies of the last 30 years have been beneficial for americans?. if so why abolish govt controlled fiat money.if this shindig can dish out the dough,why rock the boat -sorry for scrwing up my metaphors.
so the loss of 96% of dollar value is made up the managed markets mechanism?. why even bother to upset the applecart

The second half of this blog post addresses the issue that dsylexic raises:

http://cafehayek.com/2008/04/the-pessimistic.html

If there's no need for scare quotation marks for "probability distribution", I see no need for scare quotation marks for "income-distribution", your point about market economies notwithstanding.
Brent Buckner, posting as guest

Daniel,

I don't think that people think of any meaning when they use the term "distribution" in this context -- but the very passivity with which this term is used suggests very mistakenly that income is like a pre-existing pie that is then -- in a process independent from that which results in the pie's production -- cut up and apportioned to folks.

I agree with Don. "Income distribution" is a classic example of passive equivocation. Statisticians know what they mean when they use the word. Non-statisticians don't always know. In exchanges on these subjects the conversation often goes toward a discussion of "fair" or "equitable" distribution of income, which conjures up the "allotment" meaning of the word, rather than the "arrangement of data" use.

You don't think they just mean the distribution of datapoints? i.e., not an average or other point estimate, but a series of points.

I clicked through to the paper - it looks good. The household thing is always important to qualify. It is striking though - Furchtgott-Roth quotes him when he says there was no decline in the last four decades. But elsewhere in the paper he does say labor share declined since 1985 (so she's right - no decline in the last four decades, but he does identify and talk extensively about a decline in the last two decades), and the decline is very clear in his moving averages at the end of the paper. I think the point is still "it's not as big as some people say", but not that there has been no decline.

Well, people talk of "redistributing" income -- implying that it there was a prior distribution of it.

There is a prior distribution of it! Just like there's a prior distribution of animals across the Earth's landmass. Saying there is a distribution of animals isn't an argument for creationism or some central distributor.

"Distribution" in the phrase "income distribution" is a noun.
"Distribution" in the word "redistribution" is a verb.

Here I thought Jesus had died a little over 2000 years ago, but maybe you're just his reincarnation, DK.

Sure income has been distributed, but forceful and involuntary confiscation of any portion of that distributed income, to give to other people is not "income redistribution", it is distribution of stolen wealth.

So when you socialist talk about income redistribution it is that duplicitous thing you do, it is a lie.

You're a strange one, vidyohs.

As for your fury at my use of "income redistribution" - tell it to Don. He brought it up. The only thing I did was point out that the word "distribution" in that phrase was a verb. That's hardly the sort of observation that deserves a rebuke from you.

Well of course Don started it all, I guess that makes him the really strange one eh? LOL.

Nothing strange at all, little one. I was taught about a perfect man named Jesus, who was always right, and never made a mistake or had an incorrect idea. Now I get to see you in action and to all intents and purposes you seem to be a reincarnation of Jesus. Always right, never an incorrect idea, and willing to take on all comers with your vast wisdom, and hammer and hammer until people just get plain tired of your disingenuous sliding away to find a new point to hammer.

Of course you have to use that disingenuous skill you have in order to slide past most opposition, but hey, perfection just is what it is, eh youngster?

"Strange one" was a reference to your weird Jesus statement, not Don's point.

You seem to have a different understanding of my fallibility than I do. I'm just sharing thoughts on here like everyone else. The weird thing is the thought I shared here that you just responded to was a pretty basic one that a lot of people agreed with me on.

I gotta re-arrange my sock drawer, so one last comment.

I quickly scanned all responses below this level and did not see one single one that you could confidently point to as agreeing with you on any of your above posts.

Daniel agrees with Daniel, even though sometimes Daniel also can, for want of someone else to nitpick on, also argue with himself.

But, by God, you will reply, slipping and sliding in your disingenuousness, until your bones dissolve before you'll admit someone else might have a point. Wonderfully educated and brilliant Daniel knows best, and for such a young thing too! At least that is why your mother told you no doubt.

Brent, vikingvista, and richard66. Sorry, vidyohs.

None of whom agreed with you. All of whom agreed with Don.

I'm going to refrain from ranting about you being stupid - as you did to me in the most recent post - and just post the relevant things the three of them said. First, me:

DK: "The only thing I did was point out that the word "distribution" in that phrase was a verb." [the noun being a distribution of datapoints, if you read earlier]

Brent: "If there's no need for scare quotation marks for "probability distribution", I see no need for scare quotation marks for "income-distribution"

richard66: "I think the term 'Distribution' is used for its mathematical meaning. Distribution as in frequency or probability density functions etc."

vikingvista: "No scare quotes necessary. Any property of a population has a distribution. It refers to an observation, not action."

Just get over it, vidyohs.

Yeah it's not 'income redistribution' to Libertarians who have worked with the government.

Ahh, the little foreign Chihuahua wanna'b barks.

If brains were gunpowder, I could scrape your head and the muirduck's, and not get enough to blow my nose.

In reference to your comment above, good move. Keep your bark barks to one liners and you can, once in awhile, actually write something that is close to coherent; anything over one sentence and you're incapable of the English language.

This is silly. I don't really care if you use quotes or not.

That's really interesting - thanks Don

:) although I'm not sure that's what people mean when they use the word "distribution" in that context!