(no subject)

[elfs]

A reader on Andrew Sullivan's blog comments:

I find it impossible not to comment that everything Frum says about Israel applied to US support for, and dependence on, the Apartheid-era South African regime. ... Confirmation of the superiority of a market economy? Check. You only have to ignore that, in both countries, the benefits of that superior economy only applied to the chosen people.

I likewise find it impossible not to comment on the way the same is true in America: the benefits of the "superior market economy" only apply to the chosen people: in the case of America, though, the chosen people are simply those who are wealthy. Economist Lane Kenworthy submits this graph:



I know this is going to piss off some of my readers, but I honestly think that there's been a long-running class war in this country, between a congealing "meritocracy" that maintains its position by encouraging a social groupthink, and the rest of us.

Warren Buffet started the conversation when he said, "There's class warfare, all right, but it's my class, the rich class, that's making war, and we're winning." The rich class is engaged in the practice of wealth generation capture; it's not that these people create significant capital or root out significant inefficiencies, but that they're successfully exploiting the inefficiencies of the human brain-- inefficiencies that can't be overcome-- and tying up potential competition, in order to ensure that their portfolios continue to rise and everyone else's continues to fall.

Inequality has never been greater in this country; you cannot convince me that the wealthy class deserves and ever-growing share of the wealth generated in this country because they themselves produce the ever-growing economy.

Unfortunately, there are 50 to 70 million Americans "who would voluntarily vote themselves and their families into living in a cardboard box under an overpass, roasting sparrows on an old curtain rod over a tainted wood fire, as long as their vote ensures that the gay, black, Hispanic, Muslim, liberal or whatever in the next cardboard over doesn't even get the sparrow or the fire."

Comments

[autopope.livejournal.com]

Yes. You're absolutely right about both the class war and the idiot class who implicitly support them.

The question is, what is to be done?

[tagryn]

You may find Domhoff's research on inequality of interest.

[mrf-arch.livejournal.com]

It's a shame that data cuts off right before the big market collapse - I'd love to see where we stand as of today.

[invisogoth.livejournal.com]

I agree with you about class warfare also. From my point of view the closest comparison we have to our current situation is the time period from 1870-1910. During that time, 90% of the first worlds wealth was in 1% of the populations hands. Everyone else was SOL. It wasn't until 1907, for example, that the law in the US recognized that a *laborer* owned their labor, not an employer.
I see three broad things that began to change this. The first was the introduction of new technology that transformed the generation of wealth. Steam, electric, and oil power and their applications changed everything.
The second was the rise of general literacy, which led to the lower classes being able to make the most use of the new tech called "newspapers" and "mass printing".
The third, and I'll get in trouble here I'm sure, was these literate, tech savvy men and women, deciding to start the trade union movements. It would take another generation, two world wars, and several depressions, before their idea of a true middle class became reality, but it did. I sincerely hope we don't have to wait as long or go through as much grief to get it back. Some days I'm optimistic.

[mrf-arch.livejournal.com]

Inequality has never been greater in this country;

As tagryn pointed out, 1929 was worse, as Domhoff's data shows. My recollection is that inequality was also similarly bad during the latter part of the 1880's, leading up to the Panic of 1893, though I don't have the data to hand.

I don't disagree with your premise, mind you. There has been a class war in this country between the rich and the poor pretty much since a bunch of wealthy landowners pledged their lives, fortunes and sacred honor (and the lives of a great many Continental soldiers) to the task of avoiding paying taxes to the Crown.

On the other hand, I'm not sure I can think of a place where there isn't a class war between the wealthy and the poor. It's just a question of intensity.

[shaterri.livejournal.com]

While I agree with the general principle here, that graph is just dirty statistics, and I'd really like to see it with either a logarithmic scale on the left, or just scaled to 1.0 as 'base income' with all three lines clearly marked, so we can see the proportional delta in incomes. It's still damning (according to the linked article, middle-class income went up by approximately 25% from 1980 to 2005, while the top 1% nearly quadrupled) but it's more *honestly* damning. (I heartily disagree with his point about showing income levels rather than growth rates, if you hadn't guessed.)

[cadetstar.livejournal.com]

How is the graph Elf posted dirty statistics? Incomes have been brought to a single unit of measurement (2005 $) so the graph is horizontally consistent and the graph is evenly proportioned vertically so it is vertically consistent. How would a logarithmic progression be any more helpful to someone who does not regularly do statistical analysis?

I agree that a proportional graph could be useful, but I would say only in conjunction with this one.

-Michael

[shaterri.livejournal.com]

Because by and large, financial figures are measured proportionally more than they're measured in absolute dollars. I would guess that the genesis lies at some level in compound interest — if you make 1% on some initial $1000 deposit, and then make another 1%, you still talk about the latter as '1%' and not '1.01%' or even 'ten dollars and ten cents'. You generally get (e.g.) a 3% raise; that may *be* a $1500 raise, but it's much more often phrased (and computed) as the former rather than the latter. Housing prices go up 3%, or down 3%, but nobody talks about how housing prices in the SF Bay dropped $15000 on average while prices in Mississippi only dropped $3000. And when all the relevant quantities are expressed proportionally, then it's only appropriate to express the graph in the same fashion.

[cadetstar.livejournal.com]

My issue with that approach as applied to income graphs is probably a personal one, in that I don't consider the 0 to be at $0, but rather at living wage (rent, utilities, food) not including additional bills. This shifts the graph down slightly, but isn't really my point.

It's one thing to tell someone "the rich are making 10x what you do" and another to say "the rich are making $500,000 a year while you make $50,000". While the statements technically convey the same information, there is a visceral sense to the latter that is missing from the former.

-Michael

[slfisher.livejournal.com]

who is the sparrow quote from? Is that also Warren Buffet?

[http://users.livejournal.com/_candide_/]

The thing is, there's been an active class-war in the US, by the rich against the middle class, for at least 40 years.

They've won. They've convinced (nearly) everybody that they're, "pre-rich," and therefore, that anything which is good for the rich will be someday good for them.

I honestly don't see this changing.

[(Anonymous)]

A while back you were saying "just pass the damn bill already", weren't you?

The health care bill was a huge corporate giveaway, probably the biggest one in my lifetime. A universal mandate backed by taxpayer subsidies--basically, we're all indentured to Blue Cross and Aetna now. We will pay twice as much for our health care as the rest of the world does--if not more--forever. You cheered it on.

> I know this is going to piss off some of my readers, but I honestly think that there's been a long-running class war in this country, between a congealing "meritocracy" that maintains its position by encouraging a social groupthink, and the rest of us.

This might piss you off, but maybe you are confused about which side of this war you're really fighting on.

Think again. Heck, think once.

[ideaphile.livejournal.com]

Throughout history there have always been people who do no more than necessary to get by.

Also, there have always been people who work hard, happen to be smart, have great family connections, come from money, or whatever else floats their boats well above the low-tide mark where some people live.

Some of that is "unfair." Life is unfair. It will never become fair. Get over it.

Some of that is completely fair. Some of us do more productive work than others. Some of us do a LOT more productive work than others.

Over time, technology allows individuals to be relatively more and more productive than the level of bare subsistence.

A hundred years ago, the work of one farmer using the best available technology could feed N people. Today, that number must be 20 * N or more. Sizable ratios apply to many trades-- machinists, accountants, teamsters, entertainers, etc.

The existence of an increasing gap between the poorest and the wealthiest isn't evidence of class warfare. It's just a consequence of human progress. It's a race, if you will, and yes, some of us are pulling away from the others. That isn't because we're pushing them back. Quite the opposite, really; we (the wealthy) are providing more and better education and other support services to try to help them run faster, too. In fact, many of them do; the vast majority of today's wealthy Americans were not born wealthy.

The more people who become wealthy, the wealthier the rest of us can get, because the more people who are creating wealth the more wealth there is to go around.

Anyone who thinks this is a zero-sum situation, and anyone who thinks this is some kind of class warfare, is ignorant, misled, trying to mislead others, or just plain stupid. Or some combination of these factors.

. png

Re: Think again. Heck, think once.

[(Anonymous)]

"Class warfare" may be a stretch (I think it's just self-interest on both sides, except that the rich naturally have better tools and more opportunities, so of course they perform better). However, I think you overlook a couple things:

First, while there is a fairly strong correlation between moderate wealth and talent/productivity, the same most definitely does not hold true for the elite financial players. Many of the people who make hundreds of millions do so by manipulating the system, creating the illusion of productivity and then getting out before people notice that the emperor has no clothes. They don't actually create long-term wealth, they just grab it from others through a variety of methods that rely on their poorer understanding of the system. That type of "success" is a zero-sum game, and needs to be distinguished from the "good rewards for good work" type of success, which I don't think anybody has a problem with. Elf touches on this in his post.

Second, while a disparity between the rich and poor may be a sign of a healthy social and economic system, an ever-increasing disparity in adjusted dollars is a disaster waiting to happen. The current healthcare woes in the U.S. are largely the product of this disparity. Healthcare providers and insurers have determined that profit maximization involves pricing poorer customers out of basic services in favor of providing "the best healthcare in the world" to the smaller number who can afford it. We have tens of millions of people with insufficient access to healthcare not because the services actually cost more than they can afford (an MRI actually costs about a hundred bucks), but because the presence of a super-rich class allows providers to set prices out of their range. The same will hold true for any industry dealing with limited resources or significant barriers to entry.

"Tough," you might say, "it sucks to be poor," and that's fair enough if you're into that kind of thing, but it directly undermines your trickle-down comment that the rich provide better support services to the poor. At most, you could argue that the rich provide greater value for each dollar spent, but that doesn't matter to the people who don't have enough dollars to afford it -- and with an ever-increasing disparity of wealth, that will be a larger and larger percentage of the population.

I can see that the Gini 0 degenerate solution (every single person with the exact same amount of money) would be horrible, and I hope you can see that the Gini 1 degenerate solution (one person with a billion gazillion dollars and three hundred million people with nothing) is equally bad, even if the total value of the system is higher than it otherwise would be. That leaves us with the trivial conclusion that, somewhere between Gini 0 and 1, there's a point beyond which the situation worsens as the disparity continues to increase. Reasonable people can disagree on where that point lies, but it's utterly absurd to suggest that it doesn't exist.

Number 127

Re: Think again. Heck, think once.

[ideaphile.livejournal.com]

If the ever-increasing disparity is inevitable-- and I am sure it is-- what is the point of saying it's bad? Is gravity bad? Gravity leads to a great many disasters, but we don't pass laws to protect the clumsy.

I will simply assert, and refer to any comprehensive history textbook for the proof, that attempting to legislate against the inevitable always leads to worse results than simply leaving each individual to deal with it.

I will also simply assert, and wish there WAS sufficient evidence to prove, that the social programs we have enacted in the US in the last 50 years or so have made it easier-- and therefore more common-- to get by on minimum effort.

Similarly, I believe but can't prove that government intervention in the economy is the primary source of the loopholes that the vast majority of those "elite financial players" are exploiting to become rich.

So it's exactly the effort to make things more "fair" and help the poor that is further expanding the disparity between rich and poor.

By all means, though, let's try passing more laws. Maybe this time we'll get it right.

. png