Income Inequality!

[Matt_W]

By your calculations, about 33% of people in the bottom quintile will be there after four decades…but that includes people who got a good job, made a bunch of money, and then retired on a fixed income. The percentage of people who stayed in the bottom quintile for 40 years would be closer to 1 or 2%, not 33%.

This narrative and your numbers are entirely conjectural.

[Nesrie]

40% of American middle class face poverty by the time they reach age 65: Study

The massive new study on race and economic mobility in America, explained

[ineffablebob]

There's A New Kind Of Inequality. And It's Not About Income

Whole article is good, but this bit is what particularly stood out to me:

“What people perhaps 30, 40 years ago were led to believe and often saw around them,” Steiner says, “was that if you worked hard, you could escape poverty.” Yet in many countries today, he says upward social mobility is “simply not occurring” anymore.

The Human Development Report 2019 makes the case that many of the street protests popping up around the globe are driven by a growing sense that societies are rigged to favor the powerful and trap the masses in low-wage, dead-end lives.

And those inequities can start even before birth.

We’ve had similar points made in this thread before, I believe.

[Andy_Bates]

This narrative and your numbers are entirely conjectural.

The numbers are based on multiple studies of how actual people move across income groups over time, and there are also other studies about intergenerational income mobility. They all say basically the same thing: that people tend to move up in income groups over time.

[RothdaTheTruculent]

Why does the percentage of the economy matter, if the amount you’re getting is greater? If I get a larger piece of pie, it doesn’t really affect me if the size of the pie has grown by an even greater amount.

Because then you get enormous power imbalances. In concrete terms this leads to situations like a billionaire pedophile paying a few hundred dollars to a low income junior high girl so that she will come to his mansion to give him a massage.

Let me know if you have any other questions about billionaires or libertarians that you need answered.

[Andy_Bates]

Because then you get enormous power imbalances. In concrete terms this leads to situations like…

Something horrible like that could be done by a billionaire or a millionaire or someone with a few thousand dollars. This is about abuse of wealth, and has nothing to do with inequality.

And also because a lot of money buys a lot of political megaphones for people who are just fine with politicians who abuse power.

The solution is to stop people from using money to abuse political power.

[Mark_Asher]

The difference between Warren Buffet making $100B and $50B is that presumably the $50B he no longer makes is due to a more progressive tax schedule and that $50B is now being spent by the government to benefit others. That seems like a good thing to me. Heck, if a big chunk of that $50B just goes to provide good paying jobs with benefits to others that’s a good thing!

Add Warren’s $50B to the tax income from the other wealthy elite under a new tax structure and you have a lot of money to pay for healthcare, education, infrastructure, and other social goods.

“But the wealthy people will just leave and take their money with them!” Let them. Good riddance. Hope they enjoy their existence in the Caribbean in a third-world country. Or maybe Russia will welcome them. Whatever. If their only allegiance to the U.S. is lower taxes, let them go.

[Alstein]

If they’re not willing to pay a fair share, they’re not helping this country one bit- we’d be better off without them.

[Andy_Bates]

The difference between Warren Buffet making $100B and $50B is that presumably the $50B he no longer makes is due to a more progressive tax schedule and that $50B is now being spent by the government to benefit others. That seems like a good thing to me.

The discussion was about inequality in general, and I was saying that if one person makes $X a year, what Warren Buffett makes doesn’t actually affect that person one bit. So no, if we’re talking about two different hypothetical incomes, you can’t just presume that the lower income means that the rest of the money went directly to taxes.

If they’re not willing to pay a fair share, they’re not helping this country one bit- we’d be better off without them.

Where “their fair share” is defined as “whatever additional amount we think the rich can afford.” Elizabeth Warren recently claimed the rich weren’t paying “their fair share” because their taxes are a lower percentage of their net worth than poor people, which is absolutely not how taxes are defined, or how “fairness” works.

And also, I’d love to know how paying 37% of federal tax revenue is defined as “not helping this country one bit.”

[Strollen]

The difference between Warren Buffet making $100B and $50B is that presumably the $50B he no longer makes is due to a more progressive tax schedule and that $50B is now being spent by the government to benefit others. That seems like a good thing to me. Heck, if a big chunk of that $50B just goes to provide good paying jobs with benefits to others that’s a good thing!

Add Warren’s $50B to the tax income from the other wealthy elite under a new tax structure and you have a lot of money to pay for healthcare, education, infrastructure, and other social goods.

“But the wealthy people will just leave and take their money with them!” Let them. Good riddance. Hope they enjoy their existence in the Caribbean in a third-world country. Or maybe Russia will welcome them. Whatever. If their only allegiance to the U.S. is lower taxes, let them go.

As discussed in the Billionaire thread. The reason that Warren Buffet’s net worth has increase by $50 billion in the last decade is due to one reason the value of his company stock BRKA has increased from $70,000 in 2009 to $330,000 today. Berkshire stock has slightly lagged the S&P 500 increase during the same period of time. During this time Buffet has been giving 5% of his remaining shares each year to the Bill and Melinda Gate foundation (the stock he gave this year was $3.9 billion), in total he has given away 45% of the stock he owned in 2006. The stock donation has been significant source of the $5 billion dollars the foundation spends each year primarily on helping the global poor. The selling pressure is also partly responsible for the Berkshire stock lagging the S&P 500.

In all Warren has given away roughly $30 billion dollars the last decade. The foundation has saved tens of million of lives. Color me skeptical the money would have been better spent by the US government, especially the last 3 years. Oh cool we could have more walls, and nicer cages.

[Juan_Raigada]

The numbers are based on multiple studies of how actual people move across income groups over time, and there are also other studies about intergenerational income mobility. They all say basically the same thing: that people tend to move up in income groups over time.

And the fact that the median salary is the same at 35 than at 60 proves that that mobility is minor or inexistent between the bottom half of the population and the top half. There are not more people at 60 over the median as than they are at 30.

[MarinusWA]

The numbers are based on multiple studies of how actual people move across income groups over time, and there are also other studies about intergenerational income mobility. They all say basically the same thing: that people tend to move up in income groups over time.

Link me these supposed studies that aren’t over two decades old. Income inequality has been increasing since the 80s and millennials are now 20% poorer than boomers were, despite being better educated.

[Strollen]

And the fact that the median salary is the same at 35 than at 60 proves that that mobility is minor or inexistent between the bottom half of the population and the top half. There are not more people at 60 over the median as than they are at 30.

I think you have to be careful to look at aggregate data and try to extrapolate what happens to individuals. The football player who was making millions a year before his career-ending injury at 35, may very well drop down to making 50K afterward. My roommate had done very well in Silicon Valley, accumulated $1 million in stock options by the time he was 30. He got diagnosed with Leukemia and after nearly dying, decided to take some time off to smell the roses. The dot com bubble hit, his stock options became worthless, and he’s never been able to make more than $50K a year since and in many years $25K. I’ve also met entrepreneurs who struggle their whole life, started a company in their 50s and now are worth millions. All these are examples of people who have seen significant economic mobility.

That said, I do believe the article I posted that for most people by the time you are 35, you are probably pretty much locked in a career path as higher earner, or not.

[Strollen]

What’s the average peak income for 55 year olds who have been laid off because they’re old and can’t find another job because they’re old?

I’m trying to make a larger point. Age discrimination does exist, especially for hiring. However, it was far worse in the past, age discrimination laws either didn’t exist pre 1967, were weak pre 1980, or were not enforced circa mid-1990s. Companies not only didn’t hire older workers, but they were also active in firing older workers, for two reasons. Young workers are cheaper, and secondly, it was especially attractive to fire older workers right before the vested in the pension. Nowadays companies, are very concerned about lawsuits if they fire an older worker. All of this is a good thing.

The downside is easier for an older worker to hold on to these high paying jobs than it was in the past, and it makes harder for younger workers to get ahead and make more money, so it increases inequality.

[scottagibson]

And the fact that the median salary is the same at 35 than at 60 proves that that mobility is minor or inexistent between the bottom half of the population and the top half. There are not more people at 60 over the median as than they are at 30.

Yes, precisely. The actual median income remains largely unchanged over that entire period. Of course the average grows, but that’s entirely an artifact of income growth at the top.

I think you have to be careful to look at aggregate data and try to extrapolate what happens to individuals.

This is a fair point, but I wonder why it isn’t directed at Andy? That aside, what are the varieties of labor that 50% of the population are engaging in that are like that of your friend? How about high school teachers? What is the mechanism by which they briefly rise into the top 90% of income levels and then fall back below the median? Or how about cashiers? Call center employees? Restaurant service staff?

That said, I do believe the article I posted that for most people by the time you are 35, you are probably pretty much locked in a career path as higher earner, or not.

Yes, of course. So why the objection to @Juan_Raigada saying exactly that same thing?

[Matt_W]

The difference between Warren Buffet making $100B and $50B is that presumably the $50B he no longer makes is due to a more progressive tax schedule and that $50B is now being spent by the government to benefit others.

For me, that’s not what’s important. And there’s really no difference from my perspective between $50 billion and $100 billion. There is a difference between $50 billion and, say, $10 million. With $50 billion (or $100 billion), you can buy media companies, start PACs for your pet causes, hoover up social media platforms, bankroll think tanks, etc. You can exert as much influence over the political process as a million regular folks. With $10 million, you definitely have more influence than average–you can contribute maximum dollars to political campaigns and maybe get yourself a private audience or at least an invite to a limited-attendance dinner with a political candidate–but it’s more like 2-3x the influence of us slobs rather than millions.

The negative effect of enormous inequality is the enormous disparity in political influence, and that political influence makes itself felt in the preference for policies that benefit wealthy people at the expense of poor people, which exacerbates inequality, which leads to more influence disparity and more policies that exacerbate inequality etc.

[Banzai]

Ah the return of the Andy Bates shell game. Its not worth playing. It is mildly entertaining to have his posts blocked and only see the replies, however :)

[SlyFrog]

Yes, I really don’t understand why any of you are responding to him or playing along.

You could literally make a flow chart to argue with, where the flow chart goes from, “Wealth Inequality? —> Quintiles!”

[MarinusWA]

Honestly, I’m surprised he hasn’t started extolling the virtues of trickle-down economics.

[scottagibson]

I really don’t understand why any of you are responding to him or playing along.

I’ve been won over to that view.