The Distribution of Wealth in the US

[FlexGunship]

Who says they're eating at McDonald's? The truly poor are eating the cheapest things they can buy which are the fattier cuts of meat, beans, noodles, rice, no fruits, fish, or vegetables.

I'm not sure that any of those things you mentioned were included in the blog post you linked to. I got a distinctly different impression.

Foods with high energy density, meaning they pack the most calories per gram, included candy, pastries, baked goods and snacks.

That quote is from the blog you cited. I don't think they included meat, beans, noodles, or rice in the "junk food" category. I'm not sure they were attempting to create "meals" from the sample foods they gathered.

 

[mheslep]

Well, that's not necessarily a fact. However, either conclusion doesn't seem to be "obviously true."

You're right, it is not a fact; it was the conclusion of a several groups (e.g. CBO) looking at the issue during the run up to the passage of the 2010 US health care law, and undisputed so far as I know by any reputable work.

 

[FlexGunship]

You're right, it is not a fact; it was the conclusion of a several groups (e.g. CBO) looking at the issue during the run up to the passage of the 2010 US health care law, and undisputed so far as I know by any reputable work.

Fair enough. I obviously agree with you on the point, but it seemed unfair to simply declare it a fact. Since you have something to back it up, I guess the point is moot.

 

[daveb]

That is a bit disingenuous. Just because the developed world has pretty much eliminating starvation does not mean that the developed worlds have solved the food problem. One key reason that the poor in developed nations have a much higher tendency to obesity is because a low-quality, fat-inducing diet is much cheaper than is a high quality diet. The poor in the US can eat, but not well. Eating well is a luxury that the poor cannot afford.

True. It used to be that obesity was the province of the wealthy class (or at least obesity was seen as a sign of wealth). Much of this had to do with the wealthy class's attitude towards vegetables and fruit which were eaten raw mostly by the poor (the rich would eat prepared fruits in tarts and pies, though). Now, fruits and vegetables are more expensive than the crappy, cheaper foods, so the poor don't eat as much (unless they grow their own).

 

[Dale]

My apologies to all for helping to derail the thread off of the original topic and onto the much less interesting topic of obesity among the poor.

 

[WhoWee]

This is re-posted from (my) post 80 - maybe this will get us back to the OP?

"Perhaps it would be helpful to put a face on the "uber-rich"?

Warren Buffet?
Bill Gates?

How about (after mourning him last week) Steve Jobs (it was reported Apple has more cash than the US)?

What do we want to DO to these people - in the context of creating "a system that leans towards justice and fairness"? What do these people owe the people marching through the streets of America demanding change?

http://www.forbes.com/forbes-400/list/
These are the faces of the uber-rich - the first hedgefund person (George Soros) is in position number 7 and the second is in position 17 and Carl Icahn is number 25 - the rest of the top 25 are entrepreneurs or their families."

 

[John Creighto]

Well thanks, but you didn't really agree with that much of what I said: I was arguing specifically against both the need and wisdom of "fundamental change".

Well, first we have to decide what fundamental change is. In my opinion fundamental change happens all the time in law, politics, economics, technology and through social movements. Another name we might give to such events is "black swan's".

When economic downturns happen, some people will have the knee-jerk reaction that it means the system requires "fundamental change". It doesn't. The economy is cylical and downturns happen. Some are worse than others, and this one is pretty bad. And while it has some specific causes, most do and those particular causes (credit default swaps, unreasonably low interest rates, poorly-conceived lending rules) can be fixed without dynamiting the entire system. People just need to relax a little and focus on the real problems.

Well, what do you consider dynamiting the system? Did the New-Deal dynamite the system of Laissez-faire capitalism in favor of a system of state/corporate capitalism? If we went back to small government and system that gave large corporations less of an advantage would this be dynamiting the system, gradual change or something in-between?

All efforts to try to stabilize a system of market imbalances in the end lead to greater instabilities in the long run. The longer we try to keep the market from self correcting the greater the crash and the greater the likely hood of a knee jerk reaction that will take us in the wrong direction.

We can fight all we want to protect the value of the capital the people who hold the wealth have accumulated but but if the system is failing a large sector of the population and nothing is done to address the flaws in the system then those in power are creating a dangerous and unstable environment.

Now while I argued that a sufficiently advanced economy can afford to take a little off the top to help those at the bottom, the middle of a downturn is precisely the WORST time for such change, as the economy is less able to withstand a reduction in growth in bad times than in good times. Unfortunately, though, major changes require political capital and political capital is at its greatest during hard times. This is why hard times are dangerous, and we've seen examples throughout history of countries failing because when times got tough they made ill-conceived, fundamental changes.

Do you expect demand to be driven by the people at the top or the people at the bottom. It is true that the people at the top can create demand but the assets the people at the top hold in a large part derive their wealth based on the products they sell the people at the bottom.

At the same time, this thread is focused on one particular symptom as evidence that the system needs "fundamental change", when the symptom isn't even relevant to the supposed disease. None of what ails us now as a result of the recession is caused by an uneven wealth distribution.

If it is okay to inject a little bit of history in this discussion let me state this again:

"What economists call over-production is but a production that is above the purchasing power of the worker, who is reduced to poverty by capital and State. Now, this sort of over-production remains fatally characteristic of the present capitalist production, because workers cannot buy with their salaries what they have produced and at the same time copiously nourish the swarm of idlers who live upon their work.
http://www.panarchy.org/kropotkin/1896.eng.html

This was written in 1898 by Piotr Kropotkin

The simple fact is that the combination of large wealth inequality and having a high percentage of the economies wealth valued based on the purchasing power of the people at the bottom leads to a situation where the poor do not have the money to create the demand needed to justify the wealth holdings of the rich. All efforts to perpetuate these imbalances lead to unnecessary inefficiencies which result in hardship. These inefficiencies are allowed to be created because financial institutions are allowed to leverage based on an overvaluation of their capital. This expands the money supply based on fictitious wealth and erodes the buying power of the poor.

The refusal of main stream media and politicians to address these imbalances and contradictions means that the people who do address these issues will gain political power. Currently the only somewhat main stream politician addressing the fact that the poor don't have the money to stimulate the economy and the relationship between wealth inequalities and major economic downturns is Robert Reich. My guess is Reich favors a large public sector and unless people who favor smaller government are willing to address these issues it is likely that we are headed in the direction of large governments.

In fact, the OP's link shows that the wealth of the uber-rich grew substantially in the early to mid-90s, then crashed in 2000 with the stock market, then started back up again a couple of years later. The 90's, being the liberal heyday, this shows clearly that liberals are interpreting the data backwards: The vast growth in upper level incomes in the 90's, due to stock market growth and the internet boom caused spectatularly low unemployment and budget surplusses due to more capital gains income from the upper level earners and less welfare/unemployment payouts to the lower level earners.

If you read the book, "The Dollar Crisis" it essentially said that the only progress Clinton made on the debt was due to capital gains taxes". In other word the mild progress that Clinton made on the debt was simply a result of a bubble fueled by cheap money which essentially leads to a growth in debt.

That is -- if income inequality is the symptom and not the disease. Liberals fall victim (partially due to politicians pounding it into them) to the idea that wealth is a zero sum game and 'the rich get richer while the poor get poorer', so wealth inequality is a measure of poverty. That's false. Income inequality certainly has risen in the past 20 or 30 years, but poverty? Nope. So the income inequality issue really is either a misunderstanding of what inequality means or is jealousy over how much faster the rich are getting richer than the poor: The rich are too rich, so we must take their wealth. Sorry, but that's no way to run an economy. Certainly no reason to scuttle the system we have.

I'll address this last paragraph in another thread but I don't believe that the buying power of the bottom have of the income distribution has remained constant.

 

[WhoWee]

The refusal of main stream media and politicians to address these imbalances and contradictions means that the people who do address these issues will gain political power. Currently the only somewhat main stream politician addressing the fact that the poor don't have the money to stimulate the economy and the relationship between wealth inequalities and major economic downturns is Robert Reich. My guess is Reich favors a large public sector and unless people who favor smaller government are willing to address these issues it is likely that we are headed in the direction of large governments.

A somewhat Main Stream politician label doesn't quite fit him - does it? Robert Reich said this about the stimulus - and why it shouldn't benefit white construction workers.


Then he was concerned about the TEA Party - because they wanted to end the Fed?
http://online.wsj.com/article/SB10001424052702304173704575578200086257706.html

Now one of the goals of the Occupiers is ending the Fed and he supports them?

 

[Evo]

I'm not sure that any of those things you mentioned were included in the blog post you linked to. I got a distinctly different impression.



That quote is from the blog you cited. I don't think they included meat, beans, noodles, or rice in the "junk food" category. I'm not sure they were attempting to create "meals" from the sample foods they gathered.

That "blog' I cited was about "this" peer reviewed published paper.

The economics of obesity: dietary energy density and energy cost.
Drewnowski A, Darmon N.

SourceNutritional Sciences Program, School of Public Health and Community Medicine, University of Washington, Seattle, WA 98195, USA.
adamdrew@u.washington.edu

Abstract

Highest rates of obesity and diabetes in the United States are found among the lower-income groups. The observed links between obesity and socioeconomic position may be related to dietary energy density and energy cost. Refined grains, added sugars, and added fats are among the lowest-cost sources of dietary energy. They are inexpensive, good tasting, and convenient. In contrast, the more nutrient-dense lean meats, fish, fresh vegetables, and fruit generally cost more.

http://www.ncbi.nlm.nih.gov/pubmed/16002835

And we can get back on topic now.

 

[John Creighto]

A somewhat Main Stream politician label doesn't quite fit him - does it? Robert Reich said this about the stimulus - and why it shouldn't benefit white construction workers.


Then he was concerned about the TEA Party - because they wanted to end the Fed?
http://online.wsj.com/article/SB10001424052702304173704575578200086257706.html

Now one of the goals of the Occupiers is ending the Fed and he supports them?

Robert Reich was Clinton's secretary of labor. I consider that fairly main stream. Ron Paul might also talk about some of the contradictions in the system but there are far too many politicians not addressing the imbalances in the economy.

My point wasn't I agree with Robert Reich. My point was if most politicians continue to perpetuate the same obvious sophistries that ignore the imbalances in the system and this gives people like Reich power. If you don't like the direction Reich would take the country you should look for someone closer to your views who is willing to tell it like it is.

Now with regards to your link. The unemployment rate is considerably higher in the African American population. I do not agree that affirmative action is the way to address this but there has been a significant amount of politicians supporting this type of policy for quite a while. As with regards to the fed. Well, some challenge the notion of government controlling the money supply, politicians in a large part support the role of the central bank. Whether or not you agree with this it hardly makes Reich's view on this issue fringe.

We shouldn't have to agree with everything someone says to listen to them. Odds are there will be few people we are in complete agreement. The only reason there is large clustering of views along party lines is politicians exploit social group identities to divide people along party lines.

Listen to the slogan on wallstreet: "A people united can't be divided". People are sick of the false dichotomy between supply side vs demand side economics. The truth is far to much money is going to administrating both government and large corporations. This is a long ways away from the notion of an efficient market.

 

[Jimmy Snyder]

When I followed the link in the OP, I was taken by the relative stability of the numbers in the tables. Here is an example, the first table in the link.

  Total Net Worth 
Top 1 percent Next 19 percent Bottom 80 percent 
1983 33.8% 47.5% 18.7% 
1989 37.4% 46.2% 16.5% 
1992 37.2% 46.6% 16.2% 
1995 38.5% 45.4% 16.1% 
1998 38.1% 45.3% 16.6% 
2001 33.4% 51.0% 15.6% 
2004 34.3% 50.3% 15.3% 
2007 34.6% 50.5% 15.0%

What I see here is that the top 1% increased their slice of the pie by about 13% from 1983 to 1995, but had frittered it away by 2001, presumably on fatty food if I understand the rest of the posts in this thread. Since then it hasn't changed much and for those poor souls 2007 was a lot like 1983 all over again. The poor lost out, not to the uber rich, but to the merely well off.

If I read the OP correctly, he rejects our system because it lacks justice and fairness. Did I get that right? No program is suggested for getting back in his good graces. However, given the link, I expect it is to take away the wealth of the wealthy and give it to the ... Here I'm not sure, give it to the bottom 80%?, 20%?, 1%. I don't know. I do know this though. The top 1% are not holding $50 trillion in cash. In order to give anything edible to the lower end you're going to have to sell non-liquid assets. This will not increase their value, in fact, personally, I wouldn't give ten cents on the dollar knowing that whatever I buy will be taken away from me too. Perhaps the poor will buy the stuff. Maybe my neighbor will buy some. He's been living the good life because he makes so much more money than I do. As a result he is now in debt, poor, and in need of the money in my 401K so he can buy the assets of the rich so that the rich will have cash that we can take away from them to give to him so he can stop eating the junk food at McDonalds and eat the cholesterol ridden dishes at Alain Ducasse where I can't go because that would be unfair. Obviously, I don't like it when someone chooses equality over freedom. But it really sticks in my craw when they claim it brings justice and fairness.

 

[MarcoD]

Sorry, but no statistics which stops at 2007 can be taken seriously. The financial bust was in 2008, and the effects are still developing.

Given your stats, I would only want to know what happened afterwards, and can't care about the rest of the argument. [ I didn't even notice that you were making a case for the poor. ]

 

[Jimmy Snyder]

Given your stats, I would only want to know what happened afterwards, and can't care about the rest of the argument.

Not my stats, the OP's stats.

 

[CAC1001]

A free society will always have an unequal distribution of wealth, but everyone is unequally wealthy.

 

[WhoWee]

Not my stats, the OP's stats.

Ivan, we made it to post 120 - now we need you.

 

[MarcoD]

Not my stats, the OP's stats.

Ah, I just noticed it when you posted it.

 

[Jimmy Snyder]

Ah, I just noticed it when you posted it.

Here are my stats:

A PBS report by Solman on Aug. 16, 2011 now found that financial gains over the last decade in the United States have been mostly made at the "tippy-top" of the economic food chain as more people fall out of the middle class. The top 20 percent of Americans now holds 84 percent of U.S. wealth

http://en.wikipedia.org/wiki/Distribution_of_wealth"
This is actually down from 85.1% 2007 figure in the OP's table. I repeat, I was taken by the relative stability of the numbers in the tables. At any rate, although August was a while ago, a comparison of the wiki data to the OP's table shows that if there was concentration in the top 1%, it was at the expense of the next 19%, not the poor. Hopefully, this addresses your concerns.

 

[russ_watters]

Sorry, but no statistics which stops at 2007 can be taken seriously. The financial bust was in 2008, and the effects are still developing.

Given your stats, I would only want to know what happened afterwards, and can't care about the rest of the argument. [ I didn't even notice that you were making a case for the poor. ]

No argument calling for "fundamental change", based on the last two years worth of statistics can be taken seriously. The changes that are largely responsible for the mess we are in today were so small as to go largely unnoticed when they were passed.

 

[russ_watters]

Well, first we have to decide what fundamental change is. In my opinion fundamental change happens all the time in law, politics, economics, technology and through social movements. Another name we might give to such events is "black swan's".

Then perhaps it's just a terminology issue. A "fundamental" principle is a basic, founding principle. By definition, these are rare and big.

Well, what do you consider dynamiting the system? Did the New-Deal dynamite the system of Laissez-faire capitalism in favor of a system of state/corporate capitalism? If we went back to small government and system that gave large corporations less of an advantage would this be dynamiting the system, gradual change or something in-between?

The new deal was pretty big, yeah -- and it was 80 years ago. That's not "all the time".

But I'm not sure what you mean by "state/corporate capitalism" or the idea that it gave large corporations an advantage. The New Deal was almost exclusively about expansion of government power/responsibility.

All efforts to try to stabilize a system of market imbalances in the end lead to greater instabilities in the long run. The longer we try to keep the market from self correcting the greater the crash and the greater the likely hood of a knee jerk reaction that will take us in the wrong direction.

That's not true. We've done a pretty good job preventing another 1929 for the past 80 years.

If it is okay to inject a little bit of history in this discussion let me state this again:

"What economists call over-production is but a production that is above the purchasing power of the worker, who is reduced to poverty by capital and State. Now, this sort of over-production remains fatally characteristic of the present capitalist production, because workers cannot buy with their salaries what they have produced and at the same time copiously nourish the swarm of idlers who live upon their work.
http://www.panarchy.org/kropotkin/1896.eng.html

This was written in 1898 by Piotr Kropotkin

Just because it was said 110 years ago, doesn't make it right or precient. Most of the poor in the US own air conditioners, cars, TVs, dish washers, etc. They most certainly can buy the products being produced.

If you read the book, "The Dollar Crisis" it essentially said that the only progress Clinton made on the debt was due to capital gains taxes".

Yes, that's what I said. It means that rather than cutting an advancing upper class off at the knee, if we let them advance, they'll bail out everyone else.

In other word the mild progress that Clinton made on the debt was simply a result of a bubble fueled by cheap money which essentially leads to a growth in debt.

I'll grant that there was cheap money, but underlying the expansion at the time was a very real new industrial revolution. It was real advancement. Yes, it became overvalued in the end, but it did have significant real value.

I'll address this last paragraph in another thread but I don't believe that the buying power of the bottom have of the income distribution has remained constant.

It hasn't: It has increased over a long term (that is: inflation adjusted incomes), measuring peak-to-peak across cycles. I suppose you'll argue that our measure of inflation is flawed and inflation is happening faster, but I think that's wrong too: the fact that the standard of living of the poor is continuing to advance is evience that our measure of inflation and definition of poverty are moving uphill.

I don't envy the task of the CPS: they are tasked with calculating inflation by combining some products that are inflationary with others that are deflationary. And it's the needs (food, fuel) that are inflationary and the luxuries (TV, computers) that are deflationary. What this means is that there is a level - somewhere below what we now call the "poverty line" - below which purchasing power is decreasing. For just about everyone else, buying power is increasing.

 

[Dale]

So MarcoD, John Creighto, and Lapidus, have all three of you given up on producing a rational argument definding the "justice and fairness" of the forcible redistribution of wealth?

If so, then I would strongly encourage you to avoid such indefensible terminology when discussing it in the future. Talk about practicalities, avoiding impending disasters, etc., but not about justice and fairness. You want redistribution of wealth despite the fact that it is not just nor fair.

 

[MarcoD]

So MarcoD, John Creighto, and Lapidus, have all three of you given up on producing a rational argument definding the "justice and fairness" of the forcible redistribution of wealth?

If so, then I would strongly encourage you to avoid such indefensible terminology when discussing it in the future. Talk about practicalities, avoiding impending disasters, etc., but not about justice and fairness. You want redistribution of wealth despite the fact that it is not just nor fair.

I have already told you that it boils down to belief. You don't believe in it, I do. Don't bother me facts you can't support.

 

[arildno]

Clearly, for MarcoD, it is reality and nature that is the biggest sinner.
Because people are born with different capabilities, the "playing field" is never "equal".

Thus, it would be ideal that during pregnancies, each foetus was artificially injected its own hormone concoction in order to counteract evil, differentiating Nature, so that when they are born, they are EXACTLY equal in all respects...

 

[MarcoD]

Clearly, for MarcoD, it is reality and nature that is the biggest sinner.
Because people are born with different capabilities, the "playing field" is never "equal".

Thus, it would be ideal that during pregnancies, each foetus was artificially injected its own hormone concoction in order to counteract evil, differentiating Nature, so that when they are born, they are EXACTLY equal in all respects...

And yet another Morton's Fork? I already stated that redistribution of wealth is about leveling the playing field such that people get equal opportunities.

Here I provide you with one of your easy reasons: Since people are not equal and 'reality' and 'nature' must have its course, we'll disband the police. The strong survive, it has always been that way.

If you can't think, it doesn't make sense to discuss anything.

 

[arildno]

And yet another Morton's Fork? I already stated that redistribution of wealth is about leveling the playing field such that people get equal opportunities.

Here I provide you with one of your easy reasons: Since people are not equal and 'reality' and 'nature' must have its course, we'll disband the police. The strong survive, it has always been that way.

If you can't think, it doesn't make sense to discuss anything.

What about accumulated wealth due to different capabilities?
Clearly, these have to be siphoned off as soon as they are made, in order to maintain the level playing field?

 

[MarcoD]

What about accumulated wealth due to different capabilities?
Clearly, these have to be siphoned off as soon as they are made, in order to maintain the level playing field?

No, why? I think one just doesn't want a system where wealth accumulates wealth, because then you'll end up with a feudal state. The owner of the manor deciding which people will go to college, for example. There are forces in the US which at the moment 'glorify' wealthy people and present them as highly moral people. They are not, they're just as fallible as other people, history has shown that.

At the same time. We are intelligent apes, and taking care of your offspring is something most people recognize as fundamental. So, I think the truth should be somewhere in the middle. Erode the wealth over several generations, such that grandpa can look with pride at his 'blessed' grandchildren, and at the same time the economy remains dynamic with the Gates and Jobs given all opportunity, whatever background they have.

 

[arildno]

So:
If your grandfather was wealthy, you lose your right to make your grandchildren wealthy through the inheritance mechanism?

Progressive taxation of individuals on basis of what their forefathers earned?

 

[MarcoD]

Nah, I think grandchildren have some right to the luck of the grandfather. But a 20% inheritance tax, or something like that, for each generation would probably do it.

Guess that's already installed in the US, though.

 

[Evo]

This thread died awile back, and is now a zombie thread.

Time to let it go.