57.4 Percent of 1996′s Privileged 1% Are Now Among the Beleaguered 99%

by Don Boudreaux on November 4, 2011

in Data, Hubris and humility, Inequality

Here’s a letter to the New York Times:

Paul Krugman labels those who interpret data on income distribution differently than he does “obfuscators” (“Oligarchy, American Style,” Nov. 4).  Mr. Krugman is surely aware, however, that people can legitimately disagree over how best to construe the vast quantities of data gathered on so complex a topic as the varied and changing income-earning profiles of 150 million workers living in 121 million households, all in an economy as dynamic as America’s.

For example, is Mr. Krugman warranted in dismissing the claim that “the rich are an ever-changing group” with a simple and parenthesized “not so”?  Who are the “rich”?  And how much income mobility is necessary for well-meaning observers to justifiably claim that “the rich are an ever-changing group”?

Is the following description, from the IRS, of data on individual households merely obfuscatory – something that no reasonable person can possibly interpret as evidence of substantial income mobility – or might it describe a plausible reason for well-meaning people to disagree with Mr. Krugman’s insistence that the rich are NOT an ever-changing group?: “More than half (57.4 percent = 100 – 42.6) of the top 1 percent of households in 1996 had dropped to a lower income group by 2005.  This statistic illustrates that the top income groups as measured by a single year of income (i.e., cross-sectional analysis) often include a large share of individuals or households whose income is only temporarily high.  Put differently, more than half of the households in the top 1 percent in 2005 were not there nine years earlier.  Thus, while the share of income of the top 1 percent is higher than in prior years, it is not a fixed group of households receiving this larger share of income.”*

Sincerely,
Donald J. Boudreaux

* “Income Mobility in the U.S. from 1996 to 2005,” U.S. Department of the Treasury (Nov. 2007).  The passage quoted in the letter is found on page 8.

See also Mark Perry and Jarrett Skorup.

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Debashish Ghosh November 4, 2011 at 12:37 pm

57.4% of the Privileged 1% from 1996 are among the Beleaguered 99%.
I am also curious though, what is the proportion of these 57.4% are nevertheless still in the top 3%, or top 5%? Can those figures be easily looked up..

Ken November 4, 2011 at 6:03 pm

Because if you can’t bash on the 1%, widen your net and bash on the 3% or 5%, amaright? If you’d like, you can look it up yourself.

Regards,
Ken

Debashish Ghosh November 5, 2011 at 2:18 am

Thank you for the link Ken, I will take a look.

Funny that you should jump to the conclusion that my comment was just a prelude to “bash the rich”. Actually, it feels like I am already being bashed by you, merely for wondering what other data is easily accessible, and what that might reveal – and although I doubt you will understand this: even if an examination of that data led me to disagree with the essence of Don’s argument in his letter to NYT, that would still not exactly amount to me “bashing the rich”.

Charlie November 5, 2011 at 1:03 am

You should probably just click the link provided. To answer your question, 3% is not listed and 75% of those starting in the top 1% remain in the top 5%. There is much more detailed info, if you just click through to the paper.

Nikolai Luzhin, Eastern Promises November 4, 2011 at 12:41 pm

tell me again Don, why do you keep defending the rich, who have sufficient resources to do such for themselves.

It surely is not because we are better off with the rich being more rich and powerful than ever. If so, these would be the best of times and they are not.

Could it be that you are a purchased voice of the rich or hope to gain their notice and fair with your incessant letters?

Chris Bowyer November 4, 2011 at 12:50 pm

Did you have, like, a refutation to what this post actaully says? Or do you think questioning the motives of people means you don’t have to do that?

Cameron November 4, 2011 at 12:52 pm

+1

GAAPrulesIFRSdrools November 4, 2011 at 1:04 pm

+2

Josh S November 4, 2011 at 3:14 pm

=3

Greg Webb November 4, 2011 at 1:04 pm

Chris, Nikki is unable to make a persuasive, logical argument supported with objective, verifiable evidence. That is why he cannot refute the post and, instead, illegitimately impugns other people’s motives. Be careful or he will call you a stooge of the Koch Brothers.

Nikolai Luzhin, Eastern Promises November 4, 2011 at 4:12 pm

yes, Chris, I do

the rich have been getting very much richer than those of use 99 percenters and concurrent with that things have been going down hill.

Now, while generally around here concurrent equals causation. I don’t but that. I think there is an added step (the rich are getting richer because they haven’t been paying taxes they ought to have paid to finance the military and several wars and they have invested that money elsewhere than in the United States, but that is just my theory supported by all the facts). A fellow by name of Dugger writes about this.

Now, as I think that Don is as greedy as MeThinks and bright enough to curry the favor of the rich who don’t want their taxes raised.

What is your angel: why do you curry the favor of the Rich.

And, P:S. Don has a great role model. As we now all know, Hayek himself curried the favor of the Kochs til the end of this life. In the Ozarks, when you lie down with a dog, most of the time you get her fleas.

mcwop November 4, 2011 at 4:18 pm

Raising taxes on the rich does not change their gross income, only their after tax earnings. And those higher taxes will not enrich the 99%, unless you somehow transfer it to them. But, since we have huge deficits and debt, those extra taxes simply reduce deficits, and slow the rate of debt growth.

In every discussion about income inequality I ask, what is the solution. Marginal changes in taxes alone will not change the income dynamic.

Nikolai Luzhin, Eastern Promises November 4, 2011 at 6:14 pm

higher taxes will not enrich the 99%

that all depends on what we spent the money

Again, turning to the Bible, teach a man to fish . . .

Oh, you know the parable

How about us trying such for a while.

Methinks1776 November 4, 2011 at 6:18 pm

And those higher taxes will not enrich the 99%, unless you somehow transfer it to them.

And transfer what? Higher taxes simply reduce the incentive to produce so that there’s less to tax and more misery and poverty to “spread around”. Isn’t it amazing how no matter how hard leftists try, they can never effectively force people to be less self-interested?

tdp November 4, 2011 at 6:35 pm

http://www.cato.org/pub_display.php?pub_id=13803

No, the rich have not been getting richer concurrent with the economy going South. If you’re going to make use of the post hoc fallacy, you should at least get the CORRELATION correct.

Randy November 4, 2011 at 4:21 pm

Re; “the rich are getting richer because they haven’t been paying taxes they ought to have paid…”

And again, that would be a crime. Do you have evidence? If not, I will assume that your issue is really with the politicians who wrote the tax laws, and that you should take it up with them.

Ken November 4, 2011 at 6:16 pm

Nicki,

and concurrent with that things have been going down hill.

False.

while generally around here concurrent equals causation

False.

the rich are getting richer because they haven’t been paying taxes they ought to have paid

False.

Now, as I think that Don is as greedy as MeThinks and bright enough to curry the favor of the rich who don’t want their taxes raised.

What is your angel: why do you curry the favor of the Rich.

Arguing in favor of property rights and the rule of law isn’t “curry[ing] the favor of the Rich”. Property rights and the rule of law are far more important to the improvement of the lives of the not rich than the rich.

Hayek himself curried the favor of the Kochs

David Koch born May 3, 1940
Charles Koch born November 1, 1935

Hayek did the bulk of his work by the mid 1950s.

Ever heard of a time line?

Regards,
Ken

tdp November 4, 2011 at 6:39 pm

Don’t forget that established businesses like regulations and barriers to market entry because it means less competition, and thus more profit for them at consumers’ expense, even more so when these businesses have sufficient cash reserves or lobbying connections to escape the effects of the regulations. Therefore, wealthy, established corporate tycoons like the Kochs would better serve their own interests by lobbying for MORE restrictions and regulations to choke out competition from smaller, newer firms, not less. People like George Soros, on the other hand, have figured it out. They argue for restrictions on the free market that allow them to make more money. Maybe someone should tell those stupid Koch brothers that they’re being greedy the wrong way.

Nikolai Luzhin, Eastern Promises November 5, 2011 at 10:12 am

Sorry Ken

But here are the facts:

Hayek curries Koch”s favor:

http://www.thenation.com/article/163672/charles-koch-friedrich-hayek-use-social-security

Ken November 5, 2011 at 12:02 pm

Nicki,

Wow, they corresponded… 40 years after Hayek wrote The Road to Serfdom. I had no idea writing letters constituted “currying favor”. Are you sure you’re not reading things wrong? Are you sure the Kochs weren’t currying favor with Hayek?

Ha!!

This same article also said that Hayek and the Kochs were the most important shapers of the GOP. This only shows just how uninformed Yasha Levine and Mark Ames are. In addition to this stupidity, they claim that these two are the roots of identifying SS as a Ponzi scheme, which of course is false. Opponents of SS from the very beginning were denouncing, and rightly so, SS as a Ponzi scheme.

You are incredibly uninformed and gullible.

Regards,
Ken

Krishnan November 4, 2011 at 4:21 pm

Re: Chris Bowyer – You will quickly understand the meaning of futility – A patient complains to his doctor that he has a headache – the doctor examines him, asks some questions – the doctor then writes a prescription “Stop beating your head against the wall” – patient does, headache gone.

There is nothing, absolutely nothing you can say to some – just ignore the trolls.

Nikolai Luzhin, Eastern Promises November 4, 2011 at 6:19 pm

TROLL + truth rolls over lazyminded libertarians

OBTW, you will not see anywhere where Nikolai has supported deficits or the Bush tax cuts, except the post Lesser Depression Stimulus.

And Nikolai doesn’t support free money from the gov’t. He thinks everyone should work until, literally, they are no longer health enough. My definition may be a little broader about what is work, but everyone needs to work, for their spiritual, emotional, and physical health

GAAPrulesIFRSdrools November 4, 2011 at 1:05 pm

It is also surely is not because we are better off with the stupid being more vocal and powerful than ever.

Randy November 4, 2011 at 1:35 pm

The question is, Nik, what do you have against the rich? I mean, if you have some evidence of a crime then produce it.

Jon Murphy November 4, 2011 at 1:43 pm

Called it! Koch reference again! We should start a drinking game. Every time there is a reference to Koch, we take a shot

txslr November 4, 2011 at 1:45 pm

Of Coke?

Randy November 4, 2011 at 1:47 pm

:)

Jon Murphy November 4, 2011 at 1:53 pm

Well, yeah. How else do you drink Jack?

Nikolai Luzhin, Eastern Promises November 4, 2011 at 4:13 pm

truth hurts doesn’t it

now if George Soros was paying Don, things would be different, as would Don’s opinions

khodge November 4, 2011 at 4:29 pm

Nikki,
If by “things would be different” you mean that Don would be making more money, that is undoubtedly true. If you can get your buddy Soros to pay Don, I’d be willing to bet that Don’s opinion would not change.

Nikolai Luzhin, Eastern Promises November 4, 2011 at 6:20 pm

this shows how dumb Don happens to be; he is passing up good money and he would be correct in his arguments.

tdp November 4, 2011 at 6:40 pm

Yeah, what an idiot who dares to think for himself and not be paid by anyone to be their mouthpiece.

Anonymous Librarians November 5, 2011 at 10:58 am

LOL! Nikki doesn’t get paid by George Soros to be his “useful idiot.”

MWG November 4, 2011 at 4:20 pm

Allow me to be the first.

DRINK!

Jon Murphy November 4, 2011 at 1:45 pm

I only suggest that because I am fairly sure that when some of these guys already do

Ken November 4, 2011 at 1:55 pm

Nicki,

The rich need defending against nasty ignorant people such as yourself who call for use of violence to take from these people and give to yourself. All people who would be the victim of violent nasty thugs like you need defending.

Regards,
Ken

Jeff Neal November 4, 2011 at 1:56 pm

He’s not defending the rich, he’s defending property rights.

How much of Steve Jobs’ money do you think is really yours? When would you have told him that he had enough? After the Mac, after the iPod, or the iPhone, or . . .

Why do you think that taking money from one group and giving it to another is helpful or productive?

If you think that the professor’s voice is ‘purchased’ I suggest you go purchase one yourself. Or sell yours. See how large an audience you can get to listen to your non-sense.

Make a deal? I’ll give you $5.00 for every $1.00 you get in sponsorships for your own blog or newspaper or other medium for broadcasting your way of thinking.

register yourself on http://www.athirdvoice.wordpress.com so I can know where to send the money. Thank you.

stedebonnet November 5, 2011 at 1:02 am

I agree that taxing the wealthy is amoral and inefficient (as is taxing anyone). That doesn’t means wealth discrepancy is nonexistent. The top 1% probably changes frequently, I won’t deny that either. But I will argue that a wealth gap does exist. I think most data would say that it has gotten larger recently. Some interpret this as decreased regulation; I see it as government favoritism.

Where I will disagree with the left; however, is government’s cure-all capabilities. Government is the REASON we are in this mess. When big brother creates negative feedback loops for companies, and the tax-payer dollars are propping up failing businesses, what can we expect? A lot of the wealthy 1% got their because of innovation, ability, and capitalism (that’s great), but many others with a wink and a nod.

Recent examples inclu Halliburton, Solyndra, GM, the banks, etc. Further, we change patent law to a first to file system, taking away probably the greatest property right (intellectual). How does that encourage innovation? I’d say changes like that, along with socializing losses, do more to hamper innovation, prosperity, and wealth than anything.

The people have noticed a symptom (wealth disparities), but they haven’t diagnosed the disease. Perhaps we’ll soon recognize that more government, greater centralization, and increased planning are not the answers to our problems. In fact, in most cases too of a central government created the wealth disparities the left is angry about.

stedebonnet November 5, 2011 at 1:15 am

edit: In fact, in ALL a centralized government creates the wealth disparity the left is angry about. We are worse off as a society if the 1% got there by rent-seeking.

Jeff Neal November 7, 2011 at 12:15 pm

Stedebonnet.

We agree – smaller government – is what we want. I don’t agree that wealth inequality is a problem that should be ‘fixed’.

A claim for equality of material position can be met only by a government with totalitarian powers.
F.A. Hayek

More of my thoughts here > http://wp.me/p1jTK0-9u

Polly November 5, 2011 at 12:39 pm

As one who was a member of the 1% in 1996 but is now retired and living on SS plus withdrawals from savings (some tax-deferred, some double-taxed, i.e. dividends), with no company-provided or government/taxpayer-funded pension, I can’t decide if I’m among the bashed or the 99%. But I still resent the OWS movement, even though they are, apparently unknowingly, bashing Michael Moore and George Soros, as well as the various movie and sports stars (most of whom don’t realize it, either–because they earned it “honestly”?).

Surely there should be some smaller percent that could be super-bashed? More fires, attacking the police and defecating on police cars, breaking windows and other meaningful protests? Anything that can cost George Soros lots of dollars, such as breaking the windows of Men’s Warehouse?

The college professors who lamented the lack of fire in the populace a few years ago–but abhored the TEA partiers–have finally found their heroes in the OWSers. Why does it boggle my mind?

Jon Murphy November 5, 2011 at 12:42 pm

Because you can put two and two together.

Charlie November 4, 2011 at 12:45 pm

I agree with the thrust of this post that data is difficult to analyze and must be analyzed carefully. But this observation certainly is not inconsistent with the story that the incomes of the top percentile and top tenth of a percentile are rising faster than the median.

We could for instance get around this problem by averaging income data across 5 or 10 year periods and come up with new measures for income percentiles. This would control for much (though not all) of the volatility in the data*. My question is, would a more careful treatment of the data make you change your mind. Is there any type of careful analysis of data that you would accept?

It’s not clear to me why the interpretation of income data should break along ideological lines.

*I’m assuming (which I think is correct) that income volatility has increased over the period in question. This seems likely due to housing price appreciation and greater use of stock options (as well as other factors), but if it isn’t true, then the evidence presented does nothing to counteract the assertion that the gap between the very top earners and the rest of the distribution is widening.

Methinks1776 November 4, 2011 at 1:04 pm

Charlie,

How does housing (asset) price appreciation materially impact income statistics? Risk and reward are inexorably linked. It’s far more likely that top earners are either in careers where there is a lot of risk (hence, income volatility, as those jobs tend to com with a large variable compensation piece) or are entrepreneurs (tres risky).

Why the widening exists is more important than the widening.

The gap between rich and poor was far wider in the Soviet Union than anything ever experienced in the United States. And the groups were more static (the rich remained rich and the poor remained poor). People were literally prevented from improving their lives.

There are fewer (but growing) obstacles for Americans. Thus, any American with a good idea and a high tolerance for risk has a chance to move into the top of the the 5th quintile. The growing gap in income could mean many things, including that people are willing to take more risk (which implies a higher return and also optimism). We only have to worry if we move toward a system where government is so interventionist that the only way to become wealthy is through political connections.

Charlie November 4, 2011 at 1:32 pm

Methinks,

If you look at the link that Don provided, the paper makes clear that capital gains income is included in their definition of income. I hope I don’t have to explain how housing price appreciation effects that. Here is one example from the paper:

“The definition of cash income used in this analysis is similar, but not identical, to measures used in other studies. For example, the definition used here includes capital gains income.”

“Why the widening exists is more important than the widening.”

Until we agree that a widening is occurring, this question is of no importance. It appears that you already agree, but that Don does not.

Ken November 4, 2011 at 2:06 pm

Charlie,

Why should people care at all how much others make? Everyone’s material life has improved in the United States. Why isn’t that enough? Why do you let jealously and envy creep into your consideration of how good your life is?

I do very well and have for most of my working life. For most of my working life most people made more than me. So what? Even when most people made more than me, I still was able to do most of the things I wanted to do and live where I wanted to live, on top of never having to worry about a warm place to sleep, basic medical care, and when I’d eat next; in fact no American has to worry about those things, but somehow it’s a social travesty that some are making more than others?

Worrying about how much others make is giving in to base emotions, emotions most on the left think they’re too enlightened to feel, so make silly arguments about how awful those who make a lot of money are.

Regards,
Ken

Charlie November 4, 2011 at 3:41 pm

“Why should people care at all how much others make?”

If Don said, “I agree with the facts, but I don’t care.” I wouldn’t have commented. If Don had said, “I don’t care about the facts.” I wouldn’t have commented. Instead he said, “I think we are possibly misinterpreting the facts, because of a certain reason.” So I commented that we could address that reason, and if we did would you [Don] agree with the fact. Then I commented as a footnote that the article only matters in a certain environment, but I think it is likely that that environment is likely to occur.

I guess you are telling me, you don’t care about analyzing the data and discovering facts? Ok, is there a reason I should care that you feel that way?

I am not sure why you told me you’ve lived a good life, but I guess I’m happy for you. Cheers.

Ken November 4, 2011 at 3:56 pm

Charlie,

I guess you are telling me, you don’t care about analyzing the data and discovering facts? Ok, is there a reason I should care that you feel that way?

If I was a hiring manager and two people applied, a white person and a black person, but said that the fact of race doesn’t matter, would you say that I “don’t care about analyzing the data and discovering facts”?

I recognize the fact that some are making more than others. I recognize the fact that the income gap has increased. So what? Can you answer that simple question? You claim I don’t care about facts or discovery, but, really, I just don’t care about irrelevant facts and discoveries. Can you explain to me why the income gap matters at all, other than due to envy and jealousy?

I am not sure why you told me you’ve lived a good life, but I guess I’m happy for you.

Because all those who seem to think that it’s important to focus on income inequality imply that those who aren’t getting rich as fast as those with the highest incomes are somehow worse off. Of course, this is bunk, which is why I brought up the fact that even when I was in the bottom decile of the income distribution, my life was still pretty kick ass, as are all those in the bottom decile in the US.

Regards,
Ken

Charlie November 4, 2011 at 4:08 pm

“If I was a hiring manager and two people applied, a white person and a black person, but said that the fact of race doesn’t matter, would you say that I “don’t care about analyzing the data and discovering facts”?”

If I told you black people don’t get as good of jobs as white people. You would want to know why, right? I see Don as saying, “you think that black people don’t good as good of jobs as white people, because you are measuring the data the wrong way.” I think his criticism is valid, but that we can overcome it. I don’t think it explains away the central insight.

By addressing the data issue at all, he’s almost conceding that the fact is in some way relevant.

It’s like you want me to try to convince you that the distribution of income data is important. I have no idea why it would be in my interest to do that. I don’t care about what you think is important. If anything, I care a little bit about what Don thinks is important, though in my comment, I was really asking if Don’s view of the data would change if we addressed his concerns. Maybe it would not, because we cannot address them adequately enough, or because other issues would arise that cause additional problems.

Maybe Don would instead switch his argument to I agree that the data shows income is getting more unequal, but I think we shouldn’t care or X,Y, and Z policies would be worse. Maybe in the future I’d comment on those posts.

Ken November 4, 2011 at 4:16 pm

Charlie,

You would want to know why, right?

Why would you assume that I would “want to know why” or even care?

By addressing the data issue at all, he’s almost conceding that the fact is in some way relevant.

Not necessarily. He could be addressing it to show why it’s irrelevant.

I have no idea why it would be in my interest to do that.

I can think of at least one reason why “it would be in [your] to do that”: to use the fact that since that distribution isn’t uniform, income should be taken from others and given to you.

Regards,
Ken

tdp November 4, 2011 at 6:43 pm

Charlie- if you want to know why income inequality before taxes has increased (although it has decreased since the recession), look at Brink Lindsey’s study, available at Cato, entitled “Paul Krugman’s Nostalgianomics”. Then read Will Wilkinson’s “Thinking Clearly About Income Inequality”, also available on Cato.

Methinks1776 November 4, 2011 at 2:16 pm

paper makes clear that capital gains income is included in their definition of income.

Yes, Charlie, but people don’t sell their house that frequently. Those gains are far more likely to come from selling assets in a more liquid investment portfolio.

Sorry, I was unclear. I don’t care if there’s a widening. I cannot muster the energy to fume over the difference between my wealth and Mark Zuckerberg’s.

Charlie November 4, 2011 at 3:56 pm

“Yes, Charlie, but people don’t sell their house that frequently. Those gains are far more likely to come from selling assets in a more liquid investment portfolio.”

The opposite is actually true. I think I can give a simplified version of the point Boudreaux is getting at. I’ve heard a more drawn out version from Sowell. There may be differences in the details, so it’s possible this is not exactly the point Don is making.

Imagine a simple world, where people all have the same income. Let’s a assume people own houses, but the houses don’t appreciate in value (again just for simplicity). In this society, there is no wealth distribution.

Now imagine we switch regimes to an environment house prices grow quickly. Some people sell their houses and realize capital gains income. Now, in any given year, it looks like the income distribution has changed a lot. It looks like there are fat cats making a lot more than average. Yet, in reality, everyone is the same, they are just realizing capital gains income at different times. There are new people each year in the top 1%. In this environment, if people wait longer to sell their house, they will shoot up the income distribution. For one year, they will look like a CEO, but really they just sold their house and will go back to their regular income next year.

Now, Don’s point is more general. We could just get rid of the houses all together and change the income process. If the income process becomes more volatile, it will look like some are very getting very rich in any given year, even though on a long time horizon people will look the same.

I believe that is the point Don is trying to make. I agree that it’s valid, but I commented that we could control for it. If we did, I don’t think it would explain the rise in inequality. If it did I would change my beliefs about changes that have occurred in the world. I am wondering, if Don would do the same, if a careful look at the data showed that the volatility effect was minimal.

“Sorry, I was unclear. I don’t care if there’s a widening.”

I am not sure why people tell me this. If I was commenting on someone’s music critique, would you tell me you don’t care about music? Why should I care that you don’t care? I want to understand the world better, regardless of whether you do or not.

Ken November 4, 2011 at 4:27 pm

Charlie,

I am not sure why people tell me this. If I was commenting on someone’s music critique, would you tell me you don’t care about music?

Let me know when critiques on music directly affect national, state, and local politics that are designed specifically to limit liberty. The whole purpose of focusing on income inequality is to give up even more individual liberty to people writing legislation that takes that liberty.

Additionally, if you solely listened to country music, but read an article on rap music, so decided to comment on it, it’s a valid question to ask why you should care about rap. You don’t listen to it. It doesn’t affect your life, but you feel the need to comment on it. Why? Would it be to limit the amount of rap music (see FBI and NWA)? Would it be to try to institute some legislation to force radio stations to address the country/rap gap? Or are you simply doing your best to keep race resentment alive and well as in the Arbitron controversy?

Regards,
Ken

vikingvista November 4, 2011 at 4:37 pm

“Imagine a simple world, where people all have the same income. Let’s a assume people own houses, but the houses don’t appreciate in value (again just for simplicity). In this society, there is no wealth distribution.”

Both wealth and income always have a statistical distribution. Unless, I suppose, there is zero of either.

What I think you are trying to set up, is a scenario where income has a uniform distribution. If income has a uniform distribution, than wealth surely does not, unless income and wealth are extremely low. Likewise, if wealth has a uniform distribution, then income surely does not, unless both are extremely low.

Charlie November 4, 2011 at 5:08 pm

“Both wealth and income always have a statistical distribution. Unless, I suppose, there is zero of either.”

A bit pedantic, but I agree. I should not have said wealth as I meant income. And yes, I agree, by construction, I created a uniform income distribution. The point was to show that an increase in housing prices could cause us to misinterpret the meaning of our measurements of the income distribution, which I think is related to Don’s point. If we all take turns being in the top 1%, as opposed to having the same people in the top 1% year after year, that might matter to some of us.

Charlie November 4, 2011 at 5:12 pm

Ken,

You want to shout down a discussion about the facts for fear it may lead to policies that you are against. I appreciate that you are so open and honest about that.

Though, I’m sure you understand that I still don’t care that that’s how you feel.

Ken November 4, 2011 at 5:53 pm

Charlie,

You want to shout down a discussion about the facts for fear it may lead to policies that you are against.

Not at all. I’m asking you why you care. I am not trying to get you to shut up. I am trying to get you to give a coherent reason why this is an issue worth discussing, something you have thus far failed to do.

Instead of doing this basic task, you’re projecting on to me that I’m trying to “shout down” some idea you have, when in fact I want you to fully explain yourself. If you’re simply taking it as a given that it’s important, that’s fine, unsatisfying and weak, but fine. If you have reasons for thinking income inequality is relevant to anything, give it. Don’t coyly hide behind some argument that I’m trying “shout [you] down”. Boldly say what you think is true. You may be mocked for it, but be man enough to, you know, actually give a reason.

I’ve given you my reasons for why this isn’t important and you’ve mocked me. Now state your reasons. Or are you going to continue to play your games?

Regards,
Ken

Methinks1776 November 4, 2011 at 5:57 pm

You get that response because the whole issue of income distribution has become so politicized. What I mean is that it doesn’t bother me that in a free market people are richer and poorer. It may be an interesting intellectual exercise to figure out why, but usually people don’t trot it out income inequality as a purely intellectual exercise. I’m not accusing you of anything, I’m just explaining my response.

I take your point on houses. I am familiar with that argument. I’m only questioning whether trading in Real Estate was a significant portion of the capital gains since you brought up that point. I don’t know. It’s a thought.

PKSully November 4, 2011 at 6:52 pm

If you’ve lived in a house for 2 of the last 5 years then you don’t have to pay taxes on $250 k in profit, $500 if married. I’m not sure that the profit even gets counted in income, it’s been 18 years since I was a CPA. If it doesn’t get counted then the “taking turns looking rich” theory is just wrong. If it does get counted but doesn’t get taxed and people were really doing this, then the whole “rich don’t pay taxes like regular people” argument falls apart because it’s just regular people taking turns using the preferential treatment for home sales.

Methinks1776 November 4, 2011 at 9:07 pm

PKSully,

Aren’t you exempt from paying the cap gains tax if you buy a house for an equal or higher price within 12 months (I think) of selling the house on which there is a cap gain? If that’s true, then those cap gains wouldn’t even be reported on the 1040.

Is that right?

vikingvista November 4, 2011 at 10:24 pm

“Aren’t you exempt from paying the cap gains tax if you buy a house for an equal or higher price within 12 months (I think) of selling the house on which there is a cap gain?”

I believe that is true for any type of “similar” real estate turnover, not just houses. Unless it has been changed in recent years.

PKSully November 4, 2011 at 10:55 pm

At some point eased the rules so that you didn’t even have to roll the profits, that kind of screwed retirees. As long as you’ve lived 2 of the last 5 yrs- doesn’t even have to be consecutively- the gains are tax free up to those limits. Don’t know if it’s counted as income then exempted or if it doesn’t even show up on page 2 of the 1040.

Charlie November 5, 2011 at 12:36 am

Well, it would be nice if that were true. Maybe it’s been lost in the discussion, but I am arguing against Don’s argument. I brought up houses and stock options as I was trying to read Don’s argument as generously as possible. Ultimately, I don’t think that the “everyone takes a turn view” will get us very far in explaining the top 1%.

The Treasury paper gives this explanation of what “cash income” is (which is what they use). Maybe someone else can infer if it addresses your concerns. I don’t know and don’t see it addressed in the paper.

“Cash income is defined to include wages and salaries, tip income, taxable and tax-exempt
interest, dividend income, alimony, net income from business (sole proprietorships,
partnerships, and S corporations), farm income, net rental income, royalty income, net
capital gain or loss in adjusted gross income (AGI), other gain or loss, unemployment
compensation, taxable and non-taxable pension and annuity income, Social Security
benefits (including the non-taxable portion), and other income included in AGI. Net
operating losses carried over from prior years are added back. Alimony payments are
subtracted to reflect cash income. These sources of income are as reported on individual
income tax returns and supplemented by data from information returns on Social Security
benefits received but not subject to tax. The inclusion of tax-exempt interest and Social
Security benefits are important improvements to income as generally measured on
income tax returns. The inclusion of Social Security benefits is particularly important
because it is the main source of income of many older households. Transfer payments
subject to tax and thus included in income tax return data accounted for about 84 percent
of all cash transfer payments in 1995, the closest year to 1996 for which data were
available. (See Technical Appendix A in Auten and Gee, 2007).
Overall, the income measure used in this study should generally provide a good measure
of cash income for most households, though it may understate income for households
receiving significant amounts of tax-exempt income from workers’ compensation,
Supplemental Security Income, family assistance, or certain veterans disability programs.
In addition, the refundable portion of the Earned Income Tax Credit is not included
because cash income is a before-tax measure. Cash income can be affected by changes in
financial and compensation arrangements. For example, in recent years many mutual
funds have altered how they manage their portfolios so as to reduce currently taxable
capital gains of investors (i.e., capital gains distributions), even though the market values
18 of the mutual fund shares have been increasing. This change could reduce the incomes of
households that owned mutual funds in 2005 compared to the income that would have
been reported absent the change.”

Charlie November 5, 2011 at 12:51 am

“Not at all. I’m asking you why you care. I am not trying to get you to shut up. I am trying to get you to give a coherent reason why this is an issue worth discussing, something you have thus far failed to do.”

Why would I want to engage in that conversation? As I said from the beginning, I have no incentive to convince you to think about why this is an issue worth discussing. I have no reason to believe you’d add anything interesting to the discussion.

I was trying to engage in a discussion Don started on HIS blog about whether we are misinterpreting income data. You are jumping in and saying “why should I care about income data?” I just don’t understand why I should care if you care. Any discussion of whether or not income data is worth thinking about would surely distract from the discussion already started on thinking carefully about income data.

Granted this back and forth is already distracting from that discussion, but I’m enjoying it a little for its absurdity. I just can’t fathom, why you would comment on my comment on Don’s post and think you were somehow adding to the discussion, when the nature of your comment was, “why do you guys care about what you’re discussing?” What did you think you were adding? Why do you think it is my job to explain to you why people find a topic interesting?

Maybe you’d be better off starting your own blog and attracting like minded readers. No reason to participate in discussions you don’t care about on someone else’s blog.

Ken November 5, 2011 at 1:20 am

Charlie,

I just can’t fathom, why you would comment on my comment on Don’s post

I like to expose intellectual frauds. The fact that you can’t must a simple coherent answer to the basic question I’ve posed shows that. You want to discuss income inequality. I’m asking you why people should care about income inequality. You have failed – again – to provide a real reason.

The value added is to get to what your motivation is. I am suspect of those who nitpick and talk about income inequality because those who harp about it harp about it so in their very next breath they discuss a “solution” for it, but without having to explain why it’s a “problem”.

Care to expand on your interest? Or are you just going to continue to dodge the question? I’m guessing the latter.

Maybe you’d be better off starting your own blog and attracting like minded readers.

The same can be said of you and all other commenters on every other blog. You’ve chosen to engage in a public forum and now are pissy that others in that public forum are engaging you? Seriously? Grow up.

Regards,
Ken

Jeff Neal November 4, 2011 at 2:07 pm

Methinks,

While I agree with your point, I’m inclined to ask this:

You say “We only have to worry if . . . ”

IF!!?? Are we not already well down that interventionist path?

Methinks1776 November 4, 2011 at 2:19 pm

Me? I think we’re way too far down that road. But, we’re not the Soviet Union yet and the top 1% is comprised in very large part of people who did not get there through political connections or any connections at all. I’m one of them.

HaywoodU November 4, 2011 at 5:44 pm

Whatever. You’re probably on the Koch’s payroll. Drink anyone?

Methinks1776 November 4, 2011 at 5:58 pm

Yes, please, HaywoodU. If you can get me on the Kochs’ payroll I’d appreciate that too.

HaywoodU November 4, 2011 at 6:03 pm

Well it must be an easy thing to do. All you have to do is make people think you earn a lot of money and say outlandish things like, “I like freedom” or “I’m prosperous.” Boom. You work for the Koch’s.
You’re welcome.

Jon Murphy November 4, 2011 at 9:14 pm

Dude, slow down on the Koch references. I’m gonna get hammered!

GAAPrulesIFRSdrools November 4, 2011 at 10:22 pm

“Aren’t you exempt from paying the cap gains tax if you buy a house for an equal or higher price within 12 months (I think) of selling the house on which there is a cap gain? If that’s true, then those cap gains wouldn’t even be reported on the 1040.

Is that right?”

You have the old rule. PK Sully either has the current rule exactly or really, really close. It was the late 90′s when they got rid of the Section 1030-something, like kind exchange rules to defer gains and then you could take a “one time” exemption if you were 55 (its getting fuzzy)

http://online.wsj.com/article/SB10001424052748703470904575500532091181358.html

While this exemption did prevent the taxation of nominal gains that were largely inflation generated-there has been some discussion that the resulting bias toward using a residence as investment vehicle helped fuel the real estate bubble.

Randy November 4, 2011 at 2:42 pm

Agreed. It is the ease of mobility that matters, not the gap. And efforts in the past to radically minimize the gap have generally resulted in a caste system – imposed with violence.

vikingvista November 4, 2011 at 1:39 pm

It falls along ideological lines, because those of a certain ideological bent are determined to prop up the narrative that free enterprise creates a society with rigid and widely growing class distinctions–distinctions that are pathologic and necessitate violent state action to suppress.

Another ideological bent, on the other hand, sees free enterprise as a wildly dynamic system of success and failure, with countless examples of people struggling with low income to achieve a prize–a prize they the often cash out on to make their struggle worth while, and subsidize their future lifestyles.

In both scenarios, cross sectional income analysis shows a wide and widening income distribution. And certainly there are individual examples of both types of scenarios in any society. But whereas the former scenario may be construed as pathologic (depending on other characteristics), the latter scenario is devoutly to be wished.

The latter scenario puts individual’s futures in their own hands, creates great incentives to bettering the lives of large numbers of people, and transforms the world from a life of perpetual subsistence drudgery to one of concentrated productivity and long periods of leisure.

And yet both of these disparate scenarios produce the same income distribution statistics. And if you think of what life would be like in a society with a uniform income distribution, you would not want to live there.

Yes, it seems it should be reasonably simple to approximately separate out the glorious intra-individual component from the inter-individual component of the income distribution statistics, but what incentive is there if the current conflated measures are already successfully propagating your narrative among the readily duped voting masses?

Cameron November 4, 2011 at 12:54 pm

Is there any merit to the thought that the reason this 57.4% are no longer the 1% is not because incomes fell but because the rest of 1%’s income has risen?

Bob November 4, 2011 at 1:33 pm

That could only be if the size of the 1% shrank as it is 1% of the population. The country’s population did not shrink during the time period by 57% so the top 1% are still about the same size but with different members of the population.

Cameron November 4, 2011 at 1:35 pm

Good point. Thank you.

Jeff Neal November 4, 2011 at 1:50 pm

While the statistical analysis is interesting and does indeed refute a portion of the basis for Mr. Krugman’s position, a better argument might be:

OK, so we want to spread the wealth more “evenly”. How much of the rich’s money – top 5%, say – do you want to confiscate from them, Paul K.?

Now, add up that money, divide into the the other 95% (or the bottom 25% – whatever you think is fair) and then tell me how long those people can live off of that much money.

Then tell me what’s next? After they’ve consumed that confiscated wealth, what do you do now? Will you give the 99% the ability to produce for themselves or confiscate more money from a newly-disfavored group or percentage – maybe go after left-handed black Americans next – I bet there are some rich people in that crowd who can feed some of your 99% for a few days.

Jon Murphy November 4, 2011 at 2:05 pm

I ran the numbers:

If you were to take the entire wealth of the top 5% of households in the country and were to distribute it evenly among bottom 80% of households of the population, it would equal $19,711.79 per household. Since the poverty level in this country is about $22,000, this would last the poorest folks about a year.

What would we do then?

Jon Murphy November 4, 2011 at 2:06 pm

Source: census.gov

Jeff Neal November 4, 2011 at 2:08 pm

Thank you for doing the math. I think we agree, right?

Fred November 4, 2011 at 2:15 pm

The purpose of socialism is to destroy wealth.

Jon Murphy November 4, 2011 at 2:13 pm

Wholeheartedly.

Keep in mind my analysis assumes you distribute the ENTIRE wealth (including capital gains) among the households. And your logical question is perfect: after you take all the wealth from the top 5%, what then? Unless you want to keep taking it from the now new top 5%, in which case, you’ve not solved poverty at all: you just made it a revolving door.

As an aside, if you split up the entire wealth of the top 5% evenly among a quintile (for example, only the lowest 5th), it comes to $78,847.15 per household

Jeff Neal November 4, 2011 at 2:17 pm

J M

And, as M Thatcher said – eventually you run out of other people’s money.

Or they stop producing wealth for the 99% to confiscate – or they do it in Hong Kong or the Caymans.

read more if you like – http://www.athirdvoice.wordpress.com

Have a nice day

Fred November 4, 2011 at 1:56 pm

This is based upon income, correct?

Not many people start off in the top 1%. They only reach it late in their careers.

It stands to reason that many who “fell out” may have voluntarily retired, leaving the high earning position to the next person in line.

So I wonder how many of these top 1% jobs are the same over that decade, with different people occupying them.

Jeff Neal November 4, 2011 at 1:59 pm

Fred,

And, if they are the same jobs with different people in them . . . ? Is there a public policy implication or solution to that ‘problem’?

You do realize, that no matter what you do, someone will always be in the top 1.0%. (Unless you’re suggesting that everyone make/have EXACTLY the same amount of money – are you?)

Fred November 4, 2011 at 2:00 pm

I never said there was a ‘problem’ in need of a ‘solution’. I was just musing.

Jeff Neal November 4, 2011 at 2:03 pm

Fred,

Fair enough. My apology for over reacting.

Fred November 4, 2011 at 2:04 pm

np

Fred November 4, 2011 at 2:03 pm

People talk as if the top 1% is a static group of people, which is indeed false.

I was suggesting that perhaps a significant number of the top 1% earning positions may be static, and people “fall out” of the 1% when they give up the job.

No judgement was intended, and rereading my comment I’m not sure where you saw any.

khodge November 4, 2011 at 4:08 pm

Are you saying that if we get rid of the top 1% there will still be a top 1%???

Jeff Neal November 5, 2011 at 10:47 am

of course i’m saying that

Jeff Neal November 4, 2011 at 2:02 pm

On further reflection, so what if it were the case that the “1%” is the the same group year after year? Unless that were happening as a result of a anti-free-market law or regulation, who says it’s a bad thing and that some law or regulation should be promulgated to “fix” it?

Daniel Kuehn November 4, 2011 at 2:29 pm

Come on Don – almost all of them are still in the top 10%, and the ones that aren’t are probably living off their even more dramatic wealth inequality.

I’ve never been one to say that inequality in and of itself is a bad thing, but this is weak as is all the crap that Perry’s been posting – trying to pass off “top 20%” graphs as refutations of Chait who has been talking about the top 1%. That’s simply dishonest on his part. If Perry is interested in the top quintile then Perry is welcome to talk about the top quintile, but he shouldn’t misrepresent others’ views.

Greg Webb November 4, 2011 at 2:43 pm

Daniel, the US Department of the Treasury report supports Don’s claims. Are you saying that there is something wrong with the Treasury Department report?

Daniel Kuehn November 4, 2011 at 3:39 pm

I’m not challenging the figure Don got from the report. I’m saying that also in the report is the fact that 80% of the top 1% were still in the top 10%.

Of course there is churning. This is a well known fact of inequality statistics (well known – I should say – among economists who study it… maybe not by the public). That’s particularly true of the wealthy, whose income depends on market fluctuations and corporate performance far more than wage earners in middle quintiles. So of course they are going to move around a lot. But if the top 1% still stay in the top 10% (it’s not like they’re falling down to the 50th percentile), and if many of the top 1% are probably withdrawing and living off their wealth, it seems bizarre that Don would take this churning as some sort of refutation of concerns.

And the Perry point I strongly maintain. He has a terrible habit of pretending that people are talking about one thing (say, quintiles or Gini coefficients) when they’re actually talking about another (top 1% or the super-rich).

Greg Webb November 4, 2011 at 4:29 pm

Daniel, I think it is well known, even by the public, that certain statisticians and economists “play” with the numbers to support what they want their conclusion to be. I see it a lot.

I am aware of people in the top 1% of income earners being at the top of their careers who will fall out of the top 10% when they retire. I also know of several people who have fallen out of the top 10% after firmly being in the top 1% for years as a result of the recession, disability, death, etc. Consequently, Don’s conclusions seem plausible. Do you have other evidence to indicate otherwise?

I don’t read Mark Perry’s stuff very often. It is a time related issue. So, I don’t dispute your claim about his habits.

Methinks1776 November 4, 2011 at 6:04 pm

Do you not find it odd that there are people who are upset that when the top 1% drop out of the top 1% they don’t end up homeless? It’s as if they don’t consider it fair that once they have achieved a lot, these people don’t die paupers.

(and, no, Danny K, before you have another public nervous breakdown, I don’t mean you. Necessarily)

Nikolai Luzhin, Eastern Promises November 4, 2011 at 6:24 pm

Daniel

Great to see you catching Don in a “Koch” moment.

HaywoodU November 4, 2011 at 8:24 pm

Get over it.

Jon Murphy November 4, 2011 at 8:34 pm

Another Koch, another shot!

khodge November 4, 2011 at 4:13 pm

I believe that it is the OWS group that decided that 1% is the operative percent. I have heard them quoted that they are speaking on behalf of the 99% whom they represent (and who are too stupid to realize that they need someone to speak on their behalf).

Jon Murphy November 4, 2011 at 2:30 pm

I don’t know how many people here watch South Park, but Wednesday’s episode was quite interesting.

***HERE BE SPOILERS***:

The entire school had to take the President’s Fitness Exam. Individually, they were all fit. All but 1 that is: Cartman (who is a fat douche). He was so fat he dragged down the school’s average weight to the worst in the nation. So, the 99% of students in the school decided to protest against Cartman’s inclusion in the program as it was dragging them down. It’s quite a good episode (there’s more going on than that, but that’s the part of the plot that’s relevant).

So, why bring this up? I am reminded of a parable Don told a little while ago:

Bill Gates, Mark Zuckerberg, and the Google Guys are in a room. We calculate the average income of that room. Now, I walk into that room. The average income of the room falls even though no one makes less money. Is everyone worse off than before I came into the room?

Let’s reverse it. Myself, and three other middle-class workers are in a room. Bill Gates walks in. The average income of the room goes up even though no one is making any more money. Likewise, the distribution is now messed up as Gates, although only 20% of the people in the room, earns wealth that is in the top 1%. Are we worse off than we were before?

This is what’s known in the local parlance as a black swan event.

vikingvista November 4, 2011 at 3:19 pm

The writers of South Park are prolific genius’s of social satire. Mike Judge is no slouch either, so pay attention to the renewed Beavis and Butthead series.

Jon Murphy November 4, 2011 at 3:20 pm

Believe it or not, I have never liked Bevis and Butthead. Still, I’ve not seen it in a while; I should give it a second chance.

vikingvista November 4, 2011 at 3:58 pm

The aesthetics are not for everyone, but the satire is clever.

Dallas Weaver November 4, 2011 at 2:31 pm

As someone who was one of the “one year millionaires” when I closed my business (sold all the equipment) and sold the building it was in, I had my time in the 1%. However, since that one year is my retirement future and sole source of future income to last me the next 15 years, I wonder what all these statistics really mean. I didn’t get an inflation adjustment on the “basis” of my investment over 35 years and was taxed on the imaginary profits by the state (Ca) as ordinary income. At least the Feds allowed a 20% capital gains rate — again with no adjustment for the decrease in the value of the dollar.

My brother in law also retired with a government pension that has a present value of about 3 million dollars, which gives him a lower risk, higher return retirement that I am looking forward to. The IRS says his retirement just makes him in the 70 percentile range, but my retirement year put me in the top 1%.

How many of the 1% each year are “one year millionaires”?

Nikolai Luzhin, Eastern Promises November 4, 2011 at 6:27 pm

Dallas

The more important issue is the percent of the country’s wealth owned.

Wealth = real weight

Ken November 4, 2011 at 6:34 pm

Nicki,

The more important issue is the percent of the country’s wealth owned.

This isn’t important either.

Wealth = real weight

What do you mean by “real weight”? If you mean power, no it doesn’t. Bill Gates was the richest man in the world for nearly two decades and had zero power over me. Some paean bureaucrat in the government, making no more than the typical American, came up with the rules governing how much water my toilet can use when it flushes, how much gas my car can consume, what type of light bulb I can use, how high railings in factories have to be, etc. The list is endless when it comes to listing the power low paid government worker wield over the typical American.

Regards,
Ken

Daniel Kuehn November 4, 2011 at 2:34 pm

Jefferson to Madison, 1785:

“The property of this country [France] is absolutely concentered in a very few hands, having revenues of from half a million of guineas a year downwards. These employ the flower of the country as servants, some of them having as many as 200 domestics, not labouring. They employ also a great number of manufacturers, and tradesmen, and lastly the class of labouring husbandmen. But after all these comes the most numerous of all the classes, that is, the poor who cannot find work. I asked myself what could be the reason that so many should be permitted to beg who are willing to work, in a country where there is a very considerable proportion of uncultivated lands? These lands are kept idle mostly for the aske of game. It should seem then that it must be because of the enormous wealth of the proprietors which places them above attention to the increase of their revenues by permitting these lands to be laboured. I am conscious that an equal division of property is impracticable. But the consequences of this enormous inequality producing so much misery to the bulk of mankind, legislators cannot invent too many devices for subdividing property, only taking care to let their subdivisions go hand in hand with the natural affections of the human mind. The descent of property of every kind therefore to all the children, or to all the brothers and sisters, or other relations in equal degree is a politic measure, and a practicable one. Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise. Whenever there is in any country, uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right. The earth is given as a common stock for man to labour and live on. If, for the encouragement of industry we allow it to be appropriated, we must take care that other employment be furnished to those excluded from the appropriation. If we do not the fundamental right to labour the earth returns to the unemployed. It is too soon yet in our country to say that every man who cannot find employment but who can find uncultivated land, shall be at liberty to cultivate it, paying a moderate rent. But it is not too soon to provide by every possible means that as few as possible shall be without a little portion of land. The small landholders are the most precious part of a state.”

Cameron November 4, 2011 at 3:41 pm

An interesting point in this quote is that Jefferson observed that the rich were so rich that they didn’t use all the property they had in productive ways. They were comfortable enough to simply hold onto land, uncultivated while many were poor and starving.

One solution he devised was to do away with the custom/law of passing all one’s wealth on to a single child/inheritor. If inheritances were allowed to be given to multiple progeny then the uncultivated lands problem would likely go away.

But the other solution he offers is more pertinent to our day. He basically advocated taxing these super rich land owners as a means of incentivizing them to be more productive. Which is a very surprising proposal.

Jon Murphy November 4, 2011 at 3:45 pm

It might also be worth keeping in mind that in the feudal society, one could not earn a living unless he owned land (well, he could, but it was a meager living usually at the favor of some lord). I, however, own no land but I earn a living.

Also, private property was granted by the King and the King alone

muirgeo November 4, 2011 at 3:55 pm

Interesting sotry about France in 1785… and then what happened?

Ken November 4, 2011 at 4:00 pm

What’s a “sotry”?

Regards,
Ken

HaywoodU November 4, 2011 at 8:27 pm

From Urban Dictionary:

Sotry

The act of orgasming whilst video chatting with a friend of the opposite or same sex.

Captain Profit November 4, 2011 at 11:48 pm

Then what happened? He went back home and miscegenated with a slave girl, another subject he was consistently inconsistent on.

Greg Webb November 4, 2011 at 11:50 pm

Nah, that was his looney uncle Randolph.

carlsoane November 4, 2011 at 4:10 pm

He sounds like an early Georgist.

kyle8 November 5, 2011 at 8:29 am

I am not sure what you are trying to say here, Feudal France was about as far removed from a free market as possible. There were no property rights save for the nobility, There were royal monopolies or guild based monopolies on everything.

So I will agree with you and Jefferson, it was not a very good system. Interestingly enough they replaced it with a WORSE system during the reign of terror, but they are French after all.

Greg Webb November 4, 2011 at 2:46 pm

Daniel, weren’t the few that owned all the land members of the feudal aristocracy who supported government centralized in the hands of the King and the nobles who supported the King?

muirgeo November 4, 2011 at 3:53 pm

Yes , Greg and I believe that is the point. Do we want to go back there?
But Jefferson and Madison were of course ahead of their time socialist right? Or were they communist?

Ken November 4, 2011 at 3:59 pm

HAHAHAHAHAHAHAHAHA!!!! Rich people = kings and queens! HAHAHAHAHAHAHAHAHAHA!!! You’re hilarious.

Regards,
Ken

Greg Webb November 4, 2011 at 4:14 pm

But Jefferson and Madison were of course ahead of their time socialist right? Or were they communist?

Jefferson and Madison believed in freedom for the individual and limited, representative government, which is what libertarianism represents.

The French King and landed nobles were all about big, centralized government. And, today’s Big-government advocates like yourself are socialists and communists. And, we saw what socialism and communism are all about with the Soviet Union, Nazi Germany, Fascist Italy, Communist China, Communist North Korea, etc. And, we certainly don’t want to go back there.

muirgeo November 4, 2011 at 10:45 pm

“The French King and landed nobles were all about big, centralized government.” Greg

What the hell are you talking about Greg? The Kings rightfully had their property. They can do what they want on it. Wo are you to say they don’t deserve their property? Who are you to say what they can do on their own property? What are you jealous of the Kings and Queens wealth and power. Do you want to forcefully redistribute their wealth like those terrorist did to King George in 1776.

Ken November 4, 2011 at 11:10 pm

HAHAHAHAHAHAHAHAHA!!!!

Greg Webb November 4, 2011 at 11:44 pm

LOL, George! You really don’t understand history. But, since you don’t understand economics or politics, you really don’t need a knowledge of history. I sure hope that you know something about pediatrics or you will be facing many medical malpractices lawsuits.

The American Revolutionaries were not terrorists. And, they did not redistribute anything from anybody. They also decentralized and limited the power of government from what they had previously known under King George, your namesake.

The French Revolutionaries, on the other hand, were terrorists. And, they murdered everyone who had any property to redistribute it to…themselves. But, that is what happens when government and power is centrailized.

CalgaryGuy November 4, 2011 at 4:55 pm

So muirgeo, are you saying we need to reduce the centralized power of those who govern?

muirgeo November 4, 2011 at 10:42 pm

YES! People of enormous wealth own the government. That’s why they are getting more wealthy and why income inequality is increasing.

In a libertarian society eventually all property and means of production is captured by a wealthy elite leaving the rest to be serf equivalents.

Kings and Queens ARE the result of libertarian societies. There was NO centralized power… Just property owners.

Jon Murphy November 4, 2011 at 10:51 pm

Wait…so monarchy is decentralized government?

muirgeo November 5, 2011 at 12:24 am

Yeah Jon they are. It’s their property isn’t it?

Greg Webb November 5, 2011 at 12:32 am

so monarchy is decentralized government</i.

Ah, double speak and double think is such a grand thing, isn't it? With double speak and double think, monarchy is dencentralized government, while freedom for individuals comes from centralized government.

Ken November 5, 2011 at 12:34 am

HAHAHAHAHAHA!!!!

Stupid is as stupid does, right muirgeo?

Regards,
Ken

Greg Webb November 5, 2011 at 12:39 am

Ken, with newspeak, George is smart (really stupid).

Jon Murphy November 5, 2011 at 8:14 am

See, here I thought monarchies were centreralized governments because all property was owned by one person, all power was in the hands of one (or a very few) person, the administration of the law was by one person and everyone had to swear loyalty to that one person.

But now I see I was wrong. Oh, how could I have been so blind all these years! I will now become a monarchist, as it is the only thing that is consistent with my beliefs! How Founding Fathers were wrong! Oh Mighty England, take us back!

Randy November 4, 2011 at 2:57 pm

The problem, of course, is that Jefferson is dead – and has been for a few hundred years. Very little of the wealth generated today comes from land use. How would Jefferson have subdivided intellectual property? How would such property transfer from the minds that created it to the minds of those who can barely understand it? How does the distributor ensure that the creator will continue to create after said transfer? Perhaps Jefferson did consider these questions, but if so, he gives no indication here.

Jon Murphy November 4, 2011 at 3:01 pm

I’m not sure I agree with your statement that very little wealth created comes from land use (I agree with the general sentiment, so I beg you to allow me this digression). We still consume many goods that are made in factories, farmland, or storefronts. Even the iPhone has to be built somewhere.

Randy November 4, 2011 at 3:26 pm

I see your point, but I don’t entirely agree. In modern agriculture, for example, intellectual property plays a really big role. Would we really want to break up large modern farms into plots suitable for 40 acres and a mule? And the same kind of comparison can be made between big box stores and a mainstreet mom and pop, or land used for a modern plant versus a vacant lot on the edge of town.

Jon Murphy November 4, 2011 at 3:29 pm

That’s true. I understand your point, now.

Correct me if I am wrong, but your point is that intellectual property is the forerunner to wealth creation?

Randy November 4, 2011 at 3:38 pm

It is the forerunner to the massive wealth that is being created in modern productive societies. It is possible to create wealth with 40 acres and a mule – but not much.

Jon Murphy November 4, 2011 at 3:39 pm

Gotcha

Economic Freedom November 4, 2011 at 3:13 pm

We have a moral choice to make here. We can kill all of the14,000,000 unemployed and end unemployment immediately. Alternatively, we can kill the around a million who constitute the richest 1 percent and give their money to the 14,000,000 who are unemployed. That would represent a savings of approximately 13,000,000 lives. You tell me which is better from a moral standpoint?

Jon Murphy November 4, 2011 at 3:17 pm

Neither. Both are deplorable, indefensible, and immoral options. Both unduly deprive the respective parties of there right to Life, Liberty and Property. Therefore, each option is equally despised.

Economic Freedom November 4, 2011 at 3:22 pm

It is okay if the rich pile up all the money while everyone else suffers? That is deplorable, indefensible and immoral. You would deprive the poor of their right to life (medical care, and food), Liberty (living in a squalid slum), and property (they have none to speak of). Therefore, what you propose, which is nothing, is just as dispicable if not more so.

Jon Murphy November 4, 2011 at 3:27 pm

So, your answer is murder? Weren’t you lecturing me a few posts ago about how murder is always evil?

Also, explain how every American who is unemployed is on the verge of death.

Economic Freedom November 4, 2011 at 3:49 pm

I do not incorrectly call capital punishment murder, like you do. If you did the crime you must face the punishment that fits the crime. If you kill others by your bad behavior, you will be done away with after a fair trial of your peers. Get ready to face the music.

Jon Murphy November 4, 2011 at 3:53 pm

I’m sorry, EF. I didn’t realize working hard was a crime punishable by death. Certainly explains the logic behind welfare queens, persistently unemployed folks, and free-riders.

Jon Murphy November 4, 2011 at 3:28 pm

And living in squalor. And have no property.

Randy November 4, 2011 at 3:36 pm

EF,
The rich exist and the poor exist, but there is no cause and effect relationship between them. The poor are poor, generally speaking, because of behavior – and way more than a few studies have confirmed this. It seems to me that threatening the rich in order to support questionable (at best) behavior is an immoral proposition.

Economic Freedom November 4, 2011 at 4:16 pm

What is a child born into poverty guilty of? I think you have a lot to learn about how the world works. I think there are worse things than simply being a poor child. Your may have been born a crack baby. This is really too much for me to contemplate at the moment. I will stop now.

Randy November 4, 2011 at 4:36 pm

EF,
Tell you what, if you get rid of all the middle and upper class entitlement programs there would be plenty of money to take care of crack babies. But not the crack mothers. I see nothing moral in supporting that kind of behavior.

PKSully November 4, 2011 at 8:26 pm

Stop talking to this guy. He’s talking about the plight of being born poor, which almost everyone is sympathetic towards, at the same time he’s advocating MURDERING children born into the top 1% of families. He’s a barbarian troll who would MURDER my 3 children. Actually, he would have the state MURDER my children.

Economic Freedom November 5, 2011 at 1:17 am

PKSully,

You troll librarian! You sully this tread with your obnoxious, untrue statement. I give you the choice: hand over all your money and property and save your life or be killed in a violent revolution. Your choice! You kids are safe; they will be put up for adoption and raised by someone decent who clearly knows better how to raise them than a disgusting, abusively rude person like you who screams too much, and understands too little. Fork it over, loser!

Anonymous Librarians November 5, 2011 at 1:53 am

Economic Freeloader, we, the Anonymous Librarians of the World, know your name, where you live (be sure to put a dollar on your parents’ washer and dryer every time you use them, ya bum), who you work for (if you can really call that work), and your girl friend’s name (Rosie). You can’t run and you can’t hide from us. We’re coming to get you. We will make a responsible adult of you yet. You just wait. Resistance is futile.

Jon Murphy November 4, 2011 at 3:38 pm

Actually, this really opens a window: If the thinking is “13 million lives is greater than 1 million lives” then it really shows that modern leftists have no concern for human life. Humans are nothing more than pawns to be sacrificed for some invisible greater good. A lot of things just started making sense: the avocation of trade barriers so poor people in foreign countries can stay poor so a few get rich, the promotion of cash confiscation (the evil of thrift for greed), the censorship arguments.

This is all “the ends justify the means.” So what if people die if I achieve my goal? So what if I take what is not mine? So what if I damn millions/billions into poverty so I may be rich? My God, it’s like walking through Dante’s Inferno.

Randy November 4, 2011 at 3:39 pm

See Atlas Shrugged.

Jon Murphy November 4, 2011 at 3:41 pm

By the way, that should say “theft” not “Thrift”

Jon Murphy November 4, 2011 at 3:42 pm

Dante’s Divine Comedy was the first. Through is journey though Hell, you hear the various sinners use variations of that line.

Economic Freedom November 4, 2011 at 4:34 pm

You think that 14,000,000 dying by your bad actions, or inaction, is morally the same as killing 1,000,000 by your bad action? You don’t value human life much then.

Jon Murphy November 4, 2011 at 4:55 pm

I’m not saying not to do anything. My question is: who plans for who?

How is punishing those with wealth going to inspire those without wealth to work for it? It only perpetuates the problem.

txslr November 4, 2011 at 3:39 pm

The first attempt to justify genocide on ideological grounds that I’ve read on this blog. It was bound to happen.

Economic Freedom November 4, 2011 at 3:46 pm

Your librarian, neo-con, policies have already killed millions. You have lost any and all moral authority to criticize others. You are officially a troll and a loser librarian teabagger.

Jon Murphy November 4, 2011 at 4:56 pm

Txslr, I never though I’d see the day when the solution to solving poverty was to kill rich people. I always figured that’d be some kind of joke.

Jon Murphy November 4, 2011 at 4:57 pm

EF, and I say this sincerely:

If you truly believe what you have written, may God have mercy upon your soul.

And I say that, not as a Libertarian or Christian or humanitarian, but as a Human

txslr November 4, 2011 at 5:02 pm

EF,

As long as it’s official.

tdp November 4, 2011 at 6:51 pm

Yeah EF, fuck those greedy evil librarians!

Anonymous Librarians November 5, 2011 at 2:44 am

Economic Freeloader, your silly big-government policies killed over 100 million people in the 20th century alone. A God- hating fool like you does not have any moral or ethical authority.

GAAPrulesIFRSdrools November 4, 2011 at 10:23 pm

It is okay if the rich pile up all the money while everyone else suffers? That is deplorable, indefensible and immoral.

No, they are thoroughly unrelated.

Economic Freedom November 5, 2011 at 1:23 am

You don’t know your ass from a hole in the ground.

Anonymous Librarians November 5, 2011 at 2:39 am

Economic Freeloader, you have displayed, yet again, your inability to make a coherent argument and are returning to silly personal attacks.

kyle8 November 5, 2011 at 8:37 am

Even if what you sid were actually happening you still would not have a moral case (of course you have already advocated mass murder so we know you are immoral).

But nothing like what you describe is actually happening. The rich will continue to get richer because we live in a global economy which your tiny mind cannot grasp why they will gain even more wealth from that.

But everyone else will be better off as well. We are in a temporary slump but even so the gains to the average lifestyle over the last thirty years has been enormous. And global trade has created a middle class in many nations which had only rich and poor before.

Greater trade, investment, knowledge, production, and efficiency make everyone better off. If a few gain an at an even higher rate that should be of no concern to anyone who is not a evil murdering, envy fueled marxist troll.

Economic Freedom November 5, 2011 at 10:18 am

Yes, ignorant redneck hunter/killers like you should be put on trial for mass murder. What you and Bush did in Iraq was mass murder as well. After your last meal of Big Macs, you will receive a lethal injection. The your carcass will be used to make Louisiana hot links. for sale at Walmart, to feed the poor that you don’t give a shit about near where you live and suck the resources from your neighborhood stores. You are evil and must be found guilty of grave harm to the world that you really despise. You crappy recipes will be thrown into a bonfire to provide heat from your many poor neighbors who live on squat. You memory will be forgotten immediately. Know will remember that you trolled here either doing more harm. You were all about doing harm wherever you went. Bad worm/troll that was wasted DNA. Your dumb, redneck parents were to blame as well.

http://www.walmart.com/ip/Louisiana-Brand-Naturally-Smoked-Hot-Link-Sausage-16-oz/10535254

Economic Freedom November 5, 2011 at 10:24 am

http://en.wikipedia.org/wiki/ORB_survey_of_Iraq_War_casualties

You don’t care about the million people (men, women, and children) who died in Iraq.
They mean nothing to you. You only care abou the 1,000,000 super rich. You disgust.

Anonymous Librarians November 5, 2011 at 11:06 am

Economic Freeloader, you are the typical leftist haters. Grow up, get an education and a job, and move out of your parents’ basement.

Jon Murphy November 4, 2011 at 3:51 pm

Actually, let’s take this thing to it’s logical conclusion:

Let’s assume that some populist fervor possesses the American people, and we kill the top 1% and give all their money to the unemployed. Let’s even go further, and give it to all people who don’t work.

Where do we go from here? For fear of being next on the hit list, people stop working. After all, aren’t you going to get the money from the top 1%? Everyone stops working, factories shut down, farms stop producing. Homes fall apart. Lives fall apart. We all live in abject squalor. Afraid to better ourselves lest we feel the hangman’s noose, all creativity stops dead.

Unless, of course, this is a 1 time execution, in which case, we now have state-sponsored terrorism. And we are no better then the worst of humanity.

Greed is a sin. Even well-intentioned, we all end up damned.

Economic Freedom November 4, 2011 at 4:04 pm

“Greed is a sin. Even well-intentioned, we all end up damned.”

I agree with you 100%. I’m not sure what well-intentioned greed is, but okay.

Jon Murphy November 4, 2011 at 4:50 pm

Like wealth distribution. It’s done to help the little guy (well-intentioned), but it is nonetheless damning and harmful.

khodge November 4, 2011 at 4:16 pm

I confess…I log onto this website for the violence.

vikingvista November 4, 2011 at 4:58 pm

Why is murder (actually mass human slaughter) the only choice for you? Seems to me the moral choice is to kill the committed murderer.

Anonymous Librarians November 5, 2011 at 2:47 am

Economic Freeloader, perhaps we should just kill you instead. Isn’t that a better moral choice than killing 14 million or even only 1 million?

Josh S November 4, 2011 at 3:17 pm

There is a charitable but demonstrably false claim in your article. Paul Krugman simply is not aware that there is any way for a person of good will and intelligence to interpret anything other than the way he does.

GAAPrulesIFRSdrools November 4, 2011 at 4:06 pm

“Krugman simply is not aware that there is any way for a person of good will and intelligence to interpret anything other than the way he does.”

Its worse than that. Krugman sees four ounces of water in an eight ounce glass and declares it “half empty”. When somebody else says’s its “half full”, he waives his Swedish gold and questions their motives and declares them to be a morally defective, bigot and closet racist who merely wants to see Obama fail for political advantage.

I think the man is an idiot savant.

Shelby November 4, 2011 at 6:35 pm

Just an idiot.

Ryan Vann November 4, 2011 at 3:44 pm

Don playing Chael Sonnen to Krugman’s Anderson Silva is always amusing.

Jon Murphy November 4, 2011 at 3:46 pm

Not gonna lie, man. I don’t get the reference

Ryan Vann November 4, 2011 at 4:12 pm

Chael Sonnen is an (well really THE) antagonist to the current UFC Middleweight division champion, Anderson Silva. Chael, doggedly harasses the champ in pretty much every media event he is involved with, and is generally extremely entertaining.

Shelby November 4, 2011 at 3:50 pm

Thank you, Rich People, for all you do!
The Occupiers claim that rich people do absolutely nothing to directly contribute to society. The evil rich don’t provide jobs, pay taxes, take risks, etc. They spend their time riding in limos and laughing at the cake-eating 99%.
Even if this ridiculous scenario was true, we (the little people) must celebrate those who are rich enough to buy new toys before we can. Steve Jobs sold his first iPhones a few years ago for $500. Rich people bought them, enabling Jobs to invest in more efficient ways to produce the phones, dropping their prices dramatically and gaining millions of customers at the new price point.
Same with plasma tvs, etc. Maybe the Occupiers should rethink their motto. How about “Rich People Rock!”

muirgeo November 4, 2011 at 4:15 pm

The bigger picture here is not so much the wealth and wage inequality but why it exists to the degree it does.

It’s no coincidence that now the wealthiest counties in the country are those that flank Washington DC. This is coincident with their being some 400 lobbyist during the JFK administration to there now being some 40,000 registered lobbyists.

So when Don and Russ and others deny that anything has changed with regards to income inequality while seemingly denying the significance of rent seeking that is the main reason it exist to such a degree I just have to question on what basis do they see any consistency to their position.

Most significant from Krugman was his point, “The larger answer, however, is that extreme concentration of income is incompatible with real democracy. Can anyone seriously deny that our political system is being warped by the influence of big money, and that the warping is getting worse as the wealth of a few grows ever larger?”

We saw the results of massive income inequality yesterday when the Wall Street Banks and Masters of Global Finance were able to get their way once again complicit with our president and the other leaders of Europe and foil a democratic vote by the people of Greece to vote on the banker bailout they would have to pay for.

The Wall Street bankers and American Hedge Fund managers heavily invested in Greek debt were able to hold a gun to or politicians and to the heads of the people of Greece and not allow democracy to prevail. The bankers will be that much more wealthy and the people of Greece that much poorer.

Don and Russ and you all are in my opinion supporters of the use of force and holding guns to the heads of people by the government under the direction of these wealthy elites.

Shame on all of you because you are the modern day Tory’s and King Louis supporters… you’re the ones in denial and saying the Let Them Eat Cake equivalent.

Ken November 4, 2011 at 4:32 pm

muirgeo,

It’s no coincidence that now the wealthiest counties in the country are those that flank Washington DC.

That’s right. It’s indicative of a corrupt government grabbing ever more of other people’s wealth and distributing it to themselves and their political cronies. Yet, oddly your one and only solution to this is giving this same corrupt government ever more power to grab even more of other people’s wealth.

You’re a strange on muirgeo.

Regards,
Ken

muirgeo November 4, 2011 at 6:38 pm

No for the 5,075,769,836 time my solution is to have the government represent the people by getting money out of politics. Your solution is to take power away from the government to strictly limit government. And what is your solution for that. How do you acheive that? By ending Medicare and Medicaid??? How… specifically do you take power away from Wall Street and the Multinationals.

YOU do not have a rational solution… WE… the people DO.

tdp November 4, 2011 at 6:52 pm

Unless its union money or trial lawyer money, amiright?

Methinks1776 November 4, 2011 at 6:56 pm

Money is only one type of currency.

No, go misunderstand that for a while.

Ken November 4, 2011 at 7:44 pm

muirgeo,

No for the 5,075,769,836 time my solution is to have the government represent the people by getting money out of politics.

This is, for the 5,075,769,337th time, simply empty platitude. How do you get money out of politics? How will getting money out of politics get politicians to represent “the people”? Who are “the people”?

By ending Medicare and Medicaid?

Of course. I’ve stated that several times before. These two programs are the primary drivers behind medical costs spiraling upwards.

How… specifically do you take power away from Wall Street and the Multinationals.

What power do they have? The can control the property they own and nothing else. Wall Street and multinationals have no control over other people’s lives. They can’t force people to buy their products. They can’t force people to work for them. They can’t force people to give them their money. For any company to succeed in free markets (i.e., without crony capitalism) is to provide products people actually want and pay wages people will actually work for.

YOU do not have a rational solution… WE… the people DO.

Why am I excluded from “We… the people”? Am I not a legal citizen of the United States? Am I excluded because you don’t like me? Are you that arbitrary? Do you really think the majority of Americans would like a mean little troll like you?

Are you really so arrogant that you actually believe that you speak for the 310,000,000 Americans living in this country? Are the other legal citizens who post on this site not “the people”? Are Don and Russ not “the people”? Do you have any practical implementations for the vaguely worded sentences you’ve provided? Or are you simply going to repeat over and over “have the government represent the people” without saying what that means? Do you mean extreme democracy, where the majority is 50% + 1 vote? Are there any limits to what this majority do? If so what are they?

Regards,
Ken

Jon Murphy November 4, 2011 at 8:42 pm

Not to mention his ideas will lead right down the road to serfdom.

muirgeo November 4, 2011 at 10:48 pm

Ken,

“How… specifically do you take power away from Wall Street and the Multinationals.

What power do they have? The can control the property they own and nothing else. Wall Street and multinationals have no control over other people’s lives.”

Thanks for reminding me why not to bother reading most of your drool. You are one DMFer.

Ken November 4, 2011 at 11:12 pm

muirgeo,

Thanks for reminding me why not to bother reading most of your drool. You are one DMFer.

You can’t explain what power these people have over me that you insist they have, yet you claim I’m the “DMFer”? Ha!

You’re hilarious!

Regards,
Ken

Greg Webb November 4, 2011 at 11:46 pm

You’re hilarious! (Ken in describing George.)

No, Ken. George is just stupid.

Ken November 4, 2011 at 11:59 pm

Awww, Greg, stupid can be hilarious too!

Regards,
Ken

Greg Webb November 5, 2011 at 12:03 am

Ken, you point is well taken. :)

stedebonnet November 5, 2011 at 2:45 am

Multinationals might not have direct power over you Ken, but they do have it over you. They have the power to pour a ton of money into campaigns and influence policy decisions that in turn influence you. They have the power to supplement politicians campaigns by 100 Million if that’s what they want. And because people are stupid, these funds influence elections. They have the power to convince government to take taxes that you and I pay, to pay for their risks. They have the ability to get subsidies, guaranteed loans, etc.

I can tell you how to get money out of politics. Campaign finance reform. And election reform in general. Making sure that the costs and benefits of legislation are borne by everyone is another good way to get $$ out. And greater use of referenda so that a minority of voters don’t benefit at the expense of others.

Anonymous Librarians November 5, 2011 at 11:12 am

I can tell you how to get money out of politics. Campaign finance reform.

Yep. It worked so well the last time it was tried.

Let’s try something that will work. Incentives matter. Drastically reduce the federal government’s spending power and power to limit competition. The amount of money spent to get taxpayers subsidies and favorable regulation wil drop drastically if the incentives to get those drops because they are Constitutionally limited.

Ken November 5, 2011 at 12:08 pm

stedebonnet,

Your argument for claiming multinationals having power is so indirect as to be meaningless. It’s like saying that everything I do affects everyone else in the world, which while true, isn’t grounds to claim that I have power over everyone else.

I can tell you how to get money out of politics. Campaign finance reform.

Unless you stem the ocean of money that flows through the US government to their political favorites, campaign finance “reform” does nothing. As long as politicians can spend trillions every year to buy votes from the old (SS and medicare) and poor (welfare and medicaid), and all the others on the take, then you did not “get money out of politics”. You simply lied to yourself.

Regards,
Ken

Randy November 4, 2011 at 4:43 pm

Ken,
Yeah, sometimes I think he actually sees it, but then finds a way to pull back. It must be kind of like a religious zealot faced with the understanding that the entity he had always thought of as the holy of holies is really the demon he had been taught to fear. Just too much…

muirgeo November 4, 2011 at 6:40 pm

Randy,

Again… now explain to me a reality based solution to take away power form the bankers. Just walk me through how we get there and how we maintain the “power vaccum” .

You will not be able to. None of you guys can give a rational real world explaination of how that might happens.

Ken November 4, 2011 at 7:48 pm

muirgeo,

Bankers don’t have power. They use deposits to make loans. If you don’t like the way a bank does that, don’t bank there. If you don’t like the terms of the loan they’re offering, don’t get the loan. If you don’t like the terms of any of the services a bank offers, don’t do business with them. They cannot force you to do business with them. They do not have an armed force to send out to collect money simply for existing. They do not have an armed force to send out to bring you in as a customer. They do not have an armed force to send out to make you deposit money there, buy loans or any of the products they sell.

In short they have no more power than you. You claim to be a doctor, but you can’t force anyone to get treatment from you or anyone else.

Regards,
Ken

muirgeo November 4, 2011 at 10:50 pm

Ken November 4, 2011 at 7:48 pm
muirgeo,

“Bankers don’t have power. They use deposits to make loans. If you don’t like the way a bank does that, don’t bank there.”

Ken you incredible SSOB. The banks got $17 trillion dollars of tax payer subsidized interest free loans. But again thanks for reminding me.

Ken November 4, 2011 at 11:14 pm

muirgeo,

Ken you incredible SSOB. The banks got $17 trillion dollars of tax payer subsidized interest free loans. But again thanks for reminding me.

That politicians took from taxpayers to dole out to their political cronies. The banks didn’t take that money from the taxpayers. The government did, using the power that fools like you gladly handed over to them.

It’s like you don’t understand power or something.

Regards,
Ken

Greg Webb November 4, 2011 at 11:49 pm

It’s like you don’t understand power or something. (Ken’s comment to George)

Ken, George does not understand power, or history, or economics, or politics….or much of anything else that he has mentioned in any of his posts that I have read. He is simply stupid.

muirgeo November 5, 2011 at 9:43 am

Greg,

Have I ever called you stupid? I thought we agreed to keep things on a little higher level. Vigorously disagree… playfully poke fun but lets not make it personal like that.

Anonymous Librarians November 5, 2011 at 11:15 am

LOL, Muirgeo! You stop calling others names and engage in reasonable debate, and our guess is that no one will call you names.

Randy November 4, 2011 at 7:56 pm

Muirgeo,

That’s not even hard.

Just break all ties between banks and the political organization. And if you’re not willing to do that, if you think that isn’t a real world solution, then there simply is no way. Effectively, in that case, the banks are an element of the political organization.

muirgeo November 4, 2011 at 10:53 pm

“Just break all ties between banks and the political organization.”

Thaaaaat’s pretty much what I’ve been saying.

Ken November 4, 2011 at 11:09 pm

Thaaaaat’s pretty much what I’ve been saying.

No it isn’t. Not until the recent OWS group that you’re with whom you’re so enamored, you tripped over yourself saying how awesome Obama and Krugman were and how necessary the bank bailouts were to prevent a financial armageddon.

Regards,
Ken

Randy November 5, 2011 at 5:56 am

“Thaaaaat’s pretty much what I’ve been saying.

Interesting. Just so we’re clear, I’m talking about breaking ALL ties between financial institutions and the political organization. No Federal Reserve, no restrictions on what can be currency, no reporting, no regulation at all on capital movements. Still with me?

Jon Murphy November 4, 2011 at 7:59 pm

Here’s an idea: stop rewarding bankers for bad bets. Stop the bailouts, stop the protective regulations, and break the ties with the government. It’s not that hard. And best part, it won’t cost a penny!

muirgeo November 4, 2011 at 10:54 pm

Yeah Jon…great idea. BRILLIANT. You think the banks will go along?

Randy November 5, 2011 at 5:58 am

So you do get it! Of course the banks won’t go along – because their relationship with the political organization is symbiotic. Remove the so-called regulations and they would be exposed to competition.

muirgeo November 5, 2011 at 9:40 am

And thus maybe I was being a little sarcastic. So have you really walked me through this? Again, my point being you do NOThave a practcle solution. Theoretical solutions are great but we live in the real world.

Jon Murphy November 5, 2011 at 2:43 pm

Everything’s theoretical until it’s implemented.

A stimulus is a theoretical argument until it’s implemented.

Frantic wealth redistribution is a theoretical argument until it’s implemented.

I don’t understand what your point is.

Randy November 5, 2011 at 6:10 pm

Muirgeo,
I actually agree that there is no practical way, given the fact of the never ending reality of political behavior, to separate the banks from the political organization. Tight control of the banks is simply way too important to the political organization. What’s amazing to me is the propaganda aspect of it all. The banks are effectively part of the political organization, but every time something doesn’t go as planned, the politicians blame the banks, as if they were a separate entity – and they get away with it – every time.

Shelby November 4, 2011 at 5:38 pm

Hi, muirgeo!
Starting from the top of your post: Lobbyists. Yuck, I agree. So, the politicians in DC should change the laws – ban lobbyists! After all, the DC geniuses are supposed to represent their constituents (have you ever heard of a single constituent who thinks lobbyists are a benefit to society?). Lobbyists, just like the rest of us, respond to incentives. If you are good at it and can do it without a clothespin on your nose, it could be a helluva job.

On Krugman. Who decides how much “concentration of income” is too much? I don’t see a consensus for that question anytime soon. Further, I would like more details on exactly how this inequality is a threat to democracy in the U.S. Finally, yes, I completely agree that the economy is warped – warped because of the ever-changing, DC politician-produced laws and regulations that terrify investors and cost the 99%ers their jobs.

Finally, Greece. A wonderful Greek man is the father of my three children – I have nothing against Greek people! However, Greeks respond to incentives just like the rest of the human population. Why would they vote for austerity? They have been coddled into believing in free lunches – like government-sponsored retirement at age 52. The problem is, if they don’t vote for austerity the European Union, the U.S., and the rest of the world will be negatively affected, perhaps seriously.

Greece has over-spent for years, creating an unrealistic lifestyle for its citizens. It’s all fun and games until a country’s credit runs out. Personally, I would like to buy $2,000 Jimmy Choo shoes with my credit card. But, I really (REALLY) can’t afford that lifestyle. Greece and I would be going down the same path. (Ah, but those shoes – what a way to go!)

Ken November 4, 2011 at 5:59 pm

Shelby,

the politicians in DC should change the laws – ban lobbyists!

Please familiarize yourself with “Congress shall make no law … abridging the freedom of speech, or of the press; … and to petition the Government for a redress of grievances.”

Otherwise, great post.

Regards,
Ken

Shelby November 4, 2011 at 6:17 pm

Sorry about that. I should have said “ban” them by making their contributions to politicians illegal, thereby eliminating their incentives to work as lobbyists. Of course, by making those contributions illegal we could only hope to stem the flow.

Ken November 4, 2011 at 6:29 pm

Shelby,

I understand what you are saying (still not sure of the constitutionality of it), but I think it’s addressing a symptom, not the cause. The cause is politicians ignoring the restraints of the constitution, in particular taking people’s money and giving to their political favorites. Unless something substantive is done about restraining politicians, I’m afraid nothing will change and only get worse. Lobbying is very profitable: spend $5M on campaign contributions and a little wining and dining and get rewarded with $100M contract. In the case of GM, they received thousands of millions of dollars. Solyndra received hundreds of millions of dollars. All because politicians think its okay to take from some and give to others.

And why shouldn’t they? Over 50% of Americans receive some sort of check from the government. We have the government we want. Maybe not what I want or you want, but what “we” want. Unless voters start punishing politicians for this wanton corruption, politicians will continue to do it. In fact, voters vote in favor of this. How many AARP commercials have you seen lately from affluent guys talking about how they’re entitled to the younger generations money? It seems the typical American is in favor of politicians taking from one group and giving to another, so long as they’re the ones being given to.

Regards,
Ken

muirgeo November 4, 2011 at 6:46 pm

Shelby,

Do you know how much debt Greece has compared to us? Specifiaclly debt to GDP ratios.

Your post shows me you are grossly underinformed on the issues… I do not have time to reply.

But yeah, I’d be interested to know if you know the answer to my question… sure you can go look it up but if you don’t already know the answer my second claim is valid.

Ken November 4, 2011 at 7:48 pm

muirgeo,

I do not have time to reply.

Translation: I am not informed enough to reply. Not really shocking.

Regards,
Ken

Mesa Econoguy November 5, 2011 at 6:04 am

Just Awesome Logic, George:

Your post shows me you are grossly underinformed on the issues… I do not have time to reply.

But yeah, I’d be interested to know if you know the answer to my question

Apparently Lord Keynugman has miraculously discovered the “I don’t care how wrong I am”/ space/time continuum dichotomy.

Mesa Econoguy November 5, 2011 at 6:12 am

Do you know how socialist Greece is, compared to us, Georges?

Do you know why monetary union doesn’t work without political union, Maastricht?

Do you have the slightest understanding of cross-border trade, under the Euro CAP and various internalized barriers, including the Bayerische Reinheitsgebot of 1516?

Shelby November 5, 2011 at 11:50 am

“I do not have time to reply.”

Drive-by economics is hard to defend.

brotio November 5, 2011 at 4:01 pm

Hi Shelby,

Are you named after Carroll Shelby, the designer of the awesome 427 Cobra?

:D

Shelby November 6, 2011 at 2:24 pm

Hi brotio -
Actually, I beat the Shelby Cobra (1962) off the production line by three years. OMG am I old, or what? Also, I’m female. Someone who was posting on a different topic called me “Sir” yesterday! Oh, well, keep ‘em guessing!

Shelby November 6, 2011 at 4:13 pm

muirgeo -
Check out this link for more info on the Greek debt crises:
http://www.cato-at-liberty.org/helping-to-explain-greeces-collapse-in-a-single-picture

Jon Murphy November 6, 2011 at 4:20 pm

He won’t read it. Don’t ya know everyone at CATO works for the evil Koch brothers? :-P

Greg Webb November 6, 2011 at 4:27 pm

:)

Thomas Bayes November 4, 2011 at 5:59 pm

1. Our system is showing signs of being corrupt and harmful.

2. One side of the debate believes big governments are corrupt and harmful.

3. The other side believes big corporations are corrupt and harmful.

4. Both big corporations and big governments oppose free markets.

Discuss.

muirgeo November 4, 2011 at 6:58 pm

We need a seperation of state and money. Lobbying for hire is bribery and nothing more. Money is NOT speech… its money. You buys things with money and buying access is bribery not free speech. Speech is speech.. its pretty simple. Limit campaign contributions severly. Say $100 per person.
Put very strict requirements on politicians. ALL meetings need to be open to the public. They have NO right to privacy when doing the peoples business. There are many other ways to restrict politicians from tirning their office into a money maker. There are plenty of good people wiling to do the work for the salary and nothing more.

Ken November 4, 2011 at 7:52 pm

muirgeo,

We need a seperation of state and money.

So you want to end the fed? You want to eliminate the treasury department? You want to prevent government from having a printing press? When did you start becoming such an ardent Ron Paul supporter?

ALL meetings need to be open to the public. They have NO right to privacy when doing the peoples business.

These are excellent ideas. Ideas that I’ve advocated to you in the past. Are you just ripping me off? It doesn’t matter if you are, though. At least you are displaying some sense.

Regards,
Ken

vikingvista November 4, 2011 at 10:30 pm

“We need a seperation of state and money.”

Finally you’ve learned something here. Privatize money and banking. Abolish or truly privatize the Federal Reserve, and ban all central banking. Repeal the Constitutional authority for Congress to coin money. Abolish all financial regulations. Constitutionally prohibit any future bailout of financial institutions. For once, I actually agree with you.

Methinks1776 November 5, 2011 at 11:24 am

Oh no, clearly he hasn’t learned what you hope he learned. He wants to abolish you paying money to a congressman as you lobby him. Sex, vacations, and other, more difficult to track currency will be acceptable. Of course, bribes are illegal now. That’s working out so well. No matter, I’m sure Muirdiot has a good solution – like execution by firing squad.

kyle8 November 5, 2011 at 8:40 am

Hey we finally find an area of agreement. I say greatly reduce the power of lobbyists, But ALSO greatly reduce the political power of the labor unions who are the most powerful of all the lobbyists.

Nikolai Luzhin, Eastern Promises November 5, 2011 at 10:14 am

muirgeo

your forget, we have to lug the Clintons around

mcwop November 4, 2011 at 4:41 pm

“The Wall Street bankers and American Hedge Fund managers heavily invested in Greek debt were able to hold a gun to or politicians and to the heads of the people of Greece and not allow democracy to prevail. ”

This has to be the dumbest comment I have seen. The holders of Greek Debt largely include European banks (not located on Wall Street BTW), who are taking a 50% haircut on the debt they hold. The referendum held the rest of Europe hostage, and was hurting the Euro. Greece decided to join the euro, which IMO was a stupid decision long term, as we now are seeing. But joining the Euro had obligations, which the Greeks lied about recently fudging numbers etc…

Some history for you.

In 1999, Greece was left out of the eurozone for failing to meet the EU’s economic criteria. To qualify for euro membership, the Greek Government had to adopt a tough austerity programme, making deep cuts in public spending, and it was a popular move in Greece. If put up for your favorite style of democracy, it would have passed. Despite the budget cuts, euro membership was hugely popular in Greece, with polls suggesting that nearly two-thirds of the population were in favour of the move.

Countries like the UK, and others were smart to not join the Euro. Greece can leave the Euro anytime it wants, and nobody is holding a gun to their heads. Problem is that the Greek citizens are screwed either way, and they screwed themselves, and they are screwing citizens in other Europe countries.

Jon Murphy November 4, 2011 at 5:08 pm

Just to make a statement: none of this is an argument against private charity. It’s an argument against involuntary charity.

muirgeo November 4, 2011 at 7:01 pm

Yes and an argument based on charity just means the good and charitible people take all the burden while the scum bags are scott-free to profit all the more with no debt to society.

Jon Murphy November 4, 2011 at 7:53 pm

And yet, conservatives and the wealthy donate more to charity (as a percentage of their income) then “progressives.”

Jon Murphy November 4, 2011 at 8:45 pm

made a mistake. Working poor give a greater percentage. But other than that, rest of statement stands (conservatives give more). Source: http://reason.com/archives/2007/03/01/who-gives-to-charity

Mr. Econotarian November 4, 2011 at 5:17 pm

In offering to sell debt, the Greek government sought to spend more than it could afford at the time (much of which goes to Greek state workers’ salaries), and when I saw afford, I mean the ability to obtain revenue through Greek government taxes. The institutions that purchased Greek debt did Greece a favor by buying their debt. Now people want to say those institutions that financed Greek state workers’ salaries are a fault? Perhaps the Greek government should have not sold debt, but lived within the means of its taxing ability.

tdp November 4, 2011 at 7:04 pm

Income inequality is only a problem if:

1) There is no upward mobility
2) The people at the bottom cannot afford a humane standard of living
3) The rich got rich at the expense of the poor
4) The rich didn’t earn their money

In this country:
-Condition #1 is demonstrably false
-Condition #2 is only true for some people and, only because of failed programs that incentivize bad decision making and ridiculous restrictions that raise the costs of basic necessities
-Condition #3 is not true unless the rich are those who earn money by interfering in the economy, creating depressions that screw over poor people the hardest
-Condition #4 is only true of those who are rich because of their lobbying connections or ties to patronage networks, or who profit from the government swallowing up the economy and punishing productivity (personal injury attorneys, union bosses, the bureaucrats and politicians who actually get to make and enforce the regulations, idiot leftist pundits, etc.)

If you want to weed out the “undeserving rich”, liberalize the economy and make government unable to tilt the playing field in the favor of one group over another. In a true free market, you can only become rich through providing a good or service to others, i.e. by serving them. Those who are parasites or who make money at the expense of others, or who cannot provide sufficient value to their fellow man, will lose money. All other things being equal, when an economy is not interfered with, the rich and poor increase their wealth by roughly the same proportion (as has been seen in countries introducing free market reforms absent corporatism or government corruption), and diminishing marginal utility of income means that a 5% increase in wealth means a hell of a lot more to a poor person than it does to a rich person.

vikingvista November 4, 2011 at 10:39 pm

“Income inequality is only a problem if:”

1) It is the result of violence.

Greg Webb November 4, 2011 at 11:51 pm

True that…and only if it results from violence or the threat of violence.

tdp November 5, 2011 at 9:59 am

What about fraud? What about getting a handout from politicians that may not necessarily involve “violence”? I think if you want to simplify it to one condition, it is: “It is a problem if it was created through a distortion of the free market that shifted loot to those who did nothing to merit it.”

Anonymous Librarians November 5, 2011 at 11:20 am

Nah! In the real world, such distortions happen. That why courts and the rule of law are important. Fraud is punishable by fines and prison. Politicians who exceed Constitutional limits should be punished for the violation of their oath to uphold and defend the Constitution.

vikingvista November 5, 2011 at 2:47 pm

How does a politician give handouts without employing violence? You really think I would pay taxes if violence were taken out of the equation.

William Fedullo November 4, 2011 at 11:49 pm

To the fellow who cited “teach a man to fish” – that’s not Biblical; that’s a Chinese proverb.

kyle8 November 5, 2011 at 9:48 am

Proof that the Chinese are immoral libertarians with no concern for the poor!

Jim November 5, 2011 at 9:49 am

What is the evidence against income inequality? Why is it terrible? What grave issue does it cause? Why is it not irrelevant?

One could argue that as the world gets richer, some folks (say, 1%) will get fabulously so. The only worry might be that they increasingly control our lives. With the number of these folks being so small, it would be easy to research whether in fact this is true.

The focus on income inequality is further suspect when those who are income inequality are so deeply and structurally indebted. Are we here relying on the American revolution or the French for philosophical guidance?

I suggest we need to hear more of the argument presented in a coherent fashion than debatable and emotional masturbatory tidbits.

tdp November 5, 2011 at 10:03 am

If they are so filthy rich, they also probably don’t care about influencing other people’s lives, and even if they did, we have a constitution designed to restrict both the government’s and individuals’ ability to interfere with each others’ rights, even if politicians seem to forget it exists sometimes.

Methinks1776 November 5, 2011 at 10:22 am

Watcha mean “sometimes”? What incentive is there for politicians to limit their power? Power is wealth!

Methinks1776 November 5, 2011 at 10:17 am

Even if it were true that the very wealthy were gaining more control over other people’s lives (and to be in the 1%, you only need to make $350k/year – hardly a politically connected titan), then it is only because politicians have consolidated power in their hands and monetized it.

As long as that happens (and it does) there will be “a 1%” (in the sense in which it is used by the class warriors). There will always be a small minority of people who gain at the expense of others by buying – with whatever currency – the state’s monopoly on violent force. Their wealth may not be measured in money, but it will exist.

Wealth creators will only be incentivized to create wealth if they get to keep it. By nature, these are the risk takers and risk and reward are strongly positively correlated. So, it stands to reason that the successful among them will be much richer than those who take much fewer risks and benefit our lives much less.

What’s sad is it has become completely socially acceptable (particularly on the left) to conspire to rob these people and prevent others from enriching themselves by enriching the rest of us. It’s a nasty form of leveling. Instead of striving to find a way to enhance human existence, these people seek to destroy those who do. How barbaric.

Nikolai Luzhin, Eastern Promises November 7, 2011 at 6:52 am

Don

Why you are wrong about everything

Young-old wealth gap hits record

http://www.politico.com/news/stories/1111/67731.html

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