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September 20, 2010

Comments

Like you, I followed along with that Crooked Timber thread, too ignorant to contribute anything. At the risk of making this CT Lite (CT for Dummies?), it does seem to me that, since Americans seem inclined to define a person according to his/her stuff, then I'm not surprised discussions of social justice revolve around said stuff.

Anything that makes Glenn Beck cry is justice, in my book. "Social" or "general" or "poetic" makes no difference.

Aside from that, I wonder where the term "social justice" came from. When people stick an adjective in front of a noun, they're usually making a distinction of some kind. What was the original distinction?

--TP

TP, the intent seems to be to distinguish (a) "justice" as in "how goodies are distributed throughout society" (i.e. social justice) from (b) "justice" referring to a legal system (e.g. "the criminal justice system," "the Department of Justice") or (c) "justice" meaning "a just outcome to a legal case" (e.g. "The killer is now in prison -- justice has been served").

As far as I can tell ideas about social justice focus on getting at justice through treating fairness to groups of people, where more standard ideas of justice focus on getting at justice through treating individuals with as much fairness as possible.

IMHO, "social justice" does not exist outside the conceptual framework of "legal" justice. Rather, it refers to efforts to compensate for the inequities and injustices that arise as a result of the legalistic interpretation of justice, especially insofar as that interpretation emphasizes the individual property as the foundation of the legal justice system.

BTAIM, I have to object to any effort to find a "new term" because idiots like Glenn Beck try to discredit the original term. Instead, we should stand up for "social justice", and treat the Becks (and his followers) as the idiots that they are.

I was sort of waiting for Gary to put up the Anatole France quote that he has in his sidebar

The law, in its majestic equality, forbids the rich as well as the poor to beg in the streets, steal bread, or sleep under a bridge.

Justice seems to encompass the above, social justice acknowledges that this is a problem.

That the law forbids the favored as well as the unfavored from committing all manner of crimes is indeed majestic, in as much as the practical alternative is that the favored get to violate the law while the unfavored get the shaft. And is allowing the poor to steal really a good solution to poverty?

As I remarked at Crooked Timber, simple, unmodified "justice" is about individual cases. "Social" justice is about achieving some collective conception of just outcomes. To the extent this outcome differs from that produced by delivering simple justice in those individual cases, social justice actually requires simple, unmodified injustice in some of those cases.

Forget that: Once you've established that the majestic equality of the law isn't worth upholding, it ain't the poor who will get to steal in the end.

Brett, given that you have previously misinterpreted Anatole France's comment, I'm not sure you should engage in further flights of fancy on the notion.

Yes, what a state of affairs we'd be in if rich people were able to regularly get away with crimes that poor people are punished for.

Add "satire" and "justice" to the list of things Randroids don't understand.

LJ, I am perfectly aware of what Anatole France meant by that remark, that it was sarcasm. I may not be a flaming liberal, that does not imply that I'm an idiot.

The rich may not steal bread, typically, but they steal other things, and when they do, we want the law to come down on them, HARD. And is letting the poor steal bread really a solution to poverty, or even a reasonable answer to it? Or just a reason the poor can't find decent bakeries in their neighborhoods, and must pay more than the wealthy for their bread, because the stores which will risk being in their neighborhoods have to include the cost of theft in their prices?

In short, I think that the law SHOULD be majestically indifferent to whether you're rich or poor. And that, to the extent it isn't, it's the poor who are more likely to suffer from discriminatory enforcement, because they lack the leverage to get that discrimination applied in their favor.

In short, Anatole was a twit, albeit capable of a nifty turn of phrase.

Given you were the one who brought it up first in that last conversation, you seem to be doing a bit of selective re-imagination. Though I'm sure you've convinced yourself of its truth

In short, Anatole was a twit, albeit capable of a nifty turn of phrase.

Ohh, might have to return that minor in French literature. Tant pis!

Did I miss the part where somebody suggested letting people steal bread as a remedy for poverty?

Also:

Since 1975, practically all the gains in household income have gone to the top 20% of households.

Are the efforts of the top 20% of households solely responsible for the increased wealth represented by the gains in household income since 1975?

If not, then why have practically all of the fruits of that increase in wealth gone to the top fifth of income earners?

Are there any public policies here in the US that make it more or less likely for wealth to flow from the folks who create it, to folks who did not?

If discussions of "social justice" are all about how many crumbs to throw to the poor, it's probably not worth having the conversation. The horse is already out of the barn.

To the extent this outcome differs from that produced by delivering simple justice in those individual cases, social justice actually requires simple, unmodified injustice in some of those cases.

Why yes. I am reminded of the "simple unmodified injustice" of the decades long fight for collective bargaining or the civil rights movement. Injustice. Indeed. Heh.

The raging out-of-control conflation served up by BB above could only be the result of arson.

Russ, I think a whole lot of things happened from around that time that gave rise to the notion that any gains in household income were good, period. It didn't matter that it was unevenly skewered to the top 20%, or that there was a commensurate, gradual decline in said income below that top 20%, with greater decline the farther down the line. If there was an increase somewhere, that was good, it was morning in America, and that was that.

I get the sense that what raises Glenn Beck's hackles is the prospect that "social justice," to him, is a codeword for redistribution of wealth. So likewise, if my thinking above is correct, the proper conception of justice to him holds that not only those with the most toys win in the end, those with the most toys somehow earned them regardless of how they actually got them. Being lucky enough to have been born wealthy is as good as having earned that wealth, so the scales of justice are blinded in a bizarre way; not out of an overarching sense of supra-fairness, but a willful, sunny ignorance.

This was precisely the kind of gee-whiz attitude towards the decoupling of wealth accumulation from any sort of social responsibility Reagan subscribed to. It also may signify a secularization of the gospel of wealth the religious right bought into in the 80s. All Beck and his ilk have done is gussy it up for our time.

No, no Russell. Remember, if you talk about social justice, it's a slippery slope to having the poor stealing bread (and if they start with bread, what's to stop them from stealing anything else?) from hard working Merikans. Which leads to differences in captions like these. Funny, that.

In German we make a difference between Recht (justice as legal system but also 'rights'), Gesetz (law) und Gerechtigkeit (justice as an ideal) that ideally overlap to a large degree but usually do not sufficiently. The legal system can trample on the law (perversion of justice) and laws can be extremly unjust (e.g. blatantly serving special interests or establishing double standards). Justice as an ideal can only be approximated and may be actually against the law.
To use an extreme example: Some members of the previous administration should be behind bars (at least) for violating US laws.
That they are not itself violates the law (existing laws make prosecution mandatory) and the idea of justice. There is the double standard that some 'bad apples' went to jail but not those that made them do what they did. Ideal justice would probably require that those responsible would suffer in proportion to what they did (which again would violate the law against cruel and unusual punishment)....

Solomon's justice is that he restores right human relationships.

I wouldn't say "restoring right human relationships" as an extrapolation of your example. More like: "restoring what is good and right". The baby actually belonged to one of the women; Solomon used wisdom to determine which of those women it was.

Solomon also killed his half-brother Adonijah and his cousin Joab for treachery and disobedience. I'm not sure that these actions would fit your definition of "restores right human relationships".

I think it's more accurate to say that Solomon was much more about devotion to God than he was about commitment to any kind of social justice.

Social exclusion, be it institutional, cultural or otherwise, is acceptable to some people, regardless of who suffers under it or how much, unless it is those same people, which it almost never is. Therefore, any attempts to address that sufferring or the social exclusion that causes it are almost always unnecessary intrusions into the continued prosperity of those same people, according to them. It's really pretty simple.

Thank you for enjoying another episode of IGMFU.

So, um, Brett, what about the rest of that quote? Just as you argue that we want the law to crack down on theft for profit by those of means just as harshly as theft for subsistence by those of naught, I presume you're going to equally point out how we want and need the law to crack down on... um... uh... recreational vagrancy and leisure mendicancy? Or wait, do you mean we want to crack down on the rich sleeping under really big bridges, and begging on Wall Street?

In either case, I totally see your point; that Monsieur France, he was quite the twit, non?

Social justice sounds like economic justice, from what I read above, but I don't want to impute to others what is not intended.

Russell frequently makes a point along these lines:

Are the efforts of the top 20% of households solely responsible for the increased wealth represented by the gains in household income since 1975?

If not, then why have practically all of the fruits of that increase in wealth gone to the top fifth of income earners?

Are there any public policies here in the US that make it more or less likely for wealth to flow from the folks who create it, to folks who did not?

To answer your last question, probably in a completely unsatisfactory way, our public policy is the free market adjusted modestly to avoid extreme exploitation, e.g. child labor laws, universal education through grade 12, minimum wage, the rule of law, public safety, 40 hour work week, various laws prohibiting discrimination, etc. It isn't perfect, but it does let people who defer gratification, stay in school, do well, work hard, etc. prosper. Sure, at the margins, you get the uber wealthy, whether they throw touchdown passes consistently or they own a giant software company or act in movies. Good for them, gives us something to read about in People Magazine. Again, not a perfect system, but compared to any other time or society in history, our system does more for the most. The middle quintiles may, as you imply, remain truly middle class economically but relative to historical norms and most of the rest of the world, even the bottom quintile sleeps indoors, usually with air conditioning and heating, eats regularly, has clothing and most of what we consider to be the basics: refrigeration, running water, indoor plumbing, electricity, a car, semi-luxury items such as television, etc. Even today, the percentage of home ownership remains high.

Russell, I am curious as to (1) what, statistically, would be a fair distribution of wealth and (2) how you would achieve it?

I'll likely have a couple of points to make if and when you get a chance to respond.

McK: " Sure, at the margins, you get the uber wealthy, whether they throw touchdown passes consistently or they own a giant software company or act in movies."

With a few exceptions, most of the ridiculously wealthy don't do anything as productive as the things you listed above. Most of them work in finance, as middlemen who take cuts off making bets with other people's money. Does this change your calculus at all?

And yes, even most of the poor in the US are wealthy compared to history and many other countries. The US is the wealthiest country the world has ever known (so far). That's part of what makes those things WORSE, in my (and many others') opinion, it's a disgrace that the wealthiest country the world has ever known can't even manage to find useful jobs for all of its citizens to do, or provide them with the decent basics of living. Well, not that we "can't" do that, more that we don't.

The law, in its majestic equality, permits the poor as well as the rich to operate sweatshops, sell securities designed to lose value, and keep mistresses in pied-a-terres. So the poor have that going for them.

Brett,

That the law forbids the favored as well as the unfavored from committing all manner of crimes is indeed majestic, in as much as the practical alternative is that the favored get to violate the law while the unfavored get the shaft. And is allowing the poor to steal really a good solution to poverty?

I do think you've misunderstood. M. France's point was not that the law should not be equally applied. It was, rather, that the laws themselves are not impartial. The division between legal and illegal activities is influenced by the class of those likely to engage in them. See, e.g. crack/cocaine sentencing disparities, the fact that Massey Energy executives are still at large, the idea that giving a councilman $10K to get a zoning variance is a crime, but contributing millions to Senators to get a bill passed is sanctified as "freedom of speech."

most of the ridiculously wealthy don't do anything as productive as the things you listed above. Most of them work in finance . . . Does this change your calculus at all?

I am fairly sure this is a bit overstated. But even if it isn't, I am not up to defining acceptable and unacceptable means of making money. I have other thoughts on finance and accounting (very generally) which may or may not be workable. "Working in finance" includes private equity groups, the solo practitioner who manages our account and people who sell and administer 401K's. I think you are talking about speculators who operate on the margin at no personal risk to themselves. Are there any numbers to support the view that most of the uber rich make their livings in this fashion?

Not quite an answer to your question, Mr. Texas, but a very interesting essay all the same:

http://sociology.ucsc.edu/whorulesamerica/power/wealth.html

It is certainly interesting that CEOs of companies listed on the Dow Jones averages earn approximately 550 times what workers in those companies earn. However, you must remember that below CEOs there are vice-presidents and various executive officers and all the other paraphernalia of corporate power, all of whom are earning not so far below that 550 times the workers' salary. (Note, of course, that earnings are only a small part of the total wealth, such as property, stocks, etc.; elements of wealth which workers generally do not possess to the same extent relative to their incomes.)

In other words, there are vast numbers of stratospherically-paid paper-pushers in every company. It does look as if the general argument that high pay does not mean high productivity is pretty accurate.

It isn't perfect, but it does let people who defer gratification, stay in school, do well, work hard, etc. prosper.

We currently have a real unemployment rate in the mid to upper teens.

FWIW, USA Today tells me we may see 1.7 million bankruptcy filings this year, and that lots more could file but don't.

The first quarter of this year saw almost a million home mortgage default filings, and about a quarter million foreclosures. That's first quarter only.

And lots and lots and lots of people escape the above buckets, but are basically just scraping by. They will work until they no longer can, they will likely end their lives on some form of the dole, and they will leave no real wealth behind them when they go.

I'm talking about people who've worked their entire adult lives, in good faith, at some kind of useful endeavor or other. Hard-working people, not bums.

So no, deferring gratification, working hard, staying in school, and doing well is absolutely not a guarantee, or even a high likelihood, of prospering.

You are correct, most poor people in this country don't starve to death or sleep in the streets. So, that's good.

I am curious as to (1) what, statistically, would be a fair distribution of wealth and (2) how you would achieve it?

A fair distribution of wealth would more closely resemble whatever the distribution of the creation of value is. IMVHO.

I have no idea what those numbers are, so I can't give a more specific answer.

I am reasonably sure, however, that "practically all went to the top 20%" is not an accurate reflection of the shape of that curve.

The way you do it is you pay people more. Wages, share in ownership, bonuses, whatever. I don't really care what form it takes.

But at present, money flows, to a disproportionate degree, away from most of the people who create the value it represents.

Them's just the facts, as reported by the CIA, who have no particular leftist agenda to promote.

As an aside, yes, most of the discussion here (including my own) is focussed on economics. There's a whole other world of social justice to be discussed above and beyond economics, but economics will surely do as a starting point.

"In other words, there are vast numbers of stratospherically-paid paper-pushers in every company. It does look as if the general argument that high pay does not mean high productivity is pretty accurate."

Of course this conclusion doesn't follow from the argument. To assume that the "vice-presidents and various executive officers and all the other paraphernalia of corporate power" are non-productive is without any factual substance.

To go to an earlier point I made, Oracle's shareholder value went up 6 Billion dollars the day Mark Hurd was named President. Somebody thought he might be productive. His 950,000 salary and 10M bonus might be worth a 6B increase in value to the shareholders.

Tony P:

Aside from that, I wonder where the term "social justice" came from. When people stick an adjective in front of a noun, they're usually making a distinction of some kind. What was the original distinction?

That's a good question, so I went looking.

The term "social justice" is credited to Luigi Taparelli D’Azeglio, an Italian Jesuit and teacher of the early 19th century, devoted to St. Thomas Aquinas and the scholastic approach to problems. He was considered something of a political reactionary.

The clearest description I found of Taparelli's work tells me that "social justice" was intended to counter "socialism". That is, his theory of "social justice" outlined (non-optional) obligations of the rich toward the poor, so the poor didn't need to go all the way to socialism for relief.

In our terms, the word "justice" implied "usually something the rich and powerful impose on the poor"; the modifier "social" implied "being on the side of the poor".

In other words, there are vast numbers of stratospherically-paid paper-pushers in every company. It does look as if the general argument that high pay does not mean high productivity is pretty accurate.

How many companies function successfully without high level management? If every CEO was capped at some arbitrary number, the impact on everyone else's take home pay would be negligible, assuming any of that money trickled down. Complaining about senior management pay is more about anger or whatever directed against senior management's pay levels. Why not apply the same scrutiny to professional athletes, rocks stars and the mega-rich in Hollywood?

That is, his theory of "social justice" outlined (non-optional) obligations of the rich toward the poor, so the poor didn't need to go all the way to socialism for relief.

To offer my own opinion, FWIW:

I'm completely in agreement with the idea that people who share a society have *non-optional* obligations toward each other.

I think a common mistake is in discussing it as the obligations of the rich toward the poor.

Everybody has obligations toward everybody else.

People who have stuff are obliged to make sure that folks who don't have stuff at least have what they need to live decently.

People who are on the receiving end of getting stuff are obliged, in turn, to not abuse the collective largesse.

If you have a billion dollars, or even a mere million, or even mere hundreds of thousands, you shouldn't b*tch if, at a time of acute economic distress, you're asked to kick in an additional couple of points on the nosebleed income.

If you are out of work or otherwise holding the socio-economic short straw, you're obliged to do your best to change that situation, for yourself, and not just rely forever on public resources. Because those resources do ultimately come out of somebody's pocket, and because other folks might need them more badly than you do.

It's not all a one way street.

But IMVHO the obligation aspect of it -- non-optional obligation, not charity -- is a given. It's the fundamental baseline of being part of a community of people.

To go to an earlier point I made, Oracle's shareholder value went up 6 Billion dollars the day Mark Hurd was named President. Somebody thought he might be productive.

No, somebody thought he would be good at extracting value from the company for their portfolios. "Productive" doesn't necessarily enter into it.

Why not apply the same scrutiny to professional athletes, rocks stars and the mega-rich in Hollywood?

Aside from the fact that those people are rarely employers or employees the way we generally think of them, not for nothing are both actors and athletes in very powerful unions that work to ensure very high minimum salaries for the lowest-paid among them.

the distribution of the creation of value is

Isn't this incredibly subjective? In Russell's perfect world, is fair distribution of value creation simply a wished-for outcome, like world peace, or is it a goal that society should implement with force of law?

There's a whole other world of social justice to be discussed above and beyond economics

I'd be interested in your view on this as well.

Complaining about senior management pay is more about anger or whatever directed against senior management's pay levels. Why not apply the same scrutiny to professional athletes, rocks stars and the mega-rich in Hollywood?

Do rock stars sit on committees that nominally represent the fans and listeners and determine each other's salaries, bonuses and other forms of compensation? How about athletes and movie stars?

Like, no matter what C.C. Sabathia makes this season, Joe Schmoe who came up from AAA to join the club roster this season is going to make $400,000 no matter what. You OK with that deal at, say, all of the Fortune 1000, McK?

We might also discuss the fact that, even though wage-earner salaries have stayed pretty flat when adjusted for inflation over the last several decades, CEO salaries have done this:

Either you believe - and, more importantly, can defend - the idea that while workers have not grown more productive at all, CEOs have grown from being 24 times as productive to 262 times as productive as their average employees.

Or you can conclude that something has gone seriously awry.

I know which one I think is the case.

Complaining about senior management pay is more about anger or whatever directed against senior management's pay levels. Why not apply the same scrutiny to professional athletes, rocks stars and the mega-rich in Hollywood?

Actually, I think there is a substantive difference here.

Executive compensation in large, publicly traded corporations is normally negotiated with the board. Which is quite often made up of executives, former executives, consultants to executives, and friends of executives of publicly traded corporations.

As a simple point of fact, corporate governance in publicly held companies is often conducted with little input from or accountability to the owners. In general, if the company is making money, nobody looks too closely.

In comparison, Hollywood star and sports figure salary negotiations are fairly transparent, and there is a much clearer correlation between value created and compensation.

Ten million bucks to a movie star means lots of behinds in movie theater seats. If that doesn't happen, next time around the star doesn't get ten million. Ditto rock stars and sports figures. They get paid for moving product and putting warm bodies in stadium seats.

Nobody shows up, nobody gets paid. Trust me on that one.

In contrast, there are lots and lots and lots of executives in publicly traded corporations who made, literally, millions of dollars while their companies crashed and burned.

If you need specific examples, let me know and I'll be happy to supply some. But it's not like this is some obscure or little-known factoid.

McKinneyTexas: The issue with stratospherically-paid paper-pushers is that they are often simple rent-collectors who represent a market failure.

Corporate boards, of course, have input on executive pay, but if you look at the composition of the Board of Directors for a large company, you'll see that it's largely or entirely composed of the executive class.

Less-stratospheric executive pay may not increase paychecks for the rank and file, but it would take that cost out of the rest of the economy.

Recall that the upper-echelons of U.S. society took essentially all economic gains made in the past few decades.

Pay for professional athletes, rock stars, and actors is generally not set by other similarly-employed athletes, rock stars, and actors. Sports cartels may represent a market failure, but it's not one principally caused or maintained by the athletes.

In Russell's perfect world, is fair distribution of value creation simply a wished-for outcome, like world peace, or is it a goal that society should implement with force of law?

Why can't it be both? A goal that we try to approach as near as we can while minding the negative side effects? The fact that we won't achieve a 100% non-violent society is no reason to stop discouraging people from killing and assaulting each other. The fact that no matter what we do, half the people in this country will make less than the median income is no reason to ignore and try to mitigate the ill effects of poverty.

Phil, I suspect your chart is the product of advocacy statistics, but I will stipulate that senior mgt compensation has far outstripped line worker pay. Do you propose a cap on compensation? Enforced by law? Tied to share value, profit or some other metric, or simply an arbitrary cap? What happens when X holds company losses to a minimum and but gets hired away to a more profitable gig because, legally, good management isn't compensated, just hitting certain metrics? Who will do the capping? I get all the angst the disparity produces, what I don't get is how anyone plans to remedy this situation with a cure that isn't worse than the disease. And, how you plan to keep senior mgt and corporate offices in the US. Seems to me, you make working in the US too punitive and the object of your ire packs up and moves.

As there are so many egregious recent examples to choose from I hope russell will not have to provide a list to convince anyone.

Money is the way our society allocates resources and rewards behavior. To me, the question is, how do we arrange things so that the behavior we want is rewarded? [By the way, in microcosm that is exactly how management ensures that a sales force is selling the right things: control the compensation plan.]

Just focusing on money of course ignores other, arguably more important values, and perhaps that is where we have gone off track. Alas, the "values voters" don't seem to offer an alternative I find palatable.

Isn't this incredibly subjective?

Here is what is not subjective:

Practially all of the gains in household income created by increases in productivity over since 1975 has gone to the top 20% of income earners.

That's a plain fact. Numbers, not opinion.

In Russell's perfect world, is fair distribution of value creation simply a wished-for outcome, like world peace, or is it a goal that society should implement with force of law?

Perhaps you misunderstand me.

I don't think there is some kind of optimal, more-just or less-just distribution of value creation.

Some people are insanely creative and productive, and generate enormous value.

Some folks kind of fill their niche, are generally reliable, and basically get their job done.

Some folks can't find a clue with both hands and a flashlight.

All good. I'm not calling for some weird leveling of people's productive output.

What I'm saying is that value that people get back from the economy as a whole should reflect the value they create.

And I'm not looking for dollar-for-dollar equivalence. For one thing, it'd be really hard to measure the exact and specific value of each and every person's contribution.

What I am saying is that there should be at least a reasonable resemblance between the curves.

And ALL TO THE TOP 20% ain't that.

Recession or no recession, this is an astoundingly rich country. Astoundingly.

A very small number of people have hundreds of millions and billions of dollars.

Millions of people are broke, bankrupt, losing their homes, and are looking forward to ending their life on Medicaid and Social Security, if they're lucky enough to die before those programs get 86'd.

You tell me if that makes sense. You tell me if it passes the smell test.

I am, really and truly, not about punishing rich people. I know what is likely a more than average number of them, and lots of them are fine folks who work very, very hard and are extraordinarily productive.

I am about recognizing that the overall situation as it stands is profoundly and fundamentally wrong and unfair.

Even if poor people don't starve to death and sleep in the streets.

Do you propose a cap on compensation? Enforced by law? Tied to share value, profit or some other metric, or simply an arbitrary cap?

No, no, no, no, no, no, and no.

The idea is not to limit compensation on the top end. It ain't about "get the rich guy". When executives create lots of value, they should get paid a lot.

The idea is to ALSO PAY THE GUY WHO DOES THE THING THAT THE ENTERPRISE GETS PAID FOR, TO A DEGREE THAT IS MORE OR LESS COMMENSURATE WITH THE VALUE THAT IS CREATED BY THEIR EFFORT.

Not punish the rich. Make everybody rich, or at least not poor.

Not redistribution. Fair distribution, up front.

Do that, and redistribution becomes noise.

On the CEO pay growth, I am curious if anyone has put a number on the growth of revenue of the organizations a typical CEO manages over that same time period?

A worket being 20% more productive (just a stat i have seen thrown around) may be worth more, although those stats tend to include the productivity provided by replacing workers.

CEO pay is often tied to the size of the company he is the CEO of (I know lots of CEOs of midsize companies that aren't in these stratospheric ranges). So does the conglomerated GE pay more per revenue dollar for its CEO than the historical going rate?

Marty, I will look for my copy of Kevin Phillips' Wealth and Democracy tonight and see if I can find anything in there. (Don't know whether I can even find it though.) It's a bit dated (published in 2003) but addresses this very issue.

I wish I could do economic experiments in virtual alternate universes, where failures wouldn't affect real people, but perfectly accurate computerized models of people in perfectly accurate computerized models of the universe. I'd implement a federal jobs guarantee for all willing and able to work, paying them, say, $12/hr. I'd also eliminate the minimum wage, since I think it would then be moot, though I'd want to find out for sure. The jobs would focus on urban renewal, environmental remediation, infrastucture, arts programs and vocational-skills training. I'd love to see what that would do to the economy and labor markets, without having to worry about potential negative consequences.

We've already had real-world anarcho-capitalist experiments and know where they ended up - environmental devastation, ill health, squalor, child labor and company stores. No need for simulations.

Phil, I suspect your chart is the product of advocacy statistics,

You're MORE than free to provide competing data. Which you won't.

Do you propose a cap on compensation? etc. etc.

I'm not proposing anything, I was sharing a data point.

(I do find it funny that as soon as anyone points out anything that shows that maybe the working guy isn't really getting an even break in American society, your mind takes off into all sorts of flights of fancy about legally capped compensation and so forth. My goodness. Watch out for sabots and guillotines.)

I get all the angst the disparity produces, what I don't get is how anyone plans to remedy this situation with a cure that isn't worse than the disease.

You're not the guy suffering from the disease, so maybe you're not in the best position to evaluate potential cures.

And, how you plan to keep senior mgt and corporate offices in the US. Seems to me, you make working in the US too punitive and the object of your ire packs up and moves.

Oh, Jesus Christ, this constant whining. Seems like we had no trouble keeping people here when the ratio of CEO-to-worker pay was only 25:1, unless you have data that I don't.

But someone says, "Gee, does a guy in the C-suite really provide 262 times more value than the average line worker? 10 times as much as he did 40 years ago?" and suddenly it's "HAVEN'T WE CEOs SUFFERED ENOUGH? WHY ARE YOU PUNISHING US?" Punitive, my goddamned ass.

I promise you, if it gets that bad, I'll spot you your ticket to the tax-free libertarian paradise of Liberia. You won't even have to pay me back.

Honest to pete. Someone asks, "Does the ratio between CEO pay and line worker pay need to be that high? Couldn't we pay workers a little more?" and suddenly we're making work too punitive. The mind boggles. Like, being a multi-millionaire isn't sufficient; if you don't have the ability to purchase the entire net worth of 200 people who work beneath you, you're being punished.

Well Russell there are about 400 billionaires in this country. So lets not dwell too much on them because it just isn't worth the time.

Depending on the source you use there are around 3 million people in this country with a net worth of over a million dollars(not counting primary residence. That number goes up quite a bit if you count peoples primary residence.)

Of those three million something less than 60,000 have more than thirty million dollars net worth.

So what would you like to change that would make either 400 or 60,000 or 3M people be more fair, as a meaasure of social justice?

Below those numbers most people work for a paycheck.


From this: http://www.cab.latech.edu/~mkroll/510_papers/fall_05/Group6.pdf

The American dream is one of upward mobility. US citizens believe that if one works hard, and plays by the rules they can ensure themselves the quality of life that they desire. Recently, the dream toward upward mobility has been limited to a select class of corporate executives that have received record levels of compensation in recent years. Today American Chief Executive Officers (CEOs) are paid outrageously large amounts of money compared to foreign CEOs who essentially perform similar jobs as their American counterparts.

Even if we did close the gap on CEO to worker pay in this country and the CEOs didn't like it, where are they going to go to find a better deal?

Thank you for enjoying another episode of IGMFU.

As well as another episode of YGSNG! (You Got Some Now Gimme!) Or IGSYCGGSY (I Got Some; You Can Go Get Some Yourself).

Or whatever kind of alphabet-soup game you care to play. All you have to do is choose some kind of phrasing that makes you look right and the other guy look like a complete putz. It's a game anyone can play!

But, you know, who has that kind of time to waste?

So what would you like to change that would make either 400 or 60,000 or 3M people be more fair, as a meaasure of social justice?

Where I work, at the beginning of each year the presidents of each division sit down with the guy that owns the company and they set goals for the year. One of the goals is how much profit each division will return to the company as a whole.

If my division exceeds our goal for profit returned, we split the excess up and everybody gets a bonus.

That is called sharing the value created by the enterprise with the folks who generate it.

That's one example of how to do it. Others include employee-owned companies, giving employees an ownership stake through stock distributions or stock options, etc etc etc.

This kind of stuff is quite common in my industry (software). There's no reason why it can't be equally common in manufacturing, retail, construction, or any other industry.

It's relatively simple to make it happen in my specific company, because it's privately owned, by one guy, who doesn't happen to be all that greedy.

But it could, and does, work in publicly traded companies as well. Folks just have to decide it's a good idea.

I don't care how many millionaires there are in the country. Most folks aren't that interested in being a millionaire per se, they're interested in not being broke and not having to work until they're dead.

I'm interested in having more of the wealth created by the economy in this nation flow to the folks who create it.

That's all.

If you want to argue with that, have at it, but I think to most folks it's a self-evidently fair, and self-evidently not the arrangement we have at the moment.

If you want a place to start with addressing the issue, before we get into Maximum Wage laws, let's start here, with Fortune 1, Wal-Mart Stores. Their compensation committee is composed of:

Douglas Daft, Retired Chairman of the Board and CEO of The Coca-Cola Company, a director of The McGraw-Hill Companies, Inc.

Linda S. Wolf, Former chairman of the board and CEO of Leo Burnett Worldwide, Inc., a division of Publicis Groupe S.A., and a trustee for investment funds advised by the Janus Capital Group, Inc.

Steven S Reinemund, Dean of Business and Professor of Leadership and Strategy at Wake Forest University, Retired Chairman and CEO of PepsiCo, Inc., a director of Exxon Mobil Corporation, American Express Company, and Marriott International, Inc.

Hmmm . . . no labor, no small shareholder representatives, nobody from market-making institutional shareholders, no shareholders at all besides members of the Board of Directors.

How about Fortune 2, ExxonMobil? Who's on their compensation committee?

Jay S. Fishman
Principal Occupation: Chairman of the Board and Chief Executive Officer, The Travelers Companies
Current Public Company Directorships: Travelers
Past Public Company Directorships: Platinum Underwriters Holdings Ltd.; Nuveen Investments

William W. George
Principal Occupation: Professor of Management Practice, Harvard University
Business Experience: Mr. George was elected Chairman of Medtronic in 1996, and retired in 2002; Chief Executive Officer in 1991; and President and Chief Operating Officer in 1989.
Current Public Company Directorships: Goldman Sachs
Past Public Company Directorships: Novartis; Target

Samuel J. Palmisano
Principal Occupation: Chairman of the Board, President, and Chief Executive Officer, IBM
Business Experience: Mr. Palmisano was elected Chairman, President, and Chief Executive Officer of IBM in 2003. Mr. Palmisano also served as President, Senior Vice President, and Group Executive for IBM’s Enterprise Systems Group, IBM Global Services, and IBM’s Personal Systems Group.
Current Public Company Directorships: IBM
Past Public Company Directorships: None

Edward E. Whitacre, Jr.
Principal Occupation: Chairman of the Board, General Motors; Chairman Emeritus, AT&T
Business Experience: Mr. Whitacre joined General Motors in July 2009 as Chairman, became CEO in December 2009, and relinquished the role of CEO in September 2010. At AT&T, Mr. Whitacre was elected Chairman and Chief Executive Officer upon its merger with SBC Communications in 2005, and retired in 2007. He was elected Chairman and Chief Executive Officer of SBC in 1990; and President and Chief Operating Officer in 1988.
Current Public Company Directorships: General Motors
Past Public Company Directorships: Anheuser Busch; AT&T; Burlington Northern Santa Fe

(Whooo! Burlington Northern, another Berkshire company! Represent!)

Still . . . looks like just a bunch of other CEOs determining how much the CEO makes. This game seems kinda rigged to me. I wonder what I'll find when I look at Fortune 3 . . .

(I don't wanna keep you in suspense. Fortune 3 is Chevron, and all members of their compensation committee are former and current CEOs. I know, right?)

And is allowing the poor to steal really a good solution to poverty?

OMG. I'm in awe. That is three scoops of awesome with a generous spritz of fluffy whipped awesome on top.

You are magnificent, Brett. If you didn't exist, Stephen Colbert would have to invent you.

"Seems to me, you make working in the US too punitive and the object of your ire packs up and moves."

Would you please link to some data to support this theory?

Seems to me, you make working in the US too punitive and the object of your ire packs up and moves.

Probably to Europe or Canada, where the taxes are low, and the regulations non-exist...what? What's that? Oh, nevermind.

"This kind of stuff is quite common in my industry (software). There's no reason why it can't be equally common in manufacturing, retail, construction, or any other industry"

I actually can answer this question. The vast majority of people in the software/software consulting industry are salaried workers who make a fixed income except for these bonuses.


In many of the industries you name (retail, manufacturing) the primary method of payment is hourly.

The difference is that when you pay hourly workers for overachieving it is almost always in the form of overtime pay, time and half over 40 double time for weekends and holidays.

Professional people don't tend to get overtime pay, although to be successful they do work overtime. The compensation formulas are jsut different in those occupations. The managemenet people in retail and manufacturing have goals that get them bonuses just like you.

And, btw, when retail workers are faced with the choice between overtime and bonuses they almost always prefer overtime.

Julian, why just look at all those companies registered in the Cayman Islands. And Erik Prince is moving to Dubai. [ohhh.....]

But, you know, who has that kind of time to waste?

Apparently you do, Slarti, since it's the one thing on this rather long thread that you decided to comment on. I mean, it's only a small fraction of what I've written, let alone everyone else.

Slarti, you complained that HSH is engaging in a childish ploy to make his opposition sounds glib and selfish, by inventing a rude acronym to represent their argument.

While that may be so, do you have anything to say about the substance of what HSH has argued? Or are you merely objecting to his method. If you merely object to his method, I take it you agree with his content?

Hey Marty -

Whatever. I don't really care what the mechanics are of how folks' compensation is organized. Whatever works.

My point is that some of the profit that my efforts create comes back to me, in some meaningful and tangible proportion to how successful my division is. If we do a good job and make money, I get some.

Simple.

The US economy generates a huge amount of wealth. The amount of that wealth that goes to high income earners and/or capital investors is very high relative to the amount that goes to the people who provide, at a hands-on level, the actual good or service that generates revenue.

If you, or McK, or anybody else, wants a specific and precise definition for what "very high" is, and what "not too high" would be, I'd suggest "what it is now" and "less than what it is now" as a reasonable starting place.

Pay people more. If you don't like bonuses, pay them a higher wage. If you don't like higher wages, give them ownership incentives. If none of that works for you, buy them breakfast lunch and dinner every day and a new car every three years. I don't really give a flip.

Pay people more, because they create the value. They do the thing that generates the revenue, and that's what drives the bus.

It's not a hard concept.

Money is the way our society allocates resources and rewards behavior.

No, money is simply the medium of exchange. Our society doesn't "do" anything. People do things. There is no societal mechanism at play, merely the end result of a relatively free market.

Phil, what is your proposed solution?

I get Russell's, I think: promote a norm that recognizes company success more broadly.

But Phil, you don't have a solution, just the same complaint.

Also, we are talking about two different things here: the top 20% and senior mgt compensation. Until someone challenges Marty's stats, the number of uber wealthy is pretty damn small. Are they too wealthy? By how much and how much should we take away from them? Otherwise, what is the point?

As for the top 20% stat, do we know how much of this is attributable to behaviors that are more common in this cohort and less common in the others? Are deferred gratification and higher education common characteristics? Higher savings and investment rate? I'd bet real money this is exactly the case.

Further, people enter and leave the top rates. Those quintiles are not static.

I agree that the morally correct approach, and long term sounder strategy, is to incentivize everyone on the payroll. But I don't want to be forced to be moral. That's for me and everyone else to decide for themselves.

Until someone challenges Marty's stats, the number of uber wealthy is pretty damn small.

I'd like to see a link please.

McKinneyTexas: No, money is simply the medium of exchange. Our society doesn't "do" anything. People do things. There is no societal mechanism at play, merely the end result of a relatively free market.

Well, OK, if you want to quibble. For "society" read the people in it. But don't tell me money isn't used as a reward. And as for the free market, I'm not against it. But let's be honest and admit that money == power.

But Phil, you don't have a solution, just the same complaint.

If we're going to get into you-can't-complain-unless-you-have-a-solution, we're all in big trouble here.

As for the top 20% stat, do we know how much of this is attributable to behaviors that are more common in this cohort and less common in the others?

Jesus wept.

Further, people enter and leave the top rates. Those quintiles are not static.

Not static, but more sticky than in other developed nations.

The American Dream promises that aspiration, hard work and individual enterprise will be rewarded with prosperity, regardless of family background.

President Barack Obama, the first black president, epitomises this; but all too often the dream fails to match reality.

The truth is that the US sits with the UK at the bottom of the international league table of social mobility.

http://news.bbc.co.uk/2/hi/americas/8162616.stm

"Aren't the bottom 80% really probably just lazy, uneducated and not good investors?"

Behaviors. Yeah, inheriting wealth or getting your friends to help make you a millionaire is a behavior.

I can't wait to hit the bourbon tonight. Between this ever-present nonsense and the DADT filibuster today, this country is capital-F Fubared.

millionaires

billionaires

Forbes magazine estimated/reported/guesstimated that there were 700 people with a net worth of $1B or more resident in the United States in 2009.

Just brainstorming here, but what does any of you think of job-specific minimum wages? I'm not proposing that every job have its own minimum wage, but that some would and that they would apply at businesses employing some minimum number of employees, not at every business. Perhaps they would be regionally adjusted. It may sound complicated, but I think the stats that would be needed to come up with the numbers are already being collected. For anyone not in a position covered by a job-specific minimum wage, the general minimum would apply. So, no caps on executives, but some floors for workers.

I take that back, the number is less than 700, so more likely the 400 Marty mentioned above.

Marty,

Thanks for the links, but the numbers vary greatly.

Barclays estimates that there are 16.6 millionaires, which is quite a bit more than 3 million. Another said that there 9.5 million, and that was in 2006.

In fact, the 3 million number looks most dubious, because it is "households" not individuals (with the former being a multiplier of the latter) and excludes "collectibles, consumables, consumer durables and primary residences" - as in, multiple homes.

Also, keep in mind, that this does not measure the number of people with income over $1 million, just those with traceable assets over $1 million (excluding primary residences and other assets).

Now on to the billionaires.

FYI, on the topic of social justice, the GOP, led by The Honorable John McCain, just filibustered the defense appropriations bill, ensuring that DADT will not be repealed this session. As always, Republicans hate gays more than they love the troops. I'm particularly incensed at Ohio Sen. George Voinovich, who is retiring this year and still joined in this charade.

"Also, keep in mind, that this does not measure the number of people with income over $1 million, just those with traceable assets over $1 million (excluding primary residences and other assets)."

Well I make a big distinction in discussing these things between wealth and income. However, the table is what the authors decided was the most accurate number, after acknowledging the wide variance in counting.

I am not sure my point is a lot different at 16M, the top end, than at 3M. However, I am fairly confident (my interpretation), based on reading the discussion, that the number is below 10M.

The more startling number to me, and I used the high end 60k rather than the low end 32k, is the number of people over 30M.

It makes for a really small number of extremely wealthy people.

there are lots and lots and lots of executives in publicly traded corporations who made, literally, millions of dollars while their companies crashed and burned.

One of these is the current GOP candidate for Sernate from CA. Am I the only one who finds this utterly amazing?

Bernard, you are not alone. I attended a fund raiser for Barbara Boxer and to my surprise the Hon. Pete McCloskey was there! He has the distinction of being the only Republican my wife has ever voted for.

Just brainstorming here, but what does any of you think of job-specific minimum wages?

I think it's probably unwieldy if not impossible to define many jobs in such a way that you can't talk your way around the description. Further, the stupid market tends to that anyway, with a degree of variation. EG, commercial construction welders get X to Y an hour in and around Houston and Dallas, less in other places, more in others. Ditto legal assistants and secretaries. The market is X plus or minus. Experience and skill are big factors along with attitude, productivity, etc. The problem with standardization is that people are not standard and skill sets and everything else vary widely.

However, the table is what the authors decided was the most accurate number, after acknowledging the wide variance in counting.

Yes, and the "authors" being...well, anyone who wants to edit the page. The strength of wikipedia is also its weakness.

But yes, 16 million millionaires is different from 3 in meaningful ways.

But in terms of calculating the income tax, the accumulated wealth isn't really all that useuful.

The question is, what number of people had income exceeding that total?

Do you propose a cap on compensation? Enforced by law? Tied to share value, profit or some other metric, or simply an arbitrary cap?

McKinney,

If a corporation is willing to pay $10M/yr to a particular person at the top because it cannot get so competent a CEO for less, and is unwilling to pay $10/hr to its front-line workers because it can get adequate cashiers for less, that's the corporation's business.

HOWEVER: how much we tax the CEO's personal income, and what public services we provide to the cashiers, that's OUR business.

Ten bucks and hour is $20K/yr, which is not much to live on in the US. But if "we" can provide decent schools, reasonable medical care, housing subsidies, etc., to everybody (CEOs and cashiers alike) then even $10/hr can be a tolerable living. Not a living any CEO would find tolerable, mind you, but we can't please everybody.

Meanwhile, back at the top, the CEO whose $10M/yr "we" chose to tax at 80%, say, may look at his measly $2M take-home pay and decide it ain't worth his prodigious skills. So what does he do? Maybe he demands a raise. If the corporation decides he's worth $50M a year, that's fine. The CEO gets his $10M take-home, and "we" get $40M to fund education, health care, and so forth.

Note that "we" are not interfering with The Free Market in CEOs. The super-competent, value-creating, stock-price-increasing demigods still compete against each other; corporations still compete against each other for their services. The "best" CEOs still get the biggest paychecks. Oracle doesn't lose its dream CEO to Wal*Mart based on tax considerations.

"We" are the casino where the Big Players get to play against each other. "We" don't interfere in the game; "we" don't set a limit on their winnings. "We" simply specify the house take.

Since "we" includes both you and me, I don't expect that "we" agree on this approach. You may think it amounts to social INjustice. I don't know how to resolve a disagreement on that level except by voting. Neither your sense of "social justice" nor mine is dispositive.

You can try, if you like, to argue on more pragmatic ground: you can try to persuade the $10/hr cashiers that THEY will be worse off if "we" tax CEOs too much. "Social justice would be bad for everybody," you can argue. I don't buy it, myself, but maybe you can persuade a majority.

--TP

But in terms of calculating the income tax, the accumulated wealth isn't really all that useuful.

How about a 1% net worth tax?

Eric,

According to the IRS that number was 319k in 2008 based on the table "Returns with Modified Taxable Income [1]: Tax Generated, by Rate
and by Size of Adjusted Gross Income, Tax Year 2008" at this link

Apparently you do, Slarti, since it's the one thing on this rather long thread that you decided to comment on. I mean, it's only a small fraction of what I've written, let alone everyone else.

I'm sure that if you look around, you'll see another comment of mine.

Slarti, you complained that HSH is engaging in a childish ploy to make his opposition sounds glib and selfish, by inventing a rude acronym to represent their argument.

I don't think I did that, Julian. I didn't say it was childish. Glib might have been a good word to use, though. Also, the use of it implies access into the thought processes of a whole group of people that, I think it's safe to say, hsh doesn't actually have access to.

As to the content of that particular sentence that I responded to: there isn't any. It's neither based on anything concrete, nor refutable.

In the future, I suppose I should avoid responding to those things that those who said them don't mean, or mean them less than other things they've said, whichever applies. Once it's clear, in advance, which comments are not to be responded to.

You needn't respond to this comment.

I take that back, the number is less than 700, so more likely the 400 Marty mentioned above.

The 400 number in the Wikipedia link is, in turn, linked to Forbes, so if they're consistent, things should match up well.

As for the top 20% stat, do we know how much of this is attributable to behaviors that are more common in this cohort and less common in the others?

Yes. It's attributable to their getting paid more.

Seriously, if we were talking about 10 or 20% of folks who were just not getting a piece of the pie, I'd say maybe you were on to something. Even 25%. There is, unfortunately, some number of folks who lack certain basic life skills.

When we're talking about all gains going to 20%, I think we're talking about a different kettle of fish.

80% of the population are impulsive / not educated / don't save or invest? And this is only in the last 35 years?

Not likely.

I agree that the morally correct approach, and long term sounder strategy, is to incentivize everyone on the payroll. But I don't want to be forced to be moral. That's for me and everyone else to decide for themselves.

To the degree that *public policy* encourages disproportionate distribution of wealth, it's not a matter of personal or private morality.

Here's another way of looking at it: it's not your freaking money, where "you" refers to folks in the 20% who are skimming the cream off of the top of the economy.

People who create the wealth should be getting a slice of it. We can surely debate how big a slice that should be, but zero ain't cutting it.

Also, the use of it implies access into the thought processes of a whole group of people that, I think it's safe to say, hsh doesn't actually have access to.

Other than the things they write and say, no, I have no access.

Other than the things they write and say

Ok, then. Please source.

http://voices.washingtonpost.com/virginiapolitics/2010/07/webb_criticizes_affirmative_ac.html

oops - doesn't fit.

link

Hmmm...that's going to take a great deal of line-reading-between to come up with IGMFU. I rather doubt I am creative enough.

Slarti, I'm sorry for using the word childish, that was purely my embellishment. I just took issue with you (as I saw it) glibly commenting that he was being glib. That's fine, I saw your point, I just meant that there's more out there than HSH's tricky acronyms to make the other side look bad.

"In the future, I suppose I should avoid responding to those things that those who said them don't mean, or mean them less than other things they've said, whichever applies. Once it's clear, in advance, which comments are not to be responded to."

I think that's a misinterpretation of my objection. I don't think you should have refrained from responding to his post about the acronym; I think it was unhelpful of you to refer only to the acronym. It came across as though, having demolished the acronymic mockery, you were satisfied that you'd dismantled the whole argument. But there's more to talk about than just the acronym.

"When we're talking about all gains going to 20%, I think we're talking about a different kettle of fish."

short rant.

All gains in what? Do you have any fact that supports that what you did in the last ten years has created a gain in wealth in the economy? This 20% number that keeps getting thrown around excludes all investment gains by high net worth individuals, which we have all agreed used the financial markets to create eztravagant gains based on risky and exotic financial instruments that were primarily paper based leverage. Yes, this would inflate their earnings and wealth significantly as opposed to us working stiffs. It wouldn't, however, take a dime out of the economy from a GDP or productivity perspective.

There is absolutely no evidence that these people "skimmed" the productivity out of the society and kept a nickel for themselves.

This 20% number that keeps getting thrown around excludes all investment gains by high net worth individuals...

This 20% number that keeps getting thrown around comes from the CIA Factbook on the USA. I cite it upthread.

Practially all of the gains in household wealth created by increases in productivity in the last 35 years have gone to the top 20% of income earners. That's what the CIA analysis shows.

You might like to make the argument that those gains have gone almost entirely to that quintile because they, in fact, have created those gains through their own efforts, and that they therefore deserve it.

Or you may want to argue that they have not done so, but that they deserve it nonetheless, for reasons that you will of course reveal in the course of making your argument.

Or, you may wish to argue that talk about who "deserves" what wealth created by our economy is beside the point, money goes where it goes and if you don't like it you're SOL.

I personally would not want to have to argue any of those three points, but by all means feel free.

If you object to my use of the word "skim" to describe people extracting value that they have not generated, too bad for you. I find it apt.

Do you have any fact that supports that what you did in the last ten years has created a gain in wealth in the economy?

Yeah dude.

I shipped a lot of software product and lots of people made money off it, both within the companies I've worked for and without, either by using it directly or by building other stuff with it.

And I do mean lots.

I could give you the short list, some of the products are household names, and some of them are products that you no doubt make use of every single freaking day, whether you know it or not.

But frankly, I'm not in the mood. You can either just take my word for it or not, I don't much care.

But there's more to talk about than just the acronym.

No question about that. You should (and this is just a suggestion that might help explicate me, a little) just chalk up my selective attention to my own little Imp of the Perverse, that more or less whimsically selects items of interest for me to overreact to.

You may think it amounts to social INjustice.

I think anytime a majority votes to do something to a minority, particularly to take from that minority in so grossly disproportionate an amount as you propose, it's not social injustice, it's gross injustice. I don't care if that minority is stinking rich bigots who use $100 dollar bills to blow their noses or if they donate 4 out of every five dollars to Third World Relief.

The onrush of technology largely explains the gradual development of a "two-tier labor market" in which those at the bottom lack the education and the professional/technical skills of those at the top and, more and more, fail to get comparable pay raises, health insurance coverage, and other benefits. Since 1975, practically all the gains in household income have gone to the top 20% of households.

This is the quote from which Russell cites. With respect, this isn't analysis. It's an assertion of fact. It isn't footnoted. If I made a similar type assertion to support my views here at ObWi, I'd be crucified and rightly so.

Did only 20% of Americans own homes from 1975 to the present? Or did the homes owned by those in the 80% bracket never appreciate while those owned by the 20% did appreciate? Only the 20% group saved money? The others weren't allowed in the company 401K? My brother is a confirmed member of the middle quintile, yet he has a 401K. He has assets. And those two groups remained constant? For 35 years? I earned practically nothing from 1975-79, along with everyone else my age. Time passed, and I did better. More time passed, the better I did. I'm not unique or even rare, even if my personal earnings run higher on average. I suspect there are charts that show average earnings by age bracket and by age/education. Over time, as people get older, they make more money. People mature into and retire out of the 20% bracket. It changes every year, present circumstances excepted.

With respect, this isn't analysis. It's an assertion of fact.

With respect, the CIA Factbook analyses are considered to be pretty reliable. At a minimum, more so than an undocumented assertion by you or anyone else on this or any other blog.

Seriously McK, it's what they do.

If you are trying to argue that, due to the natural process of aging and the dynamic nature of our economy, lots more than 20% of the population has had a turn in that top quintile, I'd say that's an interesting observation and no doubt true.

Nonetheless, regardless of who it was that happened to be wearing the top quintile hat on any given day, that guy got the dough.

Since the topic of the thread is social justice, I would be interested in the construction of "just" that makes that a good thing.

Since the topic of the thread is social justice, I would be interested in the construction of "just" that makes that a good thing.

It is neither just nor unjust. It just is. I get the dough at my operation because (a) it is my operation, (b) I built it and (c) it is mine for a reason: the clients look to me to try their cases, no other lawyer in my firm can or will go into the courtroom, pick a jury and win a lawsuit. I've been doing this for a long time, I'm better at it than most. My employees are well paid, get bonuses, etc., but I get what's left. I also don't get anything if there isn't anything left, which happens to be the tale of 2010. I get paid last, good year or bad. Employees, unless they are laid off, get paid regardless. That's fair, too (and I haven't laid anyone off, FWIW).

Further, the assertion we're arguing about simply doesn't make sense, even if someone at the CIA says it. Far too many people owned homes, had savings accounts, had jobs, etc., lived in places where the middle quintile is the equivalent of the lower top quintile for cost of living reasons for anyone to say that 80% of the country didn't have assets that appreciated. Russell, there are a million ways to juggle numbers to get a desired result. That factoid simply defies reality and common sense.

Strangely, I wonder if we aren't putting too much focus even on the CEOs of what we think of as normally productive companies. An enormous majority of the disparity we are talking about is an artifact of the finance sector:

"...for 2004, nonfinancial executives of publicly traded companies account for less than six percent of the top 0.01% income bracket. In that same year, the top twenty-five hedge fund managers combined appear to have earned more than all of the CEOs from the entire S&P 500. The number of Wall Street investors earning over $100 million a year was nine times higher than the public company executives earning that amount."

In some respect we really are just talking about bankers and financiers.

This is from memory so please excuse the vagueness, but a major theme in Wealth and Democracy is the shift from manufacturing to financial instruments in the economies of the Dutch and then the British empire. Kevin Phillips links this to their eventual downfall.

I have to reread that book, but there will be a little delay. :-)

Sigh.

Yes, Sebastian. And since, in 2004, there were just over 13,000 tax returns of 10M or more I suspect (I couldn't find a further breakdown) that we are certainly talking about something less than 1000 people that managed to make 100M.

And Russell, I did not mean to imply that you are not an incredibly valuable and productive worker, my apologies for a poorly worded point.

I was trying to make a point that didn't work well, which was that the CIA numbers assume that the increased income comes from increased productivity. I don't happen to agree that is where the income came from.

the clients look to me to try their cases, no other lawyer in my firm can or will go into the courtroom, pick a jury and win a lawsuit. I've been doing this for a long time, I'm better at it than most.

So, McK, my take on your particular situation is that you're delivering value for the dollar.

My employees are well paid, get bonuses, etc.

Sounds like you're a good guy to work for.

I don't think you, specifically, are the problem. I'm not sure any individual person, specifically, is the problem.

I think there are lots of industries where, due to a variety of factors including public policy, rank and file people don't get paid well.

And I think there are other industries and/or contexts where, due to a variety of factors including public policy, people are paid grossly out of proportion to the value they create.

I think that rank and file folks should get paid better. Then there would be far less need for "redistribution" or any of the various forms of social safety net that folks get bent out of shape about.

And I don't think they should get paid better as some kind of charity thing, I think they should get paid better because they create value. They do the thing that generates revenue.

Too much of the money goes to people who don't do the thing that generates revenue, not enough goes to the people who do the thing that generates revenue.

I'm not looking for some kind of one-to-one equivalence, and I recognize the contribution of, and the need to reward, capital investment and entrepreneurial ownership.

I'm just looking for a better balance.

That, in its entirety, is my one and only point here.

And Russell, I did not mean to imply that you are not an incredibly valuable and productive worker, my apologies for a poorly worded point.

Appreciated, and no worries. Also, I'm not incredibly valuable and productive, I'm just a pretty good software engineer.

I was trying to make a point that didn't work well, which was that the CIA numbers assume that the increased income comes from increased productivity.

I don't think the Factbook article is claiming that all growth in household income came from increased productivity.

If I read it correctly, their claim is that *some portion* of the increase in household income could be ascribed to increased productivity, and that *of that portion*, nearly all had gone to the upper quintile.

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