Thursday, September 12, 2013

The Rich Continue To Get Richer And Richer And Richer

According to USA Today, the top one percent had a good year last year.
The gulf between the richest 1% of the USA and the rest of the country got to its widest level in history last year.
The top 1% of earners in the U.S. pulled in 19.3% of total household income in 2012, which is their biggest slice of total income in more than 100 years, according to a an analysis by economists at the University of California, Berkeley and the Paris School of Economics at Oxford University.
The richest Americans haven't claimed this large of a slice of total wealth since 1927, when the group claimed 18.7%. The analysis is based on data from Internal Revenue Service data.
I'm not an economist, but I'm better these data will show that raising the minimum rage will limit the top 1% to earning only 19% of  next year's total household income. However will they survive?

7 comments:

P&R said...

So what?

Why does it matter that the rich guy has only $100 million more than I do instead of $500 million or a billion more? It's not like there's some pile of money out there and because one guy grabbed $500 million, there's only a paltry fiver left for me.

What matters are: 1) what is the living condition of the bottom 1%? If reducing the gap requires starving the peasant, then let the gap be; and 2) how fixed are the populations in these brackets? That is, it's only a problem if the guy born into the bottom 1% is locked in there and can't rise to the top 25% over the course of his life.

Kal Lis said...

If I understand the implication of your first paragraph correctly, you believe there the pie expands without limits and therefore there's enough for everyone to be comfortable if one works hard and has a bit of wit. I see the pie as fixed.

I disagree with the idea that on the bottom 1% are struggling. Quite frankly when our nation has reached a point where 400 people have as much wealth as the bottom 50%, I'll contend that the bottom 50% is struggling.

As to your final point, concentration seems to be breeding the stagnation that you claim is truly a problem. The vast majority of people currently born in the bottom half locked in and have no chance to get into the upper quarter.

I am willing to listen to argument that stagnation is a greater threat than concentration; however, concentration and stagnation in the 1920s led to the Great Depression. The figures in the article indicate that the nation is exceeding the concentration levels of the that era. Given that growth for the bottom 75% has stagnated since the 1980s, we seem to be headed toward a repeat.

Finally, if I'm reading between the lines correctly, you're claiming that increasing the minimum wage to say $9 will turn the most vulnerable of the bottom half into perpetual serfdom. That's true only if the Waltons et al decide making a political point is more important than paying their workers. According to this calculator, a $9.12 minimum wage is the same as the $2.10 that was in effect in 1975 when I graduated from high school. http://www.bls.gov/data/inflation_calculator.htm

P&R said...

Complaining about the gap is an exercise in promoting envy. I have a problem with that.

I don't know that the proverbial pie can be expanded infinitely. I know it is not fixed and that, historically, efforts to shrink the gap have shrunk the pie, and when that happens, the rich may be inconvenienced but the poor suffer.

I am opposed to increasing the suffering of the poor so the envious may see the wealthy inconvenienced.

The relative buying power of a particular wage is not the driving factor. It is elasticity in the labor market. Raising it when there is an oversupply of labor (like now) may not affect those already with jobs. It will make it that much harder for those without. It only makes sense if the populations of economic strata are fixed (stagnant). But they aren't. Yet. (Shrinking the pie leads to stagnation, too.)

Kal Lis said...

I always find it odd that pointing out that the gap is widening that things have been stagnate is somehow a sign of greed and envy but creating a the situation is not. I think both of us can agree that the top 1-5% call the shots to their favor.

Things like the GI Bill and Pell grants helped the poor without inconveniencing anyone. I haven't followed what's happened on the GI Bill, but Pell grants have been cut dramatically and corporate welfare has increased. I'm long past needing college help,so I doubt my citing this example constitutes envy.

I don't see how purchsing power is not a driving factor. If one puts in an honest days work as he or she did 15 years ago but the paycheck doesn't provide the same purchasing power, that lack of purchasing power drives nearly everything the individual or family does.

Historically, wide income gaps promote social upheaval at best or totalitarian governments at worst.

I'm guessing that we both worry that our young'uns will not be able to enjoy the blessings we have. I'm convinced that concentration begets the stagnation that will prevent them from enjoying the comfort middle class living provides.

P&R said...

1) I never said greed wasn't a problem among the wealthy. It is not solved by encouraging envy among those who are not. A summation of what I'm getting at is found here: "But godliness with contentment is great gain. For we brought nothing into the world, and we can take nothing out of it. But if we have food and clothing, we will be content with that. Those who want to get rich fall into temptation and a trap and into many foolish and harmful desires that plunge people into ruin and destruction. 10 For the love of money is a root of all kinds of evil." (1 Tm 6:6-10 NIV)

The issue is whether I have enough to live on and the matter of an income gap is irrelevant to that question. If someone is getting richer, I am not by that made poorer. Yes, wide gaps over extended periods will, if not coupled with income mobility, create social upheaval. Encouraging envy and greed is encouraging discontent. Why do that?

2) The GI Bill is part of the compensation paid to military members (private employers frequently offer similar incentives). Pell Grants are government enforced charity (you must "donate" via taxes to assist charity cases). They do inconvenience people - they both take money from citizens and spend it on things those citizens might not individually choose to spend it on. Both also contribute to the massive increase in tuition costs (artificially increasing demand relative to supply). Look to a college bubble bursting in the same fashion as the real estate bubble did in '08.

Yes, corporate welfare has increased - and I object to that, too (one of the reasons I don't call myself a Republican). If someone has neither food, nor clothing, nor shelter, that's one thing. But if they have these, then they don't need welfare.

3) Wages are not set by "buying power." A job is not charity. A job - other than a government job - is created when an employer thinks paying somebody else to assist will earn more money for the company than that person's pay & benefits will cost. Thus wages are always connected to productivity. There is also a matter of supply vs. demand. We have at present an oversupply of labor. Corporations have laid off thousands, then lobbied for increased immigration/amnesty. Why? They like that oversupply of labor and wish to make it permanent. This allows them to keep the cost of labor relatively low regardless of the minimum wage. Larger corporations also have greater ability to manipulate their labor requirements. Economies of scale apply to regulatory compliance costs just as they do to other costs. Small businesses do not have these advantages, but are also the businesses that create most new jobs. Their tighter margins (necessary to compete with big corporations) mean they hire lower-skilled workers and train them, but also that they tend to provide minimal pay and benefits so frequently once trained these workers go on to get better paying jobs at bigger corporations.

So...big corporations can keep pressure on small business by maintaining the oversupply of labor while also increasing artificially the labor costs of small business competitors. A minimum wage, therefore, becomes less a way of taking care of low-skilled workers, than a form of corporate welfare at the expense of those low-skilled workers large corporations were never going to hire anyway but which small businesses can now not afford.

Kal Lis said...

I won't have the time in the next few days to give your comment full attention.

Three quick things.

1. I, like most Americans, am too materialistic. I try my best to avoid coveting anything that is my neighbors. That doesn't mean that I shouldn't call out unjust wealth concentration

2. I believe corporations or individual employers should be called out for cheating their employees. See James 5:4 or Deut. 24:15. (Yes, I'm aware there's a specific cultural component to the latter. The principle still holds)

3. I'm not going to argue that a student loan bubble will soon be upon us. I fully expect a major recession in 2015-16. Pell grants have been reduced dramatically since the 1970s. The bubble has come about because there are many more for profit colleges that admit students who have no business going to college, help those students get loans, and then keep the entire loan amount when those students drop out long before the semester has ended. It's a cruel scam with no risk for anyone except the kid taking the loan.

We probably could continue this by arguing whether Grapes of Wrath or Atlas Shrugged in more accurate. I'll take Steinbeck

P&R said...

1. The mere fact of such concentration does not render it unjust.
2. Don't disagree. What constitutes cheating employees?
3. Concur except it isn't limited to "for profit" colleges. They all do it (even many private "Christian" colleges).

Concur. What's worthwhile in Rand isn't enough to make it worth wading through her atrocious prose.