There’s no their there

by Russ Roberts on April 13, 2011

in Inequality

Joseph Stiglitz writes about the top 1% in Vanity Fair. I will try to comment on more of the article at some point, but it starts off like this:

It’s no use pretending that what has obviously happened has not in fact happened. The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent.

So compared to 25 years ago, the share of income going to the top 1% has doubled, from 12% to almost 25%. But the conclusion that Stiglitz draws, does not follow. It does not follow that their lot in life has improved considerably. There’s no “their” there. The people who were in the top 1% 25 years ago are not the same people in the top 25% today. The numbers that are quoted are two snapshots at two different times. The correct statement is that the people who are in the top 1% today earn a larger share of the income pie than the people who were in the top 1% 25 years ago.

How would Stiglitz answer this? Perhaps he would say it’s mostly the same people and that I am nit-picking. Or that the people who are in the top 1% today may not have been in the top 1% 25 years ago but they were close. They were maybe in the top 5%. So his statement is close enough for an article in Vanity Fair. Yes, his statement is imprecise, but it captures what is going on.

My counter would be that many of the people in the top 1% today were not even in the work force 25 years ago. LeBron James. Sergey Brin. Mark Zuckerberg. The imprecision allows Stiglitz to imply that the 1% are a coherent group that does stuff to maintain or grow their economic power. But it’s not true. Yes, some of the top 1% are politically adept. They work in the financial sector. Or in law firms that work in and around New York City and Washington DC doing stuff related to government power. But some and maybe much of that growth in the economic power of the top 1% is due to productivity.

Finally, I would point out that when you actually follow the same people over time, the gains at the top (and the bottom) do not mirror the changes in the two snapshots:


This picture is from a study that’s part of the Pew Economic Mobility Project. This study follows the same people over time over roughly a 30 year period:

Family incomes in the PSID sample were measured in 1967–1971, when parents had an average age of 41years, and again in 1995–2002, when their adult children had an average age of 39 years.

The gray bars are from the period 1967-1971. They represent the parents. The scarlet bars are the kids.

And notice that the overall change between generations is an increase in real terms (corrected for inflation) from $55,600 to $71,900. That’s an increase of 29%. And the inflation correction probably overstates inflation. Not exactly the Great Stagnation. There is ZERO gain in the top quintile. I know. The top quintile is not the top 1%. But my point is that if you look at the share going to the top quintile between 1969 and 1999 as two snapshots, you’d find big gains for the top quintile that is misleading in the same way the Stiglitz inference from the data is misleading.

This is from InfoPlease that gets the data from the Census Bureau. I assume it’s right–it mirrors what we hear over and over again. The top of the income distribution appears to get all of the the gains or at least the biggest gains:

Table 11.4  Share of Income Received by Each Quintile and the Top 5 Percent
Year Lowest Second Third Fourth Fifth Top 5%
2000 3.6 8.9 14.9 23.0 49.6 21.9
1990 3.9 9.6 15.9 24.0 46.6 18.6
1980 4.3 10.3 16.9 24.9 43.7 15.8
1970 4.1 10.8 17.4 24.5 43.3 16.6

Source: U.S. Census Bureau

Notice that all of the quintiles, except the top quintile get smaller shares between 1970 and 2000, roughly the time covered by the Pew study. But the Pew Study comes to the exact opposite conclusion. The lowest quintiles got the biggest gains WHEN YOU FOLLOW THE SAME PEOPLE. Using the Census data over time tells you NOTHING about what “they” (the top whatever percent) had happen to “them” over time.

It is also worth pointing out that the pie is not constant. So you’re well-being can grow even when your share of the pie falls if the pie is getting sufficiently larger.

Here is an earlier post on the same topic reacting to a similar claim by Justin Wolfers.

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{ 172 comments }

Chucklehead April 13, 2011 at 1:05 am

Some people have the gift to know what I want before I want it. They ave the foresight to develop and produce it, make me aware of it then make it easily available and affordable. They must be punished.

muirgeo April 13, 2011 at 3:50 am

They are being punished if they are not good choosers of the country and family to which they are born into because they will less likely be producing the things for you to buy because they never had as good of an opportunity to succeed and become one of those producers who knows what you want.

Better to be a potentially heavily taxed productive person then never to have the opportunity to be heavily taxed at all.

erp April 13, 2011 at 9:58 am

I hope your comment was sarcasm, because in this country, you are not punished by your choice of family birth.

Tim April 13, 2011 at 1:05 pm

Actually, this is not true. Libertarian philosophy in fact makes it impossible not to punish children for the sins of their parents. If the parents were irresponsible, abused drugs, failed to educate themselves, the child born into that household has to suffer the consequences as any role for the state is morally reprehensible.

Alex April 17, 2011 at 1:12 pm

I love the imagination here. So Libertarians look down on governments involving themselves in social programs therefor those programs will simply not exist in a libertarian world. There are no voluntary resources available for the downtrodden because people don’t care about other people.

muirgeo April 13, 2011 at 3:54 pm

So looking at Fig 3 in Russ’s post whch family quintile would you prefer to be born into? Do you really think those born into the lower quintile had as much oppurtunity as those in the top quintile much less those born to the top 1% ers?

dan April 13, 2011 at 4:02 pm

Maybe not, but so what?
More options are availabe for the top 1% than for the bottom 1%.
But, opportunity is available. The journey is longer, albeit, but not unavailable.
Of course, the individual in the bottom has to first leave the house and put forth effort. Will they be in the top 1% anytime soon? Unlikely, but the possibility always exists should efforts and innovations be in that individuals interest.
Not continuing the poor choices made by the parent or other caregiver will likely result in a better outcome for the offspring.
If you don’t push the ball…….the ball will not move. -says the guru on the top of mountain.

Slappy McPhee April 13, 2011 at 10:03 am

Just what are the tax rates being imposed by drug lords in Mexico? Since they are killing so many, I assume your answer would be 100%. What a glorious life Mexicans must be living under the thumb of organized crime.

dan April 13, 2011 at 11:42 am

We have organized crime in the US….. It is in the Capitol building. Tax law is written based on lobbying efforts. Contribute enough to a political party or campaign and get a tax deduction written that works specifically for that industry or business.

Rich Berger April 13, 2011 at 12:26 pm

When I read this post, I knew that Muirgeo’s head would explode. And it did.

muirgeo April 13, 2011 at 4:01 pm

Hey my head didn’t explode. You guys are the ones making the point that increasing income inequality is not relavant while the country is economically imploding the same as it did the last time income ineqaulity was so disparate.

I am dumbfounded by the illogic and persistent denial coming from your side and those politicians tauting the meme for their overlords. But as far as winning the debate I have little to worry about. The economy will not improve significantlywith such massive income inequality. We will look more like Mexico and less like Canada following the libertarian prescriptions… er directions down the road to serfdom.

Rudy April 16, 2011 at 5:54 pm

muirgeo,
You’re right, we need government printing more green backs and ‘quantitative easing.’

Kevin Carson April 13, 2011 at 12:34 pm

No. They must have a state-granted patent or copyright monopoly on whatever they produce, so that instead of moving on and developing something new as free market competition drives their entrepreneurial profits down to zero, they can live off the rents of a one-hit wonder for the rest of their lives.

Seriously, first of all the top 1% is so broad as to conflate very different levels of wealth. It starts at around $200k/year –which is basically an extension of the upper middle class — and goes to infinity. None of that stuff about turnover in the top 1% and “the millionaire next door” has much to do with people in the $100 million or billionaire range.

And second, like most such meritocratic apologetics based on turnover, Roberts’ ignores the real point: structure. If the number of good spots is artificially limited and they exist in a zero-sum relationship to those who don’t have them, it doesn’t matter how fast the rotation is. The structural condition is illegitimate at any particular point in time. No great fan of Bellamy, but his answer to such apologetics using freed Roman slaves who advanced into the plutocracy and bought their own slave-worked latifundia was a good one.

I would venture to guess that when you get up into the ranks of hundred millionaires and billionaires, you’re mainly talking about people whose fortunes come from subsidies and massive protections from the government, rents on state-enforced artificial scarcities and artificial property rights like IP, etc.

If you look at the dominant sectors in the transnational corporate economy, almost all the profit is made in 1) industries heavily dependent on IP (entertainment, software, biotech), 2) heavily dependent on government subsidies (arms, electronics and agribusiness), or 3) extractive industries like mining that are heavily dependent on land engrossment with the help of local states.

Stephen Reed April 13, 2011 at 1:14 am

I think the point is that the top talented people of today earn double the share of income what the top people earned 25 years ago. Not because they have 2x as much talent/work ethic, but because of pure luck that they were born at the right time in the right place. I think those on the right end of the spectrum have a hard time admitting how much pure luck/fortunate circumstances play in determining one’s income/wealth.

Chucklehead April 13, 2011 at 2:33 am

Perhaps those of 25 years ago were just unlucky.

muirgeo April 13, 2011 at 4:12 am

No the point is those of 25 years ago were less likely to be lucky and more likely to have succeeded on their own independent of the family they were born into. The Paris Hiltons of today were lucky by privilege and not by work ethic. That’s the whole point. As income becomes more concentrated your chances of being wealthy become more a matter of birth into privileged (ie luck) and less a matter of truly being productive and virtuous.

tkwelge April 13, 2011 at 5:35 am

Let’s all live under the tyranny of Muirgeo’s views of virtue and ethics! All hail Muirgeo!

Anotherphil April 13, 2011 at 8:52 am

“All hail muigeo” (aka, Muirbot) reminds me of the episode of FUturama where Bender becomes pharaoh.

Floccina April 13, 2011 at 9:53 am

That is not all bad though as some people’s motivation to work hard and save is so that their children will be able to work less hard and spend. At least it increases motivation for some.

Slappy McPhee April 13, 2011 at 10:08 am

Actually, as those such as the Hilton’s of the world have shown, the opportunites for more people to become wealthy have increased. Because Paris is so “irresponsible” with her wealth, many people are able to take advantage of her ignorance and make a living off of it.

*irresponsible isn’t the correct word, but I am in the middle of working for a living, don’t have time to search out my thesaurus.

Ken April 13, 2011 at 12:02 pm

muirgeo,

Today’s generation is likely to recognize the ridiculousness of vacuous rich people like Paris Hilton. 25 years ago, people like you idolized such vacuous rich people like Ted Kennedy and voted them into office repeatedly.

Regards,
Ken

brotio April 14, 2011 at 12:42 am

*like*

DaveInCO April 14, 2011 at 11:18 am

*double secret like*

HaywoodU April 13, 2011 at 4:50 pm

So that is your proof. Paris Hilton(s)? Well argued, troll.

Rudy April 16, 2011 at 5:59 pm

Muirgeo,
People, such as Paris Hilton, do come upon wealth with “luck.” But being born into wealth, or even having earned it, is no guarantee of retaining it. How many millionaire rock groups found themselves in cheap hotels, dead broke, and no where to go? Ask Ozzie that one.

dan April 13, 2011 at 11:48 am

ahahahahahahaha………. it’s all luck…….pure luck……..
Your are not gonna get lucky sitting at home watching tv.
You are not gonna get ‘lucky’ by putting forth little to no effort at your job, all the while complaining all the time. The ‘luck’ is found by individuals making effort. MOST people who live in poverty do not make an effort.
MOST people who live in poverty do not make an effort.
MOST people who live in poverty do not make an effort.
Middle class folk have not necessarily made a risky venture to try their ‘luck’ in the market.
Listened a little about the ‘LUCK’ of Oscar Mayer. Local meat producer who wanted to get bigger. Did they just wait for ‘LUCK’ TO COME ALONG.
They took a chance with a radio jingle. After putting together a jingle and waiting, anxiously, for the feedback (which they thought would have negative reprecussions), they recieved huge postivie results. They then became national after that.
LUCK? There was alot of effort and work put in to reach their ‘success’.

vikingvista April 13, 2011 at 5:05 am

You can’t attribute luck to an entire population over time. Clearly something not so random is occurring.

Methinks1776 April 13, 2011 at 7:48 am

Right. So, we should not let luck by you equally self-interested lefties determine the winners and losers through a tyranny for our own good.

I’ll take luck.

muirgeo April 13, 2011 at 9:56 am

If you prefer luck over merit this is the worst country to be born into. If you prefer privledge to merit and are born well to do this may be one of the best countries to be born into. I and I believe most Americans would chose to have society set up to most accomadate merit. A poorly regulated capitalistic society is NOT the best to promote merit over luck. And I know you frown on ” setting up” society but that is what Franklin, Hamilton and their peers did for us. it’s really not a bad thing unless you like living under a king. So hopefully you can pardon them for telling you how to live.

Anyway I will put you down as a noted Supporter of Aristocratic Libertarianism.

Methinks1776 April 13, 2011 at 10:22 am

And I will put you down as an idiot. Now, go back to crippling children.

JohnK April 13, 2011 at 10:24 am

And I know you frown on ” setting up” society but that is what Franklin, Hamilton and their peers did for us.

Uhhhhh, no?

They helped to set up our government, not our society. Not that your feeble socialist mind can comprehend the difference.

Ken April 13, 2011 at 12:03 pm

muirgeo,

How lucky was Bill Gates? Warren Buffet? Oprah Winfrey? Do none of these people work hard? Or is their success totally dependent on luck?

Regards,
Ken

muirgeo April 13, 2011 at 4:22 pm

Bill Gates…. lucky to be born into an upper middle class family… lucky for government patent protection office and government funded research important to the developement of the microprocessor.

Warren Buffett… well let him tell you…“My luck was accentuated by my living in a market system that sometimes produces distorted results, though overall it serves our country well… I’ve worked in an economy that rewards someone who saves the lives of others on a battlefield with a medal, rewards a great teacher with thank-you notes from parents, but rewards those who can detect the mispricing of securities with sums reaching into the billions. In short, fate’s distribution of long straws is wildly capricious.”

Oprah … is lucky we have an FCC. She recieved much public support during her earlly years and was lucky to participate in Upward Bound a federally funded educational program within the United States.

Ken April 13, 2011 at 5:00 pm

muirgeo,

So how do you explain all the other people in the US that were born and grew up here? How do you explain why Bill Gates is more successful than all but one or two people who were born into an upper class family?

According to Warren ALL Americans live “in a market system that sometimes produces distorted results”. Why aren’t ALL Americans as successful as Warren?

Ditto for Oprah.

Every singe American is “lucky” in the same way that Oprah and Warren are, and most Americans are “lucky” in the same way Bill was. Yet Warren, Bill, and Oprah are enormously successful compared to the same people who were just as “lucky” as them.

In other words, they weren’t “lucky”. Like all successful people, they used a situation in which millions of people find themselves to build successful businesses. It wasn’t luck for Bill to start writing software. It wasn’t luck for Warren to start Berkshire Hathaway. It wasn’t luck for Oprah to promote herself in entertainment, ending up with one of the most successful daytime talk shows of all time.

Millions of people were just as “lucky” as these three people as you define luck, but only these three people found uber success. If they were merely lucky, why aren’t the millions of people who find themselves in the same “lucky” circumstances as them billionaires?

Regards,
Ken

dan April 13, 2011 at 12:43 pm

Merit…….if you put forth little or no effort, you will likely live in poverty, moaning and groaning about rich people.

Rudy April 16, 2011 at 6:04 pm

Muirgeo,
No one on this site, I’m sure, will lose sleep knowing that one individual became a millionaire by winning the state lotto and another became a millionaire by coming up with a new computer device. It’s none of your business how one becomes ‘wealthy.’

John Dewey April 13, 2011 at 9:50 am

Stephen Reed: “I think those on the right end of the spectrum have a hard time admitting how much pure luck/fortunate circumstances play in determining one’s income/wealth.”

I cannot agree with you, Stephen.

Most persons who are in the top income levels are definitely aware that luck played a role in their success. That’s been revealed in surveys. But – and this is a very important point – these persons for the most part put themselves into positions where they could take advantage of good fortune when it reached out to them.

Furthermore, I am convinced that only a tiny few can reach the top income levels without working much harder than the average person. I’ve known a few dozen very high achievers, and I am positive their work ethic is exceptional.

dan April 13, 2011 at 11:54 am

They put forth effort.

They worked late at night.

They sacrificed time spent with family.

The ‘luck’, was manufactured by effort and work.

Winning the lottery still requires effort, though very little. Can’t win if you don’t play.

Can’t get lucky and win in business or employment if you don’t play.

dan April 13, 2011 at 11:55 am

NIke

The guy hit the streets selling.

Did he sit at home and wait for someone to knock on his door asking if he had any shoes that he made?

Peter McIlhon April 13, 2011 at 1:36 am

Even IF there is a large disparity in the amount of income the top 1% has compared to someone in the bottom quintile, or even me (middle quintile), so what? Since when is having rich people, or even a LOT of rich people bad? I find, that leftist have this notion that there is a fixed amount of income in America and them (the rich) having too much wealth or income leaves less for me and the poor. This just isn’t true. Imagine all the wealth and household income in the country is put into a barrel. Liberals have you think that the rich just take a disproportionate amount out of the barrel, leaving less for us. The way I see it, we all put money IN the barrel. Bill Gates makes my life easier, not harder.

Mao_Dung April 13, 2011 at 2:27 am

You really need to read Stiglitz’ piece again and again, because obviously you don’t get it, yet. Good luck to you! I hope you do something for humankind and make a mint in the process. I would appreciate your good works even if they don’t make you money. It’s not all about the money you know. There are some real shits out there with lots of money. I’ve met quite a few of them.

Peter McIlhon April 13, 2011 at 2:49 am

No, it’s not all about money. But try telling that to someone who is arguing that income disparity keeps poor people poor.

Mao_Dung April 13, 2011 at 3:59 am

No, you have to explain that fact to someone like you who pumps up billionaires over someone who helps a little old lady cross the street. The good Samaritan’s act doesn’t show up in the GDP directly, but is important nonetheless, and to the little old lady it’s probably as important as Microsoft is to your daily life.

dan April 13, 2011 at 12:01 pm

Is there financial compensation for helping the old lady across the street.
Charity and chivalry is a personal attribute. It make an individual to ‘happy’ to help. It does not make me happy to have an authoritive figure coerce me into helping the old lady or face consequences.
The ‘microsoft’ billionaire hires people who have jobs and can find time to help the old lady cross the street. Otherwise, the person would be at home whining about why someone else has a widget and he/she doesn’t.

muirgeo April 13, 2011 at 4:20 am

Income disparity DOES tend to keep poor poor. That is what the Pew Economic Mobility Project shows. Read their reports.

http://www.economicmobility.org/reports_and_research/other/other?id=0012

tkwelge April 13, 2011 at 5:39 am

Sigh… The report does not say that income disparity keeps poor people poor. It simply shows the difference in class mobility between two countries. The study makes a stronger case for certain policy objectives, but it does not make the case that income inequality INHERENTLY keeps poor people poorer.

Also, this study focuses on populations living in relative deciles and whatnot rather focusing on a straight comparison of wealth and income. That’s pretty telling…

Don’t worry Muirgeo, one day you’ll understand logic and reason.

John V April 13, 2011 at 9:53 am

How does a doctor have a such a poor ability to read?

dan April 13, 2011 at 12:02 pm

Good Lord…….
I need to know what city you live in…………..so I know what city to never visit and need medical assistance……assuming you are a medical doctor.

muirgeo April 13, 2011 at 4:25 pm

Income inequality and poverty rising in most OECD countries

http://www.oecd.org/document/9/0,3343,en_2649_201185_41530009_1_1_1_1,00.html

Countries with a wide distribution of income tend to have more widespread income poverty. Also, social mobility is lower in countries with high inequality, such as Italy, the United Kingdom and the United States, and higher in the Nordic countries where income is distributed more evenly.

brotio April 14, 2011 at 12:45 am

Don’t worry Muirgeo, one day you’ll understand logic and reason.

Not in his present incarnation.

tkwelge April 14, 2011 at 3:47 am

Once again Murigeo, your link doesn’t say that inequality causes poverty. It is simply making observations about relative wealth within a society. People who are relatively poor in the USA are wealthier than the middle class in a lot of countries. You aren’t looking at absolute poverty, only relative poverty.

The stupidity of inequality fetishists is astounding.

Mao_Dung April 13, 2011 at 4:50 am

It is the war on poor people that the GOP is waging that is truly disgusting. One result of that war is the extreme income disparity that we see today.

Cliff April 13, 2011 at 9:06 am

I hope one day to be involved in a war where the other side gives me tons of free stuff

Krishnan April 13, 2011 at 9:26 am

I notice all the camps started by the GOP which hold all of the poor people – waiting to be shipped off somewhere else – some atoll in the Pacific. I have also noticed that the war on the poor started by the GOP has already killed millions and bodies are piling up on the streets in the US – even blind people can see the bodies piling up around major and minor cities in the US. Once they are done with the poor people, they will go after the not-so-poor – and when that is finished, they go after the next rung – The GOP has accumulated power by engaging in War against people.

Right.

Anotherphil April 13, 2011 at 9:43 am

How is it the trolls never seem to understand that THEY gaves us a “war on poverty” and poverty seems to have survived, won and thrived.

Trillions spent on vain, ineffective and counterproductive programs, so hyper rich Democrats (funny how much money Wall Street gave Obummer) have a ready source of dependent voters eager to sell their vote.

The left is like pyromaniacs complaining about inadequate fire protection.

dan April 13, 2011 at 12:07 pm

I see extreme income disparity in the NBA. We need Congress to limit their wages and redistribute their wealth. Poor people cannot afford to go to games. It is disgusting. How can those players live with themselves knowing that many of the players come from humble beginnings and yet the community who raised them cannot afford to go to a game. And then, there is the racial inequality in the NBA. Where is the ACLU and Al Sharpton? Where is the Hispanic representation in the NBA? The NBA is America…. But, yet it does not represent America’s racial diverserty. It is an atrocity.

kyle8 April 13, 2011 at 6:59 am

NO, it is about stupid evil idiots like you an mureigo who are so eaten up with envy that you want to infest this country with ruinous soak the rich policies. because you are braindead, evil socialists.

That is what it is all about jackass.

Krishnan April 13, 2011 at 9:27 am

There is nothing, ABSOLUTELY NOTHING you can say that will put some sense into some people …

You are right in that envy drives these people – They cannot – so they demand and take …

muirgeo April 13, 2011 at 4:18 am

“Since when is having rich people, or even a LOT of rich people bad?”

That’s kinda like saying since when is having Kings , Lords and serfs bad. For one thing you have fewer rich people not more when wealth is concentrated. The rich just have individually more. Concentrated wealth is economically inefficient because it marginalizes many potentially productive individuals by not allowing them an equal opportunity to succeeded while allowing Paris Hiltons to be rewarded for the randomness of their birth unto a wealthy family.

The position ..”who cares about concentrated wealth ” is the position of economic inefficiency.. as well as being amoral and without virtue even if it is the position those of wealth and power want their lords and vassals to take and promote.

Mao_Dung April 13, 2011 at 4:31 am

“The rich get richer and the poor get prison.” is truly trite, but never more true than nowadays in the U.S. I don’t think that we’ve reached an equilibrium yet. There is still more riches to be had and more prisons to be built. And ironically, some of those riches are being made by prison industries. Angela Davis has written about it.

Davis has continued a career of activism, and has written several books. A principal focus of her current activism is the state of prisons within the United States. She considers herself an abolitionist, not a “prison reformer,” and has referred to the United States prison system as the “prison-industrial complex”. -Wikipedia

tkwelge April 13, 2011 at 5:41 am

I really don’t think that you understand the people who disagree with you at all. Case in point, you bring lots of anti-GOP talking points to a libertarian website.

Russ Roberts April 13, 2011 at 7:48 am

Please stop responding to this troll, folks. He obviously missed the chart in the post ans the post itself, the chart shows that the poor get richer.

If he wants to argue about why the chart is wrong, then talk back to him.

If he wants to imply things I allegedly beleive about the GOP and the importance of money, please juet ignore him.

Ken April 13, 2011 at 12:04 pm

Russ,

Stop telling people to whom they can and can’t respond.

Regards,
Ken

Michael April 13, 2011 at 12:57 pm

Ken,

Russ owns this blog. Obviously, he doesn’t want it to continue to be vandalized by trolls.

By responding to these trolls you enable them.

Please, DNFT.

Ken April 13, 2011 at 1:16 pm

Michael,

I am interested in free and open discussions, particularly with people with whom I disagree. Simply calling them trolls doesn’t change anything.

I am interested in what muirgeo, Mao_Dung, Gil, and Sethstrom have to say more than anyone else on this site. They allow me to see what flaws I might have, but more importantly their commenting forces me to strengthen my arguments and actually look for data to support my point of view rather than throw out bland assertions the way most on this site do, including the four I mentioned.

muirgeo’s comments are the most fascinating because of what a bigot he is. When confronted with solid data disproving or contradicting what he says he tells you why that data is flawed. He is blinded by his hatred of anyone he considers rich, which may or may not extend to lefties like Soros.

Gil and sethstrom for the most part are pretty funny, Gil especially. Both say comment in sarcastic tones trying to demonstrate the idiocy of libertarianism, but more often display their idiotic assumptions. By exposing their assumptions, I can shift my arguments to better reach them and give them understanding.

And Dung is clearly a young person rather typical of the raging, hating left seen on campuses. His childish incoherent rants represent rather well I think many of the rabid left college crowd. He more than anyone else on this site is full of hatred. It’s quite amazing the death wishes he spreads around to those with whom he disagrees. He represents the most irrational style of leftist. Plus, he’s kind of funny, in a completely unintentional way of course.

You can call them trolls if you like, but the reality is that close to 40% of Americans think they way they do. Dismiss them as trolls if you like, but trying to silence them, or those that interact with them, is just as stupid as many of the things they say.

Regards,
Ken

Michael April 13, 2011 at 6:03 pm

Ken,

A couple of points, if I may.

Firstly, the desire for open discussion with persons whom you disagree is, I believe, very healthy.

However, you need to be certain that the persons with whom you are conversing are arguing in good faith. Two of the four you refer to have demonstrated, repeatedly, that they aren’t here in good faith. Their posts are filled with red herrings, non-sequiturs, and base ad hominems.

Whether intentional or unintentional, these posts cause disruptions in the forum by devolving into flame wars–it happens daily on this blog.

Dr. Roberts is merely asking that commentators stay on the topic he has posted about. As this blog is his property, and this comments section offered has a courtesy, he is well within his rights to ask that trolls not be fed.

Having an open and honest discussion is fine, but you need to consider the forum in which you are doing it. If you were a guest at a friend’s house while having a particularly heated argument with another friend, and the host asks you, politely, to cease arguing because it is interrupting the party, you would, I suspect, stop–or you would take the argument outside. It’s only polite, no? Just like your friend’s home, blogs have a particular etiquette.

You may believe that close to 40% of Americans believe as trolls here do, but nothing could be further from the truth. If the hosts of this blog and the trolls represented two poles, the majority of Americans would fall between the two extremes and the arguments made would vary as much in shape as that of snow flakes.

The things you argue against with them are pale imitations of actual arguments put forth by liberals (that is, real liberals–not the talking heads that are often seen on TV). If you truly wish to engage those ideas, you aren’t likely to see them presented accurately in the comments section of this blog.

vikingvista April 13, 2011 at 6:06 pm

“close to 40% of Americans think they way they do.”

“Think” needs quotes here.

Ken April 13, 2011 at 7:21 pm

Michael,

I didn’t say open AND honest. I simply said open. I like for people to be able to express themselves and have their idiocy and dishonesty on display in digital ink for everyone to admire. You say that two of the four people I mentioned do not act in good faith. I think that muirgeo and Mao mostly argue in good faith and react badly to the non-sequiturs and ad hominems they receive.

Many commenters on this site argue in bad faith if you’re going to lump in non-sequiturs and ad hominems. vikingvista, a commenter with whom I usually agree, just last week called me a troll for arguing vigorously in favor of the powers granted to the federal federal government by the constitution. It’s not just the four I mentioned who comment non-sequiturs and ad hominems.

In fact, all the commenters I can think of who post here regularly engage in those very activities. I like to see people get riled up. I like to see them argue vigorously for or against something, even while engaging in all sorts of nasty activities.

I believe in open and free expression, including dishonest expression. I want those people to express themselves. Including the people who disagree with people like muirgeo. The four I mentioned are not the only ignorant, dishonest, nasty commenters on this site.

Regards,
Ken

Michael April 13, 2011 at 8:14 pm

Ken,

I’m afraid that I’m not sure how to respond to that, but I’ll give it a shot.

I didn’t say open AND honest. I simply said open.

If you aren’t looking for open and honest, you’re simply lookig to a) pick a fight, or b) entertain yourself. This isn’t the forum to do it. Might I suggest Jerry Springer or 4chan? The fact of the matter is, you’re a guest here. Please respect your host.

Many commenters on this site argue in bad faith if you’re going to lump in non-sequiturs and ad hominems. vikingvista, a commenter with whom I usually agree, just last week called me a troll

I didn’t see the comment, but for the sake of the argument, I’ll take your word for it. It doesn’t change the fact that vikingvista is, a vast majority of the time, on topic. Was his comment gratuitous? You bet. So what? It isn’t a pattern like it is with the other two, and that’s part of the point.

I think that muirgeo and Mao mostly argue in good faith

What you think is directly contridicted by their history here.

I believe in open and free expression, including dishonest expression.

I agree. Again, so what? You. Are. Missing. The. Point.

If you wish to debate the ideas they have that are not directly related to topic at hand, then invite them to a chat room or open forum and have at it. This. Isn’t. The. Place. For. It.

I’ll ask again, please respect your host.

Ken April 13, 2011 at 10:00 pm

Michael,

“If you aren’t looking for open and honest, you’re simply lookig to a) pick a fight, or b) entertain yourself.”

I’m pretty sure I made myself clear when I said “They allow me to see what flaws I might have, but more importantly their commenting forces me to strengthen my arguments and actually look for data to support my point of view rather than throw out bland assertions the way most on this site do, including the four I mentioned.” Did you not read this? It was in my first comment to you. But yeah picking and fight and entertainment is there too. I’d say the majority of commenters on this site comment for those reasons, too, including you.

I mean look at you, continuing the conversation with me, being (purposely?) obtuse as to why I believe in open discussion. Why else pursue this if you’re not looking for a fight? Did you not make yourself clear in your comment to me, making the laughable analogy that a blog is equivalent to a house? That’s the main reason for this comment that I’m now making. I like to pick at people, including you. Are you going to respond? The only reason would be for entertainment purposes or to fight. We’ve both made our positions clear (but I’m not pretending to not understand you).

“‘I think that muirgeo and Mao mostly argue in good faith’

What you think is directly contridicted by their history here.”

I believe they comment here what they believe to be the truth. How is that NOT arguing in good faith?

“You. Are. Missing. The. Point.”

No. It is you who misses the point. Don and Russ have toyed with the idea of closing comments completely the way Russ Mankiw did. It is their blog and they can do what they like with it. I made a plea for them not to do that primarily because of muirgeo. Most other commenters merely nitpick the posts, but he is violently opposed to what Don and Russ believe. I find it interesting, as well as entertaining.

And I do respect both Don and Russ. What I will NOT do is respect their requests, or anyone else’s, to NOT respond to those to whom I want. In fact, it makes me want to comment out of spite.

Regards,
Ken

PS: And before you reply, ask yourself is it to pick a fight, or for entertainment. After all, we both have clearly stated our positions, so there is no need for further clarity. I admitted I posted this comment for both of those purposes. Will you do the same if you respond?

Michael April 14, 2011 at 12:05 am

Ken,

This will be my last repsonse to you.

I’m pretty sure I made myself clear when I said “They allow me to see what flaws I might have, but more importantly their commenting forces me to strengthen my arguments and actually look for data to support my point of view

No, you haven’t made yourself clear. On the one hand you admit that you care not at all for honest debate and on the other you say you’re trying to strengthen your own arguments. Strengethen them against what? Caricatures?

I’d say the majority of commenters on this site comment for those reasons, too, including you.

And you’d be wrong.

making the laughable analogy that a blog is equivalent to a house

The analogy was about the manner in which you treat a host, not a house. I admit the analogy is imperfect (what analogy is?), but you’ve completely dodged the point. If you wish to persue the ideas that muirgeo and Dung present, please do so. Elsewhere.

I like to pick at people

You realize this is the very definition of trolling, right? Are you admitting that vikingvista was right? Think about what your writing for a moment.

Why else pursue this if you’re not looking for a fight?

Because I felt that you were (are?) being deeply and profoundly rude. I also had the (mistaken?) impression that you were unfamiliar with the etiquitte of online debate. My initial response was meant to be informative, not confrontational.

I made a plea

“Stop telling people to whom they can and can’t respond” is not a plea. It’s a demand. And you are in no position to make such demands of Roberts and Boudreaux. Choose your words more carefully and you can avoid this kind of nonsense.

And I do respect both Don and Russ. What I will NOT do is respect their requests, or anyone else’s, to NOT respond to those to whom I want. In fact, it makes me want to comment out of spite.

Very mature. At least your honest about it. You realize that failure to respect the owner’s request to stay on topic is a failure to repsect the owner, no? (In fact, in many forumns, failure to heed moderators results in banning. That professors Roberts and Bourdreaux have not banned the trolls here is extraoridinarly generous, but I digress) You can’t say that you both respect and disrespect Dr. Roberts and expect anyone to take you seriously.

And before you reply, ask yourself is it to pick a fight, or for entertainment.

You say this as if you are certain these are the only possible reasons for commenting. I think you ought to be less certain.

I admitted I posted this comment for both of those purposes. Will you do the same if you respond?

Do not presume to understand my motivations, Ken. You have far too little information to make such inferences.

Have a good night, Ken.

Michael April 14, 2011 at 12:06 am

Once again, my kingdom for an edit button.

Please forgive the typos.

Ken April 14, 2011 at 1:38 am

Michael,

“On the one hand you admit that you care not at all for honest debate”

I didn’t say I didn’t care for honest debate. I said I am for open debate. The dishonest debate that comes with open debate is to be exposed. The way you dishonestly put words into my mouth. Dishonesty can be ridiculed as it should, the way I have been ridiculing you.

“Because I felt that you were (are?) being deeply and profoundly rude. I also had the (mistaken?) impression that you were unfamiliar with the etiquitte of online debate. My initial response was meant to be informative, not confrontational.”

I have been commenting on this site for five or six years now. I think I’m familiar with commenting online. You were trying to be confrontational and antagonistic. I am also familiar with the dishonesty of people the way you are being dishonest about not being confrontational and antagonistic.

“‘I’d say the majority of commenters on this site comment for those reasons, too, including you.’

And you’d be wrong.”

Definitely I am not wrong. The comments section here is a raucous ride of people picking a fight for sport and anger, along with some other noble and not so noble reasons.

” please do so. Elsewhere.”

No.

“‘I like to pick at people’

You realize this is the very definition of trolling, right?”

You mean the way you’re picking at me in response to the way I’m picking at you? Thanks for admitting you’re a troll.

“‘I made a plea’

‘Stop telling people to whom they can and can’t respond’ is not a plea. It’s a demand.”

When Don and Russ shut down comments in 2008 I made my plea in private through email; I was not referring to my opposition I made today. You can see my plea to them in the partially reprinted email I sent to them that I agreed to let them publish as they see fit here

http://cafehayek.com/2008/11/more-on-comment.html

“You realize that failure to respect the owner’s request to stay on topic is a failure to repsect the owner, no?”

No. As I said before I respect both Don and Russ, but I will not honor their request to not respond to people. You do realize it is possible to respect people and not agree with them 100% and to not do what they ask 100% of the time, right? Don and Russ have a PUBLIC blog, on which they willing open comments. They know people will say things they don’t like. Unlike you, though, they aren’t childish about it.

“In fact, in many forumns, failure to heed moderators results in banning. That professors Roberts and Bourdreaux have not banned the trolls here is extraoridinarly generous, but I digress”

As you can see in the post I provided a URL for, they did at one time flirt with the idea of closing comments permanently, to which I made my plea. And it is extra-ordinary. Becuase these people aren’t pussies and aren’t afraid of vigorous and vicious opposition. Silencing fools doesn’t do anything. But letting people be fools, in public, and kept in perpetuity online is a great way to let people know of these fools and to prevent these fools from denying what fools they actually are.

“You say this as if you are certain these are the only possible reasons for commenting. I think you ought to be less certain.”

Of course it’s the reason. But go ahead and try to convince yourself you’re above it all. Just remember this thread is still going because you have continued to spar with me (verbally anyway), while you try to convince yourself you, no not you, would never submit to such base motives. I am honest and thank you for noticing. I am honest in admitting to what others will not. I admit I am not a superior being. I admit to being merely human with all the glorious human emotions in which to revel. You’d enjoy life more if you were more honest with yourself. Then you could start being more honest in the comments section of this site.

“Do not presume to understand my motivations, Ken. You have far too little information to make such inferences.”

I have plenty of information to make those inferences. You’re not some mysterious being to which my intuition is closed off. No, you’re just another desperate person hoping against hope others will think of you as something you’re not: an honest person just trying to keep the peace. I see you leave your comment as dishonestly as you began it.

Good night to you, too.

Regards,
Ken

PS: Those who focus on typos are simpletons; the substance of a comment is what matters. Of course all typos are forgiven.

Methinks1776 April 13, 2011 at 7:56 am

It’s like a troll convention in here.

HaywoodU April 13, 2011 at 4:59 pm

Mao responding to a Ducktor post gives me belly laughs.

Anotherphil April 13, 2011 at 9:48 am

That’s kinda like saying since when is having Kings , Lords and serfs bad.

No, its not. Its not even close.

But of course, if we elect Presidents and Legislators who have untrammelled power over the product of our labor-that’s nirvana.

Lets be honest. The trolls see the economy as closed off because they spend all their time inflicting their bile on others, instead of finding a way to be of value to their fellows.

dan April 13, 2011 at 12:10 pm

And the RICH people keep their wealth under their beds or in vaults in their houses. None of that money is in the economy. None of that ‘wealth’ is a percieved wealth. Should a ‘wealthy’ person choose to sell all assets, they would recieve every penny that they are assumed have accumulated.

dan April 13, 2011 at 1:08 pm

I am being facetious.

crossofcrimson April 14, 2011 at 2:14 pm

“That’s kinda like saying since when is having Kings , Lords and serfs bad. ”

No, it’s really not.

The reason why kings, lords, serfs (and most forms of government) are bad is because it sets a standard of arbitrary inequality in authority…..not simply that there is a disparity in their productive capacity.

Todd April 13, 2011 at 1:58 am

” But some and maybe much of that growth in the economic power of the top 1% is due to productivity.” What the heck does that mean!?!?!? Maybe?? What exactly did they produce? This obviously explains the 1 in 7 Americans on food stamps right now? Or should I just make the assumption that a very substantial portion of those upwardly mobile food stamp recipients will be in that upper 20% in a few years? Maybe just ignore those 8 digit bonuses that so many Wall Street bankers took home last year because of their “productivity?”

muirgeo April 13, 2011 at 4:27 am

Indeed… the idea that the modern financialized markets some how meter out proper incomes in proportion to worth and productivity requires much faith in the pricing mechanism of the modern supercomputer quantized politicized speculative markets… much much faith.

My experience suggest the truly productive wealthy are not the ones who care about paying their share of taxes back into the system while those who’s wealth IS the end and who tend to get their wealth through scheming the system rather then actually being productive are the ones all up in arms about paying back to society.

Ken April 13, 2011 at 12:07 pm

Those sons of bitches! I can’t believe the way Wells Fargo and Bank of America schemed to sell me two mortgages with which I used to buy two houses. Helping people purchase things truly isn’t a productive action. Thanks for pointing that out muirgeo!

Ryan Vann April 13, 2011 at 6:23 pm

I’ve no love for Wach/Wells, or banking in general. It is a corrupt, dishonest industry (see Wells laundering billions of dollars in drug money). With that said, lending has its merits, and I try to stick to credit unions when at all possible.

Ken April 13, 2011 at 10:02 pm

Ryan,

All of my business has been above board and honest. You can have no love all you like, just recognize if it weren’t for banks much of our progress over the last few centuries would have been possible.

Regards,
Ken

tkwelge April 13, 2011 at 5:42 am

Way to miss the entire point. Congratulations.

John Dewey April 13, 2011 at 10:00 am

Todd, do you know any of the people who use food stamps? I do. Some of my relatives are in that group or have been in that group. I am positive that yesterday’s food stamp recipients can be today’s upper middle income earners.

Many who receive food stamps receive unreported income which would disqualify them from the food stamp program. I have also known and read about people who have bought food stamps for 50 cents on the dollar from allegedly “poor” individuals. Food stamps are one of the biggest frauds in this nation.

dan April 13, 2011 at 12:14 pm

The stats of people living in poverty include those indviduals between 18 and 30. These millions of people are just getting their foot in the door of a career.
And, yes, most people are upwardly mobile in the their income status. 10 yrs ago I was in the poverty range. I am no longer in the poverty range. Govt did not move me out of poverty.

Liberty 1 April 13, 2011 at 1:01 pm

Todd,
You stated, “Or should I just make the assumption that a very substantial portion of those upwardly mobile food stamp recipients will be in that upper 20% in a few years?”
Yes, that is exactly the case! I remember fondly years ago when I was working as much as possible and only had a bag of pretzels for my day’s food, drank water from the water fountain because I couldn’t afford 50 cents for a 12oz soda to go with my pretzels. I remember my girlfriend at the time finding 2 dollars in her pocket to which I yelled “You’re holding out on me” chasing her around the house and doing wonderful things I can’t repeat here when I caught her!!!!! Good times, I was very poor, I’m not now.
If I’m poor tomorrow it will be because of the choices I make/made and not because of the rich. They do not determine my success or failure, I do!!!!

Peter McIlhon April 13, 2011 at 2:04 am

Todd, I’m pretty sure Bill Gates inventing Microsoft had no effect on the 1 in 7 Americans on food stamps. He has been highly productive making computers and the internet more accessible and cheaper. He deserves his wealth. Now, it is terrible that someone has to resort to food stamps, but what does the wealthy having wealth have to do with their current situation?

Mao_Dung April 13, 2011 at 4:19 am

You don’t think that Bill Gates could help alleviate hunger in this country if he chose to do so? He’s too busy playing bridge and passing out autographed 1 dollar bills to the young caddies at bridge tournaments. I saw it with my own eyes. I thought to myself “ONE dollar bills!”

Mao_Dung April 13, 2011 at 4:40 am

Dr. Boudreaux thinks there is virtually no hunger in the U.S. because the U.S. is such a rich and prosperous country. Tell that to to the millions of people and their kids who receive food stamps.

Cliff April 13, 2011 at 9:09 am

Isn’t that a little like saying “Tell that to the millions of people and their kids who receive food”?

Ken April 13, 2011 at 12:08 pm

Cliff,

You don’t get it! They’re the whipping boy of the left. Of course they eat and of course Don’t right, but then what would Dung be left to say if he admitted this?

Regards,
Ken

dan April 13, 2011 at 12:24 pm

Ever been on Food stamps. I was. Gotta tell ya. We would not have gone hungry without them. Did not get Pizza Hut pizza like other kids, every Friday. But, we got pizza. And it was good. Not entitled to ‘Pizza Hut’ pizza.

HAVE ANY OF YOU EVER LIVED THE ‘POOR’ LIFE?
The liberal (I assume they are liberal due to their comments) sound like the offspring of well-off families or offspring of entitled families.
There is ‘poor’ and then there is ‘pooooor’. But, all of the food stamps in the world or govt handouts will not change things. Their children are likely to live in poverty later in life from what the parents have taught them. I would be in Detroit, likely, if I did not have a better role model outside of the home. You want to help and do good, go out and be a role model. Sign up for Big Brother/Big Sister, Boy Scouts, Girl Scouts, Church, etc.,……
Write a check.

Cliff April 13, 2011 at 9:09 am

Did you not get the memo that Gates is donating practically all of his money to charity, and has already donated countless billions more than you ever will (has done way way WAY more good than you will ever do)?

Frank33328 April 13, 2011 at 9:16 am

Can Bill Gates alleviate hunger in this country if he wanted to? An interesting question but:

Do you consider it ironic that had Bill Gates been a Mother-Theresa-like doer-of-good from the beginning, he would not have accumulated the wealth that you now believe could be employed to alleviate hunger? The fact that he was an “evil” chaser of profit is the thing that made it possible to create the wealth that makes hunger alleviation possible at all. This dichotomy of good requiring evil seems self defeating to me.

Genuinely and without sarcasm, I am curious what you would have prescribed as the moral thing for Bill Gates to do for the start (not just now). I ask because while to trying to understand all sides I continue to come to a contradiction in what I believe to be your point. Please clarify.

dan April 13, 2011 at 12:17 pm

Alleviate hunger? for how long?
Forever?
As the free food comes rolling in, more people will suddenly show up in line daily.
Those One dollar bills are now worth more than One dollar. With his signature, he just raised the value of that One dollar. Do you not see the brilliance there?

Doc Merlin April 13, 2011 at 12:21 pm

Bill gates isn’t rich enough to do what you want him to. His entire wealth is only what… about 60B dollars? Thats roughly just the deficit the US government has for 2 weeks of operation this year.

Seriously, the rich aren’t rich enough to do very much at all redistributionally.

robert_o April 13, 2011 at 2:21 am

I wonder, how has the population in the 1% changed numerically, as a proportion of the total population compared to the previous 25 years?

I bet the top 1% of families are more than 1% of the population.

Chucklehead April 13, 2011 at 2:54 am

Perhaps the rewards are bigger because the life cycle of innovation is shorter? The model E was produced for 19 years. Remember myspace was replaced by facebook and is being replaced by twiter. Most of the top 1% don’t stay there very long. Many a real estate millionaire are now on food stamps. The Donald has been a billionaire and back several times. Most don’t make a comeback.

muirgeo April 13, 2011 at 3:44 am

Yeah there is a their there. The bottom line is America is one of the worst choices of countries to be born into if you want to have the greatest chance of succeeding regardless of the family to which you are born.

Don’t get born here… better to get born there into one of their families.

http://www.economicmobility.org/assets/img/EMP_US_Canada_Fig1.jpg

And again I believe the evidence shows the overall wealth of a nation and it’s productivity stagnate as incomes concentrations diverge. There is both a moral and an economic argument against libertarianism and the concentrations of wealth such policies promote.

tkwelge April 13, 2011 at 5:43 am

Once again, you focus on income quartiles and deciles rather than a real estimation of consumption possibilities.

Russ Roberts April 13, 2011 at 7:50 am

Read the chart in the post. If you have something constructive to say about it, please do so. Otherwise, pleaase stop repeatng the same flawed, partisan arguments.

muirgeo April 13, 2011 at 10:32 am

All that matters is THAT chart… your chart? How about the chart I just posted? Read the full reports from Pew. I may be mis-stating my argument on poverty, mobility and income concentration but there is plenty of evidence to suggest us and other countries with concentrated wealth may likely have higher poverty rates.

It’s a very fair question to ask which of those countries you would choose to be randomly born into. Because that is the big picture question I believe that encompasses most of what we debate here.

Being called a troll by you for taking the side of a Noble laureate on an issue in much dispute is a let down. As much as I disagree with you I do respect your opinion, I respect that you allow me to participate in this blog and I really think you do a great job on Econ Talk.

Yes I apologize for my flippancy and bombastic tone but just look at the comments and name calling that regularly follow even a sincere unprovoked comment by myself. And look at how fast the debate degenerates when others who disagree post to the blog.

Russ through my time here I’ve seen your position on Wall Streets complicity in the crash change to what I had been posting well before the crash.

With time I think any well reasoned evaluation of the evidence now and through history will show that great concentrations of wealth are injurious to social mobility and the economy as a whole. I think it takes quite a lack of objectivity to ignore the great economic crashes that have occurred right after times of maximal income an wealth disparity. This pattern has shown consistent not only for our country but for others and though the span of history as well.

JohnK April 13, 2011 at 11:01 am

Great concentrations of wealth are not by themselves a problem.

What matters is how that wealth was acquired.

If you look a little closer at the historical concentrations that are “injurious to social mobility and the economy as a whole” I’m quite positive that you’ll find they were acquired through plunder or some other form of coercion, not trade.
Wealth is taken without anything being given in return.
The accumulation of wealth represents wealth that no longer exists in the rest of society.
The rich get richer and the poor get poorer.

Concentrations of wealth that are accumulated through voluntary trade are not “injurious to social mobility and the economy as a whole”.
Quite the opposite in fact.
As Bill Gates gets rich, so does everyone who uses Microsoft’s product. He accumulates wealth, and society is richer as well.
The accumulate wealth represents an equal amount of wealth that is diffused throughout society.
The rich get richer and the poor get richer as well.

Do you see the difference?

Methinks1776 April 13, 2011 at 11:30 am

Calling you an idiot is no more “name calling” than calling a diabetic a diabetic.

carlsoane April 13, 2011 at 11:31 am

You attribute the rise in income disparity to an increase in economic freedom. I think other factors such as monetary inflation are far more likely culprits.

Pete April 13, 2011 at 11:58 am

“It’s a very fair question to ask which of those countries you would choose to be randomly born into.”

Yes it is a fair question. But the chart you supplied does nothing to discourage me from answering “The United States,” nor did it actively encourage me to do so.

My answer to the question might revolve around three things: 1. What is the median income for that country? and 2. How difficult is it to achieve that median income from a starting point far below it? and 3. How likely am I to start out far below it?

Your chart partially addresses points 2 and 3, but provides a satisfactory answer to neither. It does not address point 1 at all.

My point is that saying there is high income elasticity doesn’t say all that much about how well-off people are (or, to your point, how well-off a random person is likely to be). It tells me a little bit about how influential luck is in determining where I fall in a certain income distribution, but without additional knowledge of that distribution (i.e. range, min, max, median), it cannot affect my preferences for being born into it.

chris April 13, 2011 at 12:40 pm

I’m all for civil discussions as you are. However, you admitted to misstating your arguments. I suspect that you did this to provoke a certain response from people. That is pretty close to being a case of trolling, if it is not exactly a case of trolling. You aren’t arguing in good faith. As bad as the name calling may be, turning a fruitful debate into a trollfest is worse.

dan April 13, 2011 at 12:31 pm

WOW!!!!!

‘The bottom line is America is one of the worst choices of countries to be born into if you want to have the greatest chance of succeeding regardless of the family to which you are born. ‘ -muirgeo

We are all more stupid now from that statement. Please stay away from children. That idiocy will hurt their ambitions and their likely-hood to succeed in life.

That is theeeee Stupidest statement I have seen.
What complete crap. Ludicrous!!!
I cannot believe I have even read that statement.

muirgeo April 13, 2011 at 4:06 am

In replying to chuckleheads first post I finally understood the significance of Russ’s point.

We look at people now who are wealthy and think how unfair it is to tax their success. But the whole point is that by agreeing to tax FUTURE wealthy successful people we will likely have a society better equipped to produce MORE future wealthy successful and productive people. THAT IS THE KEY POINT.

So if it seems too harsh to tax the now wealthy successful productive people an argument ( obtuse as it may be) can be made that we could agree to tax future wealthy people in 20 years and we will not have discriminated against anybody now and will have paved the road to a more equitable and opportunistic society.

Of course I don’t believe there is any reason to be so obtuse and wait to tax the current wealthy as they mostly came to their success following heavy taxation of the previously wealthy who came before them and paid to set up the conditions of society that allowed them an increased likelihood to so succeed.

As Russ says they are NOT the same people but taxing the wealthy IS the best way to make more wealthy people…even if they aren’t quite so wealthy.

Morality, virtue and economics arguments all side with the position to agree to tax future wealth properly.

Babinich April 13, 2011 at 5:30 am

The is no moral or economic argument for wealth confiscation.

But the whole point is that by agreeing to tax FUTURE wealthy successful people we will likely have a society better equipped to produce MORE future wealthy successful and productive people. THAT IS THE KEY POINT.

we will likely Great; action based on maybes and emotion…

Is there a plan you have in mind? Maybe you have a society that has followed your ideology and achieved your goals?

muirgeo April 13, 2011 at 4:42 pm

“Maybe you have a society that has followed your ideology and achieved your goals?”

Uh yeah… post FDR America right up to Reagan and the Republicans brought us back to square one… a great depression and a collapsing economy and collapsing state.
Great growth post FDR with shared prosperity , massive innovation and no major economic calamities. Then Reagan deregulates and we go from the Savings and Loans crisis right through several more such crisis and eventually the collapse.

Ken April 13, 2011 at 12:11 pm

muirgeo,

“But the whole point is that by agreeing to tax FUTURE wealthy successful people we will likely have a society better equipped to produce MORE future wealthy successful and productive people. THAT IS THE KEY POINT.”

How is this even remotely true? Taking from the most productive members of society and giving to the least productive ensures we will be better equipped to produce more future wealth? Do you even realize what it is you say?

Regards,
Ken

muirgeo April 13, 2011 at 4:54 pm

Yes Ken I do realize what I am saying. By the way thanks for defending at least my worth as a debate sparring partner.

The point is much idle wealth and talent chasing such wealth is truly unproductive. Much better to refunnal excess wealth to the infrastructure of society and supporting education and rsearchers ect…

There are 2 types of people in the world . Those that are mostly concerned with their personal wealth and well being and those that want to make a positive contribution to society. I and the latter type of person generally agree that we need to payback a reasonable debt to society to keep the whole thing going… especially if we are extremely successful. If there are truly people out their who think they need hundreds of millions much less billions of dollars to live too bad.. we do not need to set up society to promote their excesses…. they can go elsewhere or just deal with having 100 million in stead of 15 million dolars…. they are mostly scavengers of the truly productive society.

Ken April 13, 2011 at 5:11 pm

muirgeo,

No problem about the defense. Most if not all people are just as bigoted as you, including the commenters, and Russ (I’m very annoyed that he has on multiple occasions asked commenters to not reply to you or Mao_Dung), on this site. Rather than recognize their own biases and bigotry, people prefer to call you a troll. While I think you can be an asshole, I think you truly believe what you have to say. Since I think you are completely wrong, I’m interested why you believe what I think is obviously wrong.

Now on to your comment: What idle wealth and talent are you talking about? Into what infrastructure should this “excess” be funnelled? How do you know it will be “better”?

And you’re wrong about the types of people in the world. There are three. One who wants to rule over everyone and everything. One who wants to be ruled (I think you are one of these people). One who simply wants to be left alone. Unfortunately, I those who want to rule and those who want to be ruled combine to screw over those who want to be left alone.

As for your two types of people: generally people become wealthy by making large contributions to society. As a previous example, I’ll use Bill Gates. Bill Gates introduced an easy to use operating system and partnered with hardware developers and software developers resulting in Windows becoming the dominant operating system. Having this easy to use operating system on cheap computers had added trillions of dollars of productivity to the world. Gates deserves the billions he has.

Regards,
Ken

Brian Bedient April 13, 2011 at 5:20 am

Hey, we’re talking about households here and comparing today with the Reagan years. A major difference today is that a much larger share of households (concentrated in the upper quintiles for obvious reasons) have two incomes rather than one, and that second income earner is likely to be much better educated. To make it into the top 1%, you just need to have two incomes of over $125k apiece, and such incomes aren’t that uncommon among professionals, business owners, and high-end salespeople.

I remember living with three of my friends back in my early 20s and surprising them with the fact that our household was in the top quintile of income-earners despite the fact that we all just had crappy entry-level jobs. Congratulations, gentlemen, because none of us could afford our own places alone (let alone luxuries like health insurance), we are now officially classified as ‘the rich.’

Also, the really interesting development in income inequality is the rise of the share of wealth held by the very wealthiest people, the top 400 or so families, which I find to be at odds with what I’d expect from a system of competitive markets. Is this best explained by freer markets in the last 25 years or by increased cronyism and the influence of government? I’d strongly suspect the latter. Executives and bankers are becoming more valued not for their skills but for their connections, I’d wager, and while labor valued purely for its skill is subject to a competitive market process keeping wages from shooting up into space, the power to influence the government is more of a limited resource, with value limited only by the power of government to pick winners and losers in the economy, which is considerable. If the majority of the newest highest income earners aren’t in some stage of the ‘revolving door’ I’d be very surprised.

kyle8 April 13, 2011 at 7:04 am

It is ironic, the best way for the socialists to realize their dream of thwarting the richest people from garnering more undeserved wealth would be to shrink the power and size of government because, as you say, a lot of wealth has been gained by people jobbing the system.

John Dewey April 13, 2011 at 10:15 am

Bruce Bedient: ‘A major difference today is that a much larger share of households (concentrated in the upper quintiles for obvious reasons) have two incomes rather than one, “

Did you find any data to back up that assertion? I could not. In fact, according to the U.S. Census Bureau, the percentage of households with two or more wage earners has actually decreased since the Reagan years:

2002-2009 ….. 41.9%
1981-1988 ….. 44.6%

see Table H-12. Household by Number of Earners by Median and Mean Income

Ken April 13, 2011 at 12:13 pm

Ha! I love it when people’s assumptions are shown positively to be false. Brian’s probably formulating an argument that the Census Bureau is a tool for the right!

Brian Bedient April 13, 2011 at 1:20 pm

What? I’m an anarcho-capitalist. Speaking of showing assumptions to be positively false.

The Census Bureau is a tool for the government. Still, I don’t necessarily doubt their numbers here. Also, the argument I was making was ‘rich households are mostly just households with two above-average income earners who are still middle-class normal people’ which tends to deflate the vilification of the wealthy practiced by the trolls here.

Wikipedia on “Affluence in the US” says “The overall increase in household income is largely the result of an increased percentage of households with more than one income earner. While households with just one income earner, most commonly the male, were the norm in the middle of the 20th century, 42% of all households and the vast majority of married couple households now have two or more income earners. With so many present day households having two income earners, a substantial increase in household income is easy to explain.” Forgive me for taking that at face value and assuming the progression towards two-income households has been steady.

Fortunately, my point was that second household incomes are larger now than then. The Census data Mr. Dewey posted do seem to bear that out – the average income difference between one-income and two-income households grew from about $13,000 in 1984 to about $40,000 in 2009 (all in 2009 dollars). They may have backslid a bit in the percentage of households with two incomes (which sounds pretty strange to me, because I don’t hear about many stay-at-home moms anymore, I wonder if divorces have made two-income households’ share a bad proxy for women in the workforce now, or if 2009′s unemployment rate being higher had a large effect) but they’ve tripled the average difference between two incomes and one. My argument rests on the idea that there were fewer educated professional women earning high incomes in the 1980s than there are today (we are talking about the top 1% after all)…I admittedly don’t have data for that, but I don’t think it is in danger of contradiction.

Ken April 13, 2011 at 3:26 pm

Brian,

“A major difference today is that a much larger share of households (concentrated in the upper quintiles for obvious reasons) have two incomes rather than one…”

You assumed that the number of households with two incomes were increasing. By the hard numbers you were wrong. Your assumption about dual income houses were wrong. Now in the above comment you’ve changed your position all the while not even acknowledging you made an assumption and it turned out to be wrong.

“What? I’m an anarcho-capitalist. Speaking of showing assumptions to be positively false.”

What assumptions was I making that were false? You seem to want to put words in my mouth by mentioning that you are an anarcho-capitalist. I didn’t mention your political affiliation at all. I know you want me to, but really it doesn’t matter.

Regards,
Ken

John Dewey April 13, 2011 at 3:37 pm

Brian: “the argument I was making was ‘rich households are mostly just households with two above-average income earners who are still middle-class normal people’”

That’s true of not just rich households but of most upper middle income households as well.

Brian: “which sounds pretty strange to me, because I don’t hear about many stay-at-home moms anymore”

Be careful about relying on your observations alone in making conclusions about a nation.

In “America’s Stay-at-Home Feminists”, Professor Linda R. Hirshman summarized the research on stay-at-home moms who have professional degrees:

‘In 2000, Harvard Business School professor Myra Hart surveyed the women of the classes of 1981, 1986, and 1991 and found that only 38 percent of female Harvard MBAs were working full time. A 2004 survey by the Center for Work-Life Policy of 2,443 women with a graduate degree or very prestigious bachelor’s degree revealed that 43 percent of those women with children had taken a time out, primarily for family reasons.

I haven’t found any research on blue-collar stay-at-home moms. Have you?

Ken April 13, 2011 at 4:07 pm

“A major difference today is that a much larger share of households (concentrated in the upper quintiles for obvious reasons) have two incomes rather than one…”

You’re even further moving away from your original assertion, which I’ve conveniently posted in this comment. The fact that you LATER was that “rich households are mostly just households with two above-average income earners who are still middle-class normal people”. An argument you started AFTER your original assertion was shown to be false.

I’m assuming you’re conceding that your original assertion was wrong, since you’ve since changed your argument to something else… twice.

Also, about not hearing about stay at home moms. I hear about them all the time. About half of the professional couples (both the husband and wife worked) I know who when they started having kids, the mother or father quit their job to stay home with their kids. Many of the other couples had one or both parents reduce their weekly hours so that at least one of the parents would be home at all times.

Regards,
Ken

John Dewey April 13, 2011 at 4:21 pm

Brian: ” because I don’t hear about many stay-at-home moms anymore”

Brian, I’m not trying to pick on you. But it would be easier to accept your arguments if you would check your assumptions before including them in a comment.

According to the U.S. Census Bureau:

“•In 2009, 22.6 percent of married-couple family groups with children under 15 had a stay-at-home mother”

That’s a lot of stay-at-home moms, despite the fact that you haven’t heard about them.

Ryan Vann April 13, 2011 at 6:29 pm

That doesn’t necessarily contradict his point. You’d need sub categories broken down by income bracket, not just the population average to address the point made.

Brian Bedient April 14, 2011 at 1:11 am

Thanks Ryan.

Now that you all mention it, my post was poorly worded. I will refrain from posting here at 5 AM during bouts of insomnia in the future.

Ken, how did I change my original argument twice? I only posted one comment since then, which was to say that the thing I was factually wrong about wasn’t actually important to what I was trying to say, and explained how the Census numbers actually helped me make my case. Also, the assumption that you seemed to be making by predicting I’d call the Census numbers right-wing propaganda was that I was a leftist, which is why I brought up my political affiliation.

If you really want to torpedo my offhand blog-comment conjecture about high-income households probably having multiple higher-than-average-but-still-middle-class incomes rather than one huge one, I’m sure there’s some data available that’ll prove it either way. I don’t think answering that question will have any implications about what policies I’d support, however.

vikingvista April 13, 2011 at 5:43 am

Stiglitz’s misunderstanding is rooted in:

1. Evaluating normalized rather than non-normalized distributions (e.g. %income vs quintile rather than income amount vs income level).

This obscures the desirable effect of nearly the whole population getting richer. Before normalizing, the distributions grows to the right, and grow taller at each income.

2. Evaluating collective population income distributions rather than the income distribution within a person’s life.

This obscures the desirable effect of forgoing income early in life to develop skills that permit a brief period of high income followed by a long low income retirement. It allows people to assume that 50-year-old me is a different person than 20-year-old me. It is used to lend support to the accusation that 50-year-old me is somehow oppressing 20-year-old me.

Intellectually, these are easy errors to avoid. The problem is psychological. You would think he would know better than to make the first error, but that is assuming it is an error he doesn’t want to make. The second error is rooted in the collectivist fallacy that pollutes so damned many of us, of all ideological stripes.

kyle8 April 13, 2011 at 7:08 am

Stiglitz’s misunderstanding is rooted in:

Being a stupid evil marxist who wants to turn us into a socialist hell hole.

I really have no tolerance anymore for this type of immature, non-thinking. We have over 100 years of world history to show us that punishing the rich does not help the poor, and causes hardship and stagnation for the middle class. Intentions be dammed , none of it ever works. It only serves to empower a new class of government workers, lawyers and politicians.

Even the so called socialist paradises in Scandinavia are crawfishing out of their high taxes as quickly as they can.

Methinks1776 April 13, 2011 at 10:27 am

Being a stupid evil marxist who wants to turn us into a socialist hell hole.

I don’t think Stiglitz is a Marxist, but he is certainly an elitist ass in love with some Marxian ideas.

It is my dream to force these bastards to live as an ordinary citizen in Cuba, Venezuela or Belarus for 30 years before they are allowed to publicly indulge us with the rot between their ears.

vikingvista April 13, 2011 at 4:18 pm

That too.

WhiskeyJim April 13, 2011 at 5:53 am

Mobility does not fit in with Marxian class thinking.

Two related trends:
1. The amplifier effect on the 1%; LeBron James and Bill Gates can get richer than in earlier generations because the world is now their market place. Same with actors. This is a more recent phenomenon.
a) The world is getting smaller (not flatter).
b) The world is getting richer. See number 2.
2. Not nearly enough is made of the pie getting larger.

Krishnan April 13, 2011 at 9:45 am

The redistributionists have never been interested in looking at how the size of the pie has increased … and how just about most people have benefited – they will trot out few examples and say “Look – what happened to these people”

John Dewey April 13, 2011 at 10:20 am

WhiskeyJim: “because the world is now their market place … The world is getting richer”

Excellent points. Those who have taken the risks to expand globally – FedEx’s Fred Smith immediately comes to mind – have both helped the world become wealthier and enriched themselves in the process.

Greg Ransom April 13, 2011 at 6:01 am

Most of the bottom 25% and their parents weren’t even Americans 25 years ago.

And note well, the top “2%” became the top “1%” simply because of population growth — mostly due to immigration .. mostly of poor people.

kyle8 April 13, 2011 at 7:10 am

Exactly, what would our “poverty” rates look like if we didn’t have ten million or so people recently arrived from third world nations?

John Dewey April 13, 2011 at 3:54 pm

Greg: “Most of the bottom 25% and their parents weren’t even Americans 25 years ago.”

Why do you believe this to be true? Are you referring to immigrants from Mexico and Latin America?

Ryan Vann April 13, 2011 at 6:31 pm

Demographics can be quite deceptive like that.

Tom April 13, 2011 at 7:24 am

Statistics lie. The top anything percent represents a whole lot of individual cases. Consider mine:

Twenty five years ago, I was in the top of the top 1%, with a taxable income of 7 figures from a very profitable but mature and declining business.

Now my taxable income is near the poverty level and I get refunds from the government for “Making Work Pay” and other tax incentives for low income people.

But the fact is that I live better now than I ever did when I was at the top. Back then, I was newly wealthy and had to pay for everything, house, cars, airplane, etc. Now I live in a paid for McMansion, drive paid for SUVs, and wear paid for clothes.

And the biggest difference is that I now run a paid for start up business, though it is struggling. But since it’s paid for I get big depreciation deductions every year and that lowers my taxable income. And since I’ve got a good credit rating I can borrow whenever necessary to buy more stuff for the business to depreciate.

Of course one day, I will run out of depreciation and again have a big taxable income and face big taxes. That’s when I sell the business and substitute lower capital gains for higher income taxes. I might make a guest appearance in the top 1% that year but I’ll be back close to the bottom soon, especially in an economy where interest rates are so low that my cash pile generates almost nothing.

Economiser April 13, 2011 at 2:06 pm

*Like*

Thanks for sharing.

vikingvista April 13, 2011 at 6:33 pm

Statistics are just calculations. Deliberately wrong inferences are the lies.

Ryan April 13, 2011 at 7:37 am

I have a hard time grasping the notion that we can measure social justice with such statistics. It is my suspicion that the people in the most unfavorable economic circumstances hardly care about the direction, or magnitude, of inequality measures.

I think that individual notions of social justice largely experiential. For instance, Mohamed Bouazizi did not self-immolate because of his great frustration over the fact that 1% of the population earned a large portion of the nation’s income. He was denied basic opportunities and even humiliated, by the police, for no good reason.

Appreciation is a crucial component of happiness. The United States is one of the few nations in which people do feel appreciated because, for the most part, our economic system rewards the hard working, which includes many of the poor. I know this because this has largely been my experience, not because of a statistic.

Political economy aside, if America was truly about the rich, then why do so many millions of immigrants continue to see it as the land of opportunity? Why would immigrants be willing to be among the lowest wage earners in a nation that is purportedly for the rich?

These mobility/inequality figures may be interesting to economists, but I suspect that it has very little implication for actual human beings. Wealth transfers aren’t a panacea because the problem is not necessarily about money. Capitalism’s virtues are that it engenders a great deal of of pride, choice, and appreciation for inidividuals. You cannot spread these same virtues by handing out cash and, in the same vein, you cannot fix society’s ills by punishing the wealthy.

kyle8 April 13, 2011 at 7:59 am

Thank you for saying that so eloquently. I was tongue-tied by my anger. It angers me that in this day and age that there are still people who believe that things would be better by punishing the achievers and giving hand outs to the rabble.

Matt April 13, 2011 at 8:24 am

25 years ago, high school seniors had vastly more class credits than freshman. Unfortunately, this disparity still holds true true today. Despite many attempts at reform, high school seniors (on a per capita basis) disproportionately have more class credits than freshman. Something must be done to rectify this!

Matt April 13, 2011 at 8:37 am

I also think that when speaking about economic mobility, focusing on the top one or five percent is unhelpful. It’s a red herring. If you are born poor, it is indeed very, very difficult to reach this echelon. However, the chances of being born poor and ending up middle class, upper middle class, or moderately wealthy are very, very good given you make a few key decisions correctly. I would rather live in a country with those odds which happens to have high income inequality at the extreme ends of the spectrum, rather than a place with less inequality but whose government crystalizes its population into wealth and income brackets with little chance of any change.

John Dewey April 13, 2011 at 10:33 am

Matt: “If you are born poor, it is indeed very, very difficult to reach this echelon.”

Obviously it took more effort for Oprah Winfrey to become a billionaire than it did for Donald Trump. But Oprah is certainly not the only person to move from poverty iinto the top income levels.

It is difficult for anyone to reach and remain in the top income levels. But it happens all the time, to persons with widely diverse socioeconomic backgrounds.

I think you are underestimating the chances of person born in poverty to reach the top five percent level, but I cannot quickly find relevant statistics.

Matt April 13, 2011 at 11:27 am

Perhaps I am, however my point is that arguing over whether someone born poor can become a billionaire is not important. Arguing whether someone born poor can become upper middle class, or become a millionaire, is. And I believe that if someone can stay out of jail and contribute to a retirement account to a modest extent before age 35 (each task fairly achievable for even the poorest), then they can be very wealthy compared to other, more egalitarian countries in the world. Just because someone is not in the top five or one percent doesn’t mean that they’re not doing very well.

Economiser April 13, 2011 at 2:09 pm

I wish I had the study, but I recall reading once that an American’s odds of being below the poverty line are something like 1% if they can meet three criteria: (1) graduate from high school (or receive a GED); (2) not go to prison; and (3) not have a child out of wedlock.

The opportunities are there.

Mark T April 13, 2011 at 8:37 am

What are the demographics of the people who buy Vanity Fair? Its ads suggest top 1%.

The other way to look at this is Tyler Cowen’s ZMP argument, that the number of people whose labor adds marginal value has been driven down by a variety of factors.

Floccina April 13, 2011 at 9:54 am

Thanks Russ, that is a great way to look at the data.

erp April 13, 2011 at 10:04 am

Why is a serious blog like this commenting on an article in a super silly magazine like Vanity Fair?

Slappy McPhee April 13, 2011 at 10:31 am

Because Stiglitz is considered one of the “serious people” on the internets.

Liberty 1 April 13, 2011 at 10:21 am

I’m not an Economics expert as some of you are, but as I think about the whole premise, what I see in life does not correlate with statistics that I read from the left to support their agenda and positions. Honestly, I’m not bright enough to figure out why that is, but here are my thoughts. What I see in real life isn’t 5% driving new Rolls Royces and Ferraris and the remaining 95% fighting over the best remaining Ford Pintos and AMC Gremlins. When I drive past entire towns and developments am I to believe that most of what I see are basically squatters who “owe their life to the company store”? Question using the left’s statistics would the federal government qualify as the wealthy, or would they be the down trodden (I don’t know how their debt to asset ratio would rank them, but I think it would be telling)?
I know the federal government is controlling around 25% of GDP. Are 1% of the citizens really accounting for around the same amount of income?

Slappy McPhee April 13, 2011 at 10:29 am

USA Inc is the richest corporation in the world.

Slappy McPhee April 13, 2011 at 10:28 am

Here is what I always wonder. Why is 1% the magic number? Why doesn’t Stiglitz focus all his anger on just Bill Gates? And as WhiskeyJim noted earlier, why is only income for US citizens accounted for? CEO’s get their income from all over the world. It seems a little disingenuous to only compare the pie when all the ingredients aren’t added in.

Seth April 13, 2011 at 10:43 am

“It is also worth pointing out that the pie is not constant. So you’re well-being can grow even when your share of the pie falls if the pie is getting sufficiently larger.” -RR

I think this is the most compelling point.

Methinks1776 April 13, 2011 at 10:57 am

Stiglitz will, of course, miss the fact that the rich in socialist countries were comparatively just as rich. They are the politically connected who are granted private apartments, privileges and access that is not only denied the ordinary citizen but is also difficult to account for on a ledger.

The only difference between the classes here is only wealth – a hurdle easily overcome as generations of impoverished immigrants after impoverished immigrants have proven. Because the constraints are fewer, people can achieve that which is impossible in their countries. That, not income equality, is why immigrants are literally dying to come here. That is what is special about this country and why it is the wealthiest country in the world.

Without the freedom to settle in whatever income bracket your heart desires, America is just another socialist hell-hole.

Don Boudreaux April 13, 2011 at 11:05 am

A beautiful truth beautifully expressed.

jjoxman April 13, 2011 at 11:14 am

Nuts to the like button – I need a Love button for this one.

vikingvista April 13, 2011 at 4:29 pm

So true. Socialism kills economic mobility, and thereby creates classes, class envy, and class conflict, while destroying choice, hope, and the individual’s belief in his ability to affect his future through nonpolitical means.

txslr April 13, 2011 at 12:12 pm

If you go through life believing that the fundamental nature of human interaction is exploitation, then you will view data such as these as evidence of that exploitation and you’ll wonder why others don’t see what is so obvious. If you believe that people generally can engage in free exchange that is mutually beneficial you can observe data such as these and wonder why. What are the average ages of those in the different groups? What proportion of each are recent immigrants and from where did they immigrate? What is the role of education in explaining the differences?

As to luck, certainly luck plays a role in individual cases, but luck isn’t exploitation and a much different argument is needed to invoke government action to redress the impact of random chance. After all, LaBron James is lucky to be so tall, but does that fact alone justify government interference?

It is interesting to me that discussions regarding differences between rich and poor seem to inevitably focus on the anthropology of the rich rather than the poor. Is it possible, if the gaps are indeed growing, that the poor are different than they were, and if so, why? High school drop-outs, children born to single mothers, longer time to ‘maturity’ – could these things be driving some significant part of the difference, and if so, why are they happening? What would cause people to increase behaviors that appear to be self-defeating? Now THAT’S an interest question.

dan April 13, 2011 at 12:39 pm

‘What would cause people to increase behaviors that appear to be self-defeating?’

Read post 67……’bottom line is America is one of the worst choices of countries to be born into if you want to have the greatest chance of succeeding regardless of the family to which you are born.

Don’t get born here… better to get born there into one of their families’

That is your answer. fools teaching fools.

Ike April 13, 2011 at 2:32 pm
dan April 13, 2011 at 2:49 pm

While I enjoy economic papers and stats, they often lack the ability to account for individualism or the variable that make a persons life. If often does not account for attitude of the individual engrained by parents of another role model.
Personal experiences are highly relevant in the breakdown of obtaining those stats.
Also, what is the goal? 100% of people rising beyond their parents income level or beyond their parents standard of living. I would opine that only a fraction of people live worse off than their parents. Overall society standards of living are improving every decade. Would take serious effort to not live better than your parents, from the bottom of the income spectrum.
But, coming from a mostly middle to lower middle class/ or upper lower class areas………… most individuals have better themselves. The few I have met up with that have found themselves a little worse off have made choices that put themselves into their situation.
So many choices to be made……..yet so many would attribute their lesser upward moblility on choices made by others.
I recognize the choices that I have made that not allowed me to move further upward. The choices came with risk……not risk of death, starvation, injury……….. but risk of status quo. My own choices.

Dave April 13, 2011 at 5:06 pm

The Pew Report he quotes states: “Economic position is strongly influenced by parental economic standing. Children of low-income parents and middle-income parents are much less likely to make it to the top quintile than are children born to parents in the top quintile. Further, a high percentage of low-income children remain in the bottom fifth, calling into question the dream that all children have equal chances of achieving economic success.”

dan April 13, 2011 at 7:36 pm

Bologna!!!

What is economic success, exactly????

Moving oneself into the next income bracket? Making millions and taking ownership of a yacht?

The top quintile is economic success?

John Dewey April 14, 2011 at 7:19 am

Dave: “calling into question the dream that all children have equal chances of achieving economic success.”

That’s certainly a “dream” which should be questioned. Not sure whose dream it is, but it is completely unrealistic. And potentially dangerous.

Americans are born into a country which provides them as much opportunity to succeed as does any place on earth. But that doesn’t mean all those Americans are born equal. If one possesses 4.4 speed in the 40 yard dash – or an IQ above 130 – or genetically-endowed beauty – one’s chances of acheiving phenomenol success are much greater than if one does not. Attributes such as those – and many others – are pretty much due to genetic endowment.

Would you recommend that this nation attempt genetic engineering of our species in order to equalize the “chances of achieving economic success”? Is your “dream” of equality that important to you?

Chucklehead April 13, 2011 at 7:31 pm

So lets seize all children from birth, have the nanny state raise them, so they can ensure proper nutrition, equal education and environment. We should therefore ensure equality of result and equally miserable opportunity. Do you not think that the output of the parents might fall. Why work harder to afford benefits on your kids, to enhance your genes being passed on and flourishing? Those who do not have children are missing what a motivator they can be. Why would I drive a 12 year old car if not to make those Hopkins tuition payments.

dan April 13, 2011 at 8:17 pm

From Dr Thomas Sowell:

It so happens that many– if not most– of those called “the rich” are not rich and many, if not most, of those called “the poor” are not poor. They are people who happen to be in a particular part of the income stream as of a given moment in their lives when statistics are collected.

Internal Revenue Service data show that the income of people who were in the lowest income tax bracket in 1996 rose by 91 percent by 2005. But people in the “top one percent” had their incomes drop by 26 percent in those same years.

There is nothing complicated about this. Most people simply start at the bottom when they are young and their pay rises as they get more experience. Most people in the top one percent are there for only a single year when they happen to have a spike in income. They too are not an enduring class.

Designer Wholesale Handbags April 13, 2011 at 11:57 pm

do with the run-up in prices after 2003 or s0. And yes, there were a lot of dumb, myopic lenders, borrowers and bond-fund managers. But why did they start getting dumb in 1997.

Curtis Lanoue April 16, 2011 at 8:05 am

“But some and maybe much of that growth in the economic power of the top 1% is due to productivity.”

What, exactly, have they produced?

Apolloswabbie April 19, 2011 at 3:29 pm

I love this breakdown. It shows how speedily one can confuse the discussion using meaningless terms like “the rich” and including telling statistics.

Nevermind the fact that the rich doing better does not necessarily mean the rest of us are doing worse. Further, when all of the “us” we’re discussing (citizens of the USA) are in the world’s 95th percentile, how much more fair can it get? And if we’re really going for fairness, why aren’t we giving all our money to poor folks in China, India, North Korea and Iran?
Is equality only good if it helps you be more equal to me, while both of us dwarf 99% of the Indians in income? What is the moral basis for that kind of equality?
Murigo unintellibly argues that if you and I are more equal, we’ll be better able to increase our inequality with the Indians. He’s a passionate caring fellow I guess.

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