A Second Porsche Won't Fill That Hole

by Jacob Davies

A nice short piece on inequality in the NYT:

Many economists are reluctant to confront rising income inequality directly, saying that whether this trend is good or bad requires a value judgment that is best left to philosophers. But that disclaimer rings hollow. Economics, after all, was founded by moral philosophers, and links between the disciplines remain strong. So economists are well positioned to address this question, and the answer is very clear.

Recent research on psychological well-being has taught us that beyond a certain point, across-the-board spending increases often do little more than raise the bar for what is considered enough. A C.E.O. may think he needs a 30,000-square-foot mansion, for example, just because each of his peers has one. Although they might all be just as happy in more modest dwellings, few would be willing to downsize on their own.

People do not exist in a social vacuum. Community norms define clear expectations about what people should spend on interview suits and birthday parties. Rising inequality has thus spawned a multitude of “expenditure cascades,” whose first step is increased spending by top earners.

The rich have been spending more simply because they have so much extra money. Their spending shifts the frame of reference that shapes the demands of those just below them, who travel in overlapping social circles. So this second group, too, spends more, which shifts the frame of reference for the group just below it, and so on, all the way down the income ladder. These cascades have made it substantially more expensive for middle-class families to achieve basic financial goals.

I was sitting in the middle of the floor with our 1 year old boy today and we were flinging Duplo in all directions and I was thinking, you know, you really don't need much more than this. Four walls, a roof, a floor, indoor plumbing, refrigeration, cooking, heating, storage, Internet access, Lego. What else can money buy that I actually care about? Maybe more Duplo, I'm short on orange pieces...

Humans have simple needs. Most middle class Americans of my acquaintance would be much happier if they lived on a much less steeply-sloped income curve, and would suffer much less anxiety over housing and healthcare and schooling.

I don't think it's too much to say that a large sector of American economic activity has been simply devoted to counterfeiting - the production of paper with apparent face value but no underlying worth - mortgage backed securities with no actual mortgages backing them are just the most obvious form. Inequality is inevitable in a system where one group is allowed to print money and spend it.

Comments

[Bob L.]

My wife has taken to watching HGTV, which broadcasts, among other things, lots of shows featuring people looking over houses before buying one, and lots more shows about home renovations. I find myself watching along. It has become a cliche of those shows that people will frequently reject a house solely because the master bathroom doesn't have two sinks, one for each spouse. I don't have two sinks in any bathroom in my condo apartment, and now I wonder if I'll ever be able to sell it (there isn't room for double sinks anywhere, even if we renovate -- it's an apartment.)

And yet, what percentage of the couples that buy the house with the two-sink bathroom actually use both sinks at the same time? Of those, what percentage actually *need* to do so. This looks like a classic case of utterly pointless escalating demands. My brother and I grew up in a three-bedroom, one bath house -- with only one sink in the bathroom -- and neither of us is the worse for it.

Spengler was right. And we are all the worse for that.

[Marty]

What Jacob and Bob L. said. We raised four kids in a very small 3 bedroom house (with one split into two). We survived and they all seem to be fine, although some mornings before school it would have been nice to have an extra bathroom sink.

[Hartmut]

Once it was the policy of absolute monarchs to have the members of their nobility overspend each other to curry favour with him (thus not having money left for mischief against him). Anyone unable to follow every turn of (expensive) fashion had already lost. And in some countries the bourgeoisie tried to imitate the high nobility (in others they were prevented by law from doing so).

[DecidedFenceSitter]

I think there was a study several years ago that you only feel rich if you make more than the folks you think of as your peers - so if the average salary is 20K and you make 30K you are rich; but if the average salary is 150K of your peers, but you make 100K, you'll feel poor.

And yeah, my wife and I bought a home that we could afford on my income alone so she could do the SAHM thing, and we have friends saying "How are you going to live without two showers?"

[Rob in CT]

Huh. Never thought about the two-sink thing. Our current house (purchased in 2007) has that in the master bath. Our prior house didn't (actually it simply didn't have a master bath).

I never even considered it. But you could view that as "feature creep."

As for the meat of the OP - yeah, it makes sense to me that rich & poor are relative things. I feel rich. But then I don't hang out with a bunch of top executives. I'm running with the wrong crowd! ;)

[Hogan]

It's what I thought when I heard about Dennis Kozlowski's $6000 shower curtain (which he billed to his company)--if he'd bought a $5200 shower curtain and paid for it himself, the other CEOs would have laughed at him.

[Hartmut]

I have the totally not backed by data theory that societies run to a large degree on a mix of greed and envy with the relation of both being characteristic for the (local) system as a whole.
Definitions for this context:
Greed = I want to have more than person X
("I will be #1!")
Envy = Person X should not have more than I (preferably less). ("YOU shall share my misery!" "If I can't have it, YOU shall neither!")
Western (capitalist) societies are mainly dominated by the former, the Soviet block and the Middle East were/are dominated by the latter.

[Bob K.]

"Community norms define clear expectations about what people should spend on interview suits and birthday parties."

I'd point out that birthday suits, and, perhaps, interview parties (if such things exist) are nominally inexpensive lifestyle features.

[The Sanity Inspector]

To paraphrase Roger Scruton, the wellbeing bestowed by imaginary status is not imaginary wellbeing. Making a choice for a simpler lifestyle for ourselves takes wakefulness, and can be a brave action. But it is obviously a personal choice, not to be imposed on anyone else by any intellectual elite.

[Jacob Davies]

The wellbeing bestowed by status is not magnitude-sensitive, that is, it's based on ranking and not absolute disparity. So any mechanism that preserves income rankings - like a straightforward progressive income tax with fewer deductions and no loophole for capital gains income - will not significantly affect the relative-status wellbeing.

As for "intellectual elites", can you come up with something a bit more interesting for your next Astroturf run? That's starting to have the whiff of "capitalist running dogs" - at some point, the words sort of lose their meaning.

[cleek]

my Porsche-shaped hold remains sadly empty.

[cleek]

s/hold/hole/g
:wq
logout

[Uncle Kvetch]

As for "intellectual elites", can you come up with something a bit more interesting for your next Astroturf run?

Aw, you're no fun anymore.

Personally I love the idea of being asked to sympathize with people with 8-figure incomes, because of how they're being so cruelly held down and pushed around by "elites." It captures the spirit of political discourse in the US today so perfectly.

[Mike Schilling]

Medical care, college, crime-free neighborhoods. All damned expensive these days, and none status symbols.

[hairshirthedonist]

It captures the spirit of political discourse in the US today so perfectly.

To modify a Syndrome (Buddy Pine / IncrediBoy) line from "The Incredibles":

Everything can be ironic! And when everything's ironic, [laughs maniacally] nothing will be.

[Sanity Inspector]

As for "intellectual elites", can you come up with something a bit more interesting for your next Astroturf run?

I apologize for the cliche, then. I can't at the moment come up with a more suitable term for people who feel themselves, booted and spurred, born to ride the rest of us.

And I hope no one thinks I'm trolling. "As iron sharpens iron, so man sharpens man" is one of the reasons I, a conservative, frequent liberal blogs.

[Jacob Davies]

I am suggesting that if you wish to reduce the impression of trolling, you refrain from trotting out tired lines about "intellectual elites".

I want more income equality in the US because I like the US; I live here, my kid will grow up here, and I feel the egalitarian-Utopian-meritocratic aspect of American life is receding, not advancing. That's the thing I like best about America and one of the things I've appreciated about its past (in various ways, at various times).

In order to have a system that is more equal, we have to acknowledge the inequality that exists, we have to understand the powerful self-reinforcement that inequality brings, and we have to make a conscious decision to address it.

This is hardly a call for panels of intellectual elites to make judgments about the relative worth of various lifestyle choices. It's just to say that with an income of $100k or $200k, you can live a ridiculously comfortable life in the US. If you aren't satisfied by that, you probably aren't going to be satisfied by $10 million or $100 million either.

[hairshirthedonist]

I can't at the moment come up with a more suitable term for people who feel themselves, booted and spurred, born to ride the rest of us.

Who is "riding" anyone, and who is "the rest of us?" I mean, couldn't you be just as easily said to be "riding" the people who post and comment here with your criticisms as you suggest someone here (I guess) is "riding" "the rest of us" by blogging on social and economic criticism? What sort of "intellectual elite" does that make you, Sanity Inspector? You must be even more elite than the rest of us, right?

I take you at your word that you are not trolling.

[Hogan]

I can't at the moment come up with a more suitable term for people who feel themselves, booted and spurred, born to ride the rest of us.

MBAs?

[Slartibartfast]

I've run into Sanity Inspector a few times in other places. SI is generally cordial and is in no way a troll, in my experience.

[russell]

But it is obviously a personal choice, not to be imposed on anyone else by any intellectual elite.

Or, imposed by greedy jerks blowing the economy up.

Same/same?

I can't at the moment come up with a more suitable term for people who feel themselves, booted and spurred, born to ride the rest of us.

Maybe it's because the folks for whom you are trying to find a better term don't exist.

[McKinneyTexas]

It's just to say that with an income of $100k or $200k, you can live a ridiculously comfortable life in the US. If you aren't satisfied by that, you probably aren't going to be satisfied by $10 million or $100 million either.

Maybe, maybe not. I suspect more than one lefty at this site is in the 100-200K range and hopes to see more as their careers progress, even if they don't need or want gazillions.

JD, what kind of gets to me, since this is a bit of a recurring theme, is that you tend consistently to conflate bankers, and more specifically, the almost-failed bankers, with anyone who makes a lot of money. Parenthetically, I am not sure what qualifies as "a lot of money" in the sense that it would be viewed by most here as unseemly. My guess is that incomes south of 6-750K, while high, aren't viewed as robber baron money, but I can't say for sure.

But if we are going to take the very, very well to do to task, maybe just once, we could hold the magnifying glass on Bill Clinton, John Kerry, Al Gore, John Edwards, Nancy Pelosi and Barak Obama.

And, JD, if you're not proposing some sort of policy to create/enforce a lesser degree of inequality, I ask, with respect, what is the point of your post? Like Sanity Inspector, I thought that's what you were alluding to.

Final question: is there a country, now or in the past, who's relative economic equality you find acceptable?

[Jacob Davies]

McKT: I suspect more than one lefty at this site is in the 100-200K range and hopes to see more as their careers progress, even if they don't need or want gazillions.

Well, yeah, like me; I can easily find ways to spend more money. But that's different to saying that having more money will make me happier. I don't much rate the chances of that.

Will get back to the others later, but:

McKT: is there a country, now or in the past, who's relative economic equality you find acceptable?

The US that my step-father grew up in - he was born in 1943 and lived in Chicago - was one that was considerably more economically equal than the US today. I'm not saying it didn't have any problems. I'm saying it was more equitable. It was also recognizably the United States, and the culture of egalitarianism persists to this day, even though it is eroded by inequality, the presence of large numbers of low-status workers who lack citizenship, and the continuous din of pro-business propaganda.

I think a lot of the things I really like about America and Americans were born of that period - the easy assumption of social equality, the emphasis on education and hard work, the free sharing of professional and commercial ideas and practices, the comfort with widespread ownership of high-quality cars, houses, and appliances by all classes in society, the willingness of Americans to speak their mind, the enterpreneurial venture, the continuous effort to reduce injustice, and so on. I think that the greater equality of that period was a major influence in creating modern American society, which for all its flaws is still the most enlightened society on the planet.

That more-equal society was the result of specific policies that limited economic inequality through high taxes and high investment. I think those were a good idea. I would support them coming back. If you think that goal is desirable and have ideas for other ways to get there, have at it. I think those methods were effective and that nothing else has come along that looks any better.

[Roland]

Praise to Davies for writing this.

Answer to McT's final question: Yes. Canada circa 1985 was good enough in terms of income and property distribution, although not ideal.

Since that time, we've been getting seriously class-divided like the USA, and it's not a good way to go.

Sanity Inspector: there are always elites deciding how income and property get distributed. That's what elites do, ffs.

The question is what sort of elite is doing it, how they're doing it, and for what purpose. Right now, for instance, the elite known as investment bankers seem to be having a rather disproportionate say in the matter.

If definite steps are not soon taken to reduce their amount of say, then the long-range political consequences will prove unfortunate. The elite that will probably take the bankers'place, whether drawn from the hard left or from the hard right, will be much less friendly to people like our dear Inspector, than the few mildly hypocritical petit-bourgeois academics of whom you complain!

[Roland]

Praise to Davies for writing this.

Answer to McT's final question: Yes. Canada circa 1985 was good enough in terms of income and property distribution, although not ideal.

Since that time, we've been getting seriously class-divided like the USA, and it's not a good way to go.

Sanity Inspector: there are always elites deciding how income and property get distributed. That's what elites do, ffs.

The question is what sort of elite is doing it, how they're doing it, and for what purpose. Right now, for instance, the elite known as investment bankers seem to be having a rather disproportionate say in the matter.

If definite steps are not soon taken to reduce their amount of say, then the long-range political consequences will prove unfortunate. The elite that will probably take the bankers'place, whether drawn from the hard left or from the hard right, will be much less friendly to people like our dear Inspector, than the few mildly hypocritical petit-bourgeois academics of whom you complain!

[Carleton Wu]

I can't at the moment come up with a more suitable term for people who feel themselves, booted and spurred, born to ride the rest of us.

This just seems like a pointless jab at people who want to discuss our society and what we ought to do as a society. Unless you are an anarchist and believe that we ought to not make any decisions as a society, then you are poking at yourself as well as everyone else. Only, most people who pull this sort of rhetoric out have in mind *other people's* suggestions as tyranny, while their suggestions are merely commonsense requirements for maintaining social order etc.
[Similar to the thing that happens rhetorically with taxes: so many people are willing to yell "taxes are theft" in one way or another, until they come to spending that they prefer; then it's "taxes are a necessary evil"].

[liberal japonicus]

I suspect more than one lefty at this site is in the 100-200K range and hopes to see more as their careers progress, even if they don't need or want gazillions.

Christ on a crutch. Does every observation you make have to be framed within 'the lefties at this site'? I know you've got your wife thinking your a liberal, but don't take it out on us!

Seriously, there are a gazillion ways to make that observation without trying to make it some left/right dichotomy. You could have said 'I have to think that there are lots of people (maybe even a few here) in the 100K range...' Or you could say 'I can't imagine stopping people from striving for more, even when they probably have more than enough' But your comment is like 'ahhh, look, lefties being hypocritical, I gotcha!'

I'm not trying to run you off and I'm not pulling out the T word here, but at some point, you are going to get judges by the number of red and white floats trailing baited hooks that pop up in your wake...

[Mike Schilling]

you tend consistently to conflate bankers, and more specifically, the almost-failed bankers, with anyone who makes a lot of money.

I, for one, would include many CEOs here too. Ken Lay was the genius who created all those jobs until the criminal prosecutions came, at which point he was just a salesman who had no idea how the business actually worked. He's not alone.

[McKinneyTexas]

Seriously, there are a gazillion ways to make that observation without trying to make it some left/right dichotomy. You could have said 'I have to think that there are lots of people (maybe even a few here) in the 100K range...' Or you could say 'I can't imagine stopping people from striving for more, even when they probably have more than enough' But your comment is like 'ahhh, look, lefties being hypocritical, I gotcha!'

Well, there is more than a little left/right dichotomy here, LJ. Think about it--commenters here routinely lump conservatives, Republicans, right wingers, etc. Complaints about income equality are a feature of the left. It's not an insult, anymore than referring to someone as being on the right.

The US that my step-father grew up in - he was born in 1943 and lived in Chicago - was one that was considerably more economically equal than the US today. I'm not saying it didn't have any problems. I'm saying it was more equitable. It was also recognizably the United States, and the culture of egalitarianism persists to this day, even though it is eroded by inequality, the presence of large numbers of low-status workers who lack citizenship, and the continuous din of pro-business propaganda.

Uh, not all was peachy keen back then, for women, minorities, gays, Jews, Catholics in many places and civil liberties were only and barely getting off the ground in any kind of meaningful way. Education thru high school was somewhat common, college was unusual.

I am happy to continue this discussion: is the US better today than it was in 1943? I'll take the "today" side of that debate.

[Carleton Wu]

I am happy to continue this discussion: is the US better today than it was in 1943? I'll take the "today" side of that debate.

That is not the question you asked. You asked is there a country, now or in the past, who's relative economic equality you find acceptable? Not "is there a country now or in the past that you would trade for the current situation of the United States?" Very different questions.

[liberal japonicus]

Well, there is more than a little left/right dichotomy here, LJ. Think about it--commenters here routinely lump conservatives, Republicans, right wingers, etc. Complaints about income equality are a feature of the left. It's not an insult, anymore than referring to someone as being on the right.

But look at your statement. Rather than try to address this, you take it as a given and you move straight to suggesting hypocrisy. Do you disagree that there is income inequality? Or do you think that the inequality is necessary for our society to function? Or do you think we couldn't have had the level of social equality we had without having the measure of income equality that we are seeing (again assuming that you agree this situation exists)

Certainly, the observation that the left is concerned, from the time of Proudhon, with questions of inequality is true. But it seems like a stretch that your aside about 'lefties on this site' was an invitation to discuss it.

Now, you want to argue that the combination of today's income inequality and social equality is much better than the earlier general income equality and social discrimination. However, it was liberals and lefties who were the ones who the ones who were against social discrimination, so somehow, they were right about that, but they were wrong about the income thing? There is a reason why a lot of the left likes the term 'progressive'.

Again, seriously, if you want to discuss this, that's fine, but if you really think about it, you have introduced this as a question of left versus right. So please don't bemoan the fact that the right gets beat up when you introduce it in those terms.

[Charles S]

McKinneyTexas,

Do you believe that the increase in the rights of women, catholics, gays, blacks, etc. since the 60's (The America of Jacob's father is not the America of the year of his birth, but the America of his adulthood) required the huge increase in income inequality that we have seen in the past 30 years? Can you imagine a USA that had the income equality of the 60's and the political and social equality of 2010? Do you imagine that country would be a better place or a worse place than the actual USA of 2010?

[McKinneyTexas]

That is not the question you asked. You asked is there a country, now or in the past, who's relative economic equality you find acceptable? Not "is there a country now or in the past that you would trade for the current situation of the United States?" Very different questions.

Carelton, that hair is too thin to split. I asked JD what country would fit his definition of the US better than today equality wise. He said Chicago circa 1943. I disagree and am willing to debate the point.

Rather than try to address this, you take it as a given and you move straight to suggesting hypocrisy. Do you disagree that there is income inequality? Or do you think that the inequality is necessary for our society to function? Or do you think we couldn't have had the level of social equality we had without having the measure of income equality that we are seeing (again assuming that you agree this situation exists)?

I do find hypocrisy on the left. And on the right. Usually different kinds of hypocrisy. It's more fun discussing inconsistencies at ObWi because here, unlike most sites left or right, a fair number of people are fair (and I include you in that group--it's the standar here). I think the income inequality thing is overdone and is something without a meaningful remedy, certainly without a meaningful remedy that isn't much worse than the condition being treated.

Yes, there is inequality: of income, good looks, ability to BS, genetics, sex, etc. Good luck fixing all of that.

Inequality is like intestinal gas--it's there, it isn't pleasant but it's also a fact of life: some people work harder, are smarter, make better life choices or get born into the right family. It's life, here and everywhere that worth a damn to live.

When have we ever had the measure of social equality we have today? Seriously, is there anyone here who was born in the 40's or 50's.

I apologize for my belligerence. It is the cocktail hour. I'm feeling a bit frisky.

[McKinneyTexas]

Do you believe that the increase in the rights of women, catholics, gays, blacks, etc. since the 60's (The America of Jacob's father is not the America of the year of his birth, but the America of his adulthood) required the huge increase in income inequality that we have seen in the past 30 years? Can you imagine a USA that had the income equality of the 60's and the political and social equality of 2010? Do you imagine that country would be a better place or a worse place than the actual USA of 2010?

Progressives measure from the top down, I measure from the bottom up. I grew up solid middle class and did some kind of work for hire beginning at age 10. Our house was minuscule. Hamburger stretched with rice, pasta or potatoes was the staple. We didn't travel, we had one TV, blah, blah, blah.

Look at an average suburbanite's home, cars, schools, clothes, etc. Life is fabulous at the top and pretty damned decent for most in the middle. More decent today for the middle than when I was coming up.

[Cranky Observer]

> What else can money buy that I actually
> care about? Maybe more Duplo, I'm short on
> orange pieces...

Well, there are Tool-Os, which are now only sold in the Lego preschool/museum bulk purchase catalog...

Cranky

[Cranky Observer]

> Look at an average suburbanite's home, cars, schools, clothes, etc. Life is fabulous at the top

Yes

> and pretty damned decent for most in the
> middle.

Well, that's the question, isn't it. Life appeared quite fabulous for even the lower end of the middle right up until 2007, but at this point it isn't clear that (1) net of debts that "middle" even existed after 2000 or so (2) even if it does exist at this moment it will still do so in 2020. Or even 2015.

Cranky

[ral]

> What else can money buy that I actually care about? Maybe more Duplo, I'm short on orange pieces.

I don't want to have to live without a piano. Mine isn't an expensive one but it's nice having a house in which it fits.

McKT: I've mentioned Kevin Phillips' Wealth and Democracy before. It draws disturbing parallels between our current increasing wealth/poverty gap and prior empires. I agree with you that today's social equality is better but I fear there's trouble on the horizon.

[liberal japonicus]

Thanks McT, but my point is that discussing this starting out from a left/right dichotomy just adds too much noise to the signal. I tend to think that hypocrisy is part of the human condition, so focussing on it really doesn't help much.

I live in a society that is having its own problems and I tend to think of equality as rather illusory. However, I do think that 50 years from the time that you reference, things damn well ought to be a lot better. But that 'better' shouldn't automatically mean bigger. It should mean (to this progressive at least) that there should be a greater measure of security at the bottom. You say you measure from the bottom up, but having the salary you have, I'm not sure how you can say you can actually see what life is like at the bottom, just as it is pretty hard for me, as a tenured professor at a Japanese university to see it. But if you squint, you see things like this and this, and it leaves me more than a bit concerned. That seems as much of a bottom up measure as yours, the only difference is that my concern with the bottom leads me to support looking at the top for the resources to help the bottom.

I certainly acknowledge that my life now is materially better than my folks, and I'm grateful for that. But to think that means that everything is ok, I'm not sure that is the case.

[Gary Farber]

"I asked JD what country would fit his definition of the US better than today equality wise."

No, you didn't. You asked:

Final question: is there a country, now or in the past, who's relative economic equality you find acceptable?

Jacob began his response with:

The US that my step-father grew up in - he was born in 1943 and lived in Chicago - was one that was considerably more economically equal than the US today.

He then specifically went on make sure the goal posts weren't moved in a way they obviously could be:

I'm not saying it didn't have any problems. I'm saying it was more equitable.

Jacob was specifically noting that attempting to switch the topic from income inequality to bigotry wasn't going to be a rhetorical tactic that if attempted would go unnoticed. Attempting it directly in the face of that notice suggests, at best, inattentive reading.

Later:

[...] Inequality is like intestinal gas--it's there, it isn't pleasant but it's also a fact of life: some people work harder, are smarter, make better life choices or get born into the right family.

Income inequality kills when you're sufficiently on the other side of it.

That you can see it as, at worst, intestinal gas, clarifies exactly how blind you are to this.

"When have we ever had the measure of social equality we have today?"

What does "social equality" have to do with "income inequality," and how does social equality help deal with the want-of-a-nail problems of extreme poverty?

[russell]

is there a country, now or in the past, who's relative economic equality you find acceptable?

I've only lived in this country, so I really can't comment on how relative economic equality plays out elsewhere.

What I can say unequivocally is that the level of economic inequality in this country right now is not acceptable, and is dangerous for our form of government.

I had a similar upbringing to yours as regards economic circumstances. Modest. My wife and I live today, just the two of us, in a house that is larger than the house I spent my early years in as part of a family of six.

I'm also vulnerable to being laid off more or less at the whim of my employer. That's something that was simply not, at all, common in my father's time, at least during his professional life, post WWII. On the contrary. And not only was it not common, it was socially frowned on for companies to lay folks off in large numbers.

Nowadays it often results in an uptick in stock price.

My old man worked his way to a pretty good executive position in the defense aerospace industry. That meant he made maybe 4 or 5 - maybe 6! - times what the line workers in his company made.

I went to an excellent state university for less than $2,000.00 a year, full tuition. That's about $5,000.00 today. Between federal and state grants my very excellent college education was virtually free to me.

I'm one of your lefties in the $100K-$200K range. In my real estate market that lets my wife and I live a very pleasant middle class life. By that I mean we're able to pay the bills, eat out a couple of times a month, and go on vacation once in a while. We can afford to buy our vegetables fresh at the farmer's market, rather than frozen or canned BJ's.

We do buy paper goods and frozen stuff at BJ's.

If we were not both white collar professionals we would not be living such a pleasant middle class life.

I'm a software guy, with a pretty good resume, living near Boston MA. Discounting really highly paid professions - law, medicine, financial sector - I'm pretty close to the top of the heap.

I live a nice middle class life. No more than that.

People have more stuff now than when we were young. There's more to life than stuff.

[Carleton Wu]

Carelton, that hair is too thin to split. I asked JD what country would fit his definition of the US better than today equality wise. He said Chicago circa 1943. I disagree and am willing to debate the point.

Once again, that is not what you asked- for a lawyer, I hope you spend more time working on briefs than in the courtroom (or perhaps this sort of extended intentional misinterpretation is useful in that setting, I dunno). You did not say "equality-wise"- you said something very specific. I will quote you once again: is there a country, now or in the past, who's relative economic equality you find acceptable?. Note carefully the use of the word "economic" there. If you would like to pose this entirely different question, by all means do so. But don't pretend it's been answered already.
You asked for an example of a country with an income distribution that would please LJ. Now, if you wanted to follow up that with some points tying eg racial inequality to income equality, to show how his example had a downside, that would be one thing. But you haven't done that. You've merely changed the question- now LJ cannot merely pick an income inequality regime he would like, he has to trade everything from technological advancement to capital improvements to changes in society to legal changes- even if they don't have any arguable relation to the matter at hand.

I think the income inequality thing is overdone and is something without a meaningful remedy, certainly without a meaningful remedy that isn't much worse than the condition being treated.

Whether it's actually important and whether it's treatable without worse side-effects are two different questions. I find that when people tend to lump questions together like this they aren't thinking about them carefully individually. I will now maul a quote the source of which I cannot even remember "I didn't steal your bike and besides it's a cruddy bike."
If you could push a button and equalize wealth (income being a bit trickier as a one-time event) across the country, would you do it? One time, no one need sit around waiting for it to happen again, so no disincentives towards savings etc.

Yes, there is inequality: of income, good looks, ability to BS, genetics, sex, etc. Good luck fixing all of that.
Inequality is like intestinal gas--it's there, it isn't pleasant but it's also a fact of life: some people work harder, are smarter, make better life choices or get born into the right family. It's life, here and everywhere that worth a damn to live.
When have we ever had the measure of social equality we have today? Seriously, is there anyone here who was born in the 40's or 50's.

First, you're lumping inequalities together as if they were similar or could be treated similarly. I don't see how that's useful. Or, I see how it's useful rhetorically, to blur the line between various inequalities and treat them as if they were fundamentally the same question.
For example, I would argue that individuals ought to be treated equally by the justice system. One could merely say "hogwash, there is always inequality", but Id much rather see a spirited defense of income inequality than an attempt to hide the matter behind any number of other inequalities that no one is proposing to 'fix'.
Second, I don't think anyone (here, anyway) proposes getting rid of *all* income inequality. Unlike your intestinal gas methaphor, I think a certain amount of income inequality is useful now. But there is a question of degree- again, like gas, a large amount can be quite disturbing and disruptive to social processes.
And third, another attempt to lump inequalities together, as if addressing income inequality would somehow lead to greater racial inequality. Yes, greater social equality is wonderful. Im not sure how it plays a role in an argument against reducing income inequality though. Although you've mentioned this several times, so presumably you've some ideas on that which you've not shared yet.

Progressives measure from the top down, I measure from the bottom up.

Hey, Im all for being satisfied with less. But as pointed out above, this is not really how people think. And there are quite a few things that are both expensive and very much worth it to virtually everyone: the opportunity to educate one's children well, good medical care, retirement, etc.
Also, I hope you recognize that this argument has been available for centuries of rising GDP, and could be used by some ancestor of yours or mine to justify a one-room, dirt-floored sod house with no windows, one door, and a fireplace that burned cow turds or peat. It was good enough for them, what are you doing with your fancy indoor plumbing and different pants for every day of the week?

[McKinneyTexas]

Ok, income equality--in 1943, the economy was a fraction of the size it is today. Poverty then makes poverty today look like the middle class. How many sharecroppers do you hear of today? Income inequality is material inequality. Measuring from the bottom up, what is life like for the bottom 30-60%? Horrible, unsustainable? No, it's not bad, compared to any country our size or any country half our size. Certainly superior to any of the really populous countries.

But, comparing income equality to social inequality isn't irrelevant. How much of the material homogeneity among whites in the 40's was due to African Americans and Hispanics being well and truly on the short end of the stick? Progress and growth produce proportionately larger gaps in society's layers, through competition and the dynamic of having more people doing more things. That doesn't mean the bottom layers are intolerable.

In a rural/agricultural society, pretty much everyone is equal. Aside from living off the land, there isn't much surplus to go around. For example, income equality is widespread in Africa, but it's not such a great thing.

The inequality issues that are of such concern to progressives are not new. They've been around before Marx. They were certainly a major theme on the left in the 40's. If the majority of Americans today shared these views, this would be a center/left if not left country. It isn't. Most Americans are reasonably happy, notwithstanding current circumstances.

[wonkie]

There is the possiblity that I will lose my job because of funding cuts. I have savings. I live a very frugal lifestyle because there is very little that I want and even less that i need. I have a roof. I have a car. I have a Kindle. I have my health more or less. My only extravagances are the enormous medical bills I pay to keep my elderly dog alive and donations to charities.

For example I am committed to pay for the spays for two dogs belonging to two families that don't have the cash for vet bills.

I make monthly donations to two charities in memory of dogs I loved: Missouri Pitbull Rescue for Tawny and Stray Rescue of St. Louis for Lassie.

I would really miss that. I would really be sad if I knew of an animal in need and couldn't afford to help and really sad if I could make my memorial donations.

I hope I don't lose my job.

But that's just me. When I look around at how people in my area live I don't know how they survive the stress. I'm not talking about people being pissed because they have to share abathroom. I'm talking about people being driven into stress over load because they are alwasys on the brink of a crisis: the car repairs they can't afford, the vet bill they can't pay, the three jobs they work and they never see their kids and they still can't get the braces tgheir daugher needs. Working poor and lower middle class life in this country sucks because the stress is over real issues. How to put the kids through post highschool educations of some sort? How to pay for health insurance since the employer no longer provides it? How to save for retirement when every penny is already budgeted for genuimme necessities, not status symbols?

It's tough out there. The problems are real. For many AMericas life is a nightmare of stress ovedr problems that are very real.

[bobbyp]

"The inequality issues that are of such concern to progressives are not new. They've been around before Marx."

As Marx noted. Funny that.

[bobbyp]

"In a rural/agricultural society, pretty much everyone is equal."

....wait, wait, wait! They've been around since 'before Marx'? Well, maybe not.

[bobbyp]

"....there isn't much surplus to go around."

So when there is some surplus to 'go around' how should it be split up? Now in my reading of history, this question has been around since we got out of the hunter-gatherer stage. Of course, your fantasy may differ.

[Carleton Wu]

Ok, income equality--in 1943, the economy was a fraction of the size it is today. Poverty then makes poverty today look like the middle class. How many sharecroppers do you hear of today?

So you think that GDP growth is related to the increasing inequality? Because we had great income growth until the 1980s without that component.
Or are you just saying that income inequality doesn't matter to you personally? Because if that's the case- well, on the one hand that's great for you, one less thing to worry about. But it's not consoling me: income inequality leads to a lack of satisfaction with societal fairness and to lack of fuel for the meritocracy.

Income inequality is material inequality. Measuring from the bottom up, what is life like for the bottom 30-60%? Horrible, unsustainable? No, it's not bad, compared to any country our size or any country half our size. Certainly superior to any of the really populous countries.

Really populous being China and India, I guess; kind of a limited pool to examine. Is life in the bottom quintile better here than in the UK or France or Germany? I think not, but at least Id want to make an argument rather than assuming that one way or the other. In those socialized countries, they get good healthcare and a better safety net, although Im not sure whether the bottom 10% in eg France gets more income than the bottom 10% here, I think it'd have to be a pretty big chunk in order to offset the loss of those non-income factors. Plus, iirc most studies show higher mobility between quintiles in France.

But, comparing income equality to social inequality isn't irrelevant. How much of the material homogeneity among whites in the 40's was due to African Americans and Hispanics being well and truly on the short end of the stick?

Uh, I would guess virtually none. There was great income inequality in the Gilded Age. There was great income inequality during slavery.
So, Id say that invalidates your thesis that discrimination is correlated with income equality. Also, again, I find it disturbing the degree to which you allow yourself to make totally unsupported- and unsupportable IMO- correlations to satisfy your innate preferences. You seem bright, but a moment's critique of your own suggestion should've found it tossed in the reject pile.

Progress and growth produce proportionately larger gaps in society's layers, through competition and the dynamic of having more people doing more things.

Also unsupportable. Do you have any evidence that GDP growth correlates with income disparity? Other than the standard "growth in the 50s-70s was leftover from the war so it doesn't count".

In a rural/agricultural society, pretty much everyone is equal.

Again, this is not true. Except for unusual circumstances like the settling of the American West by Westerners, agrarian economies usually have large income inequality. Think "Middle Ages". Think modern India.

For example, income equality is widespread in Africa, but it's not such a great thing.

Income inequality is high in much of Africa, actually. Check out Niger, Nigeria, Botswana, Zambia, Zimbabwe, Mozambique, The Gambia, Burundi, Uganda, Ivory Coast. Cameroon, Kenya, Ghana, Namibia, Mali, Senegal, Mauritania are all within shouting distance of the US's income inequality too. FYI, these are some pretty poor places. Course there isn't good data for a lot of the others.
http://en.wikipedia.org/wiki/List_of_countries_by_income_equality
Again, I wonder if this gives you a moment of pause- you assume something to support your argument that turns out not to be the case. Does that make you doubt your position? It should if your position is based on the 'facts' you're using to support your case.

If the majority of Americans today shared these views, this would be a center/left if not left country. It isn't. Most Americans are reasonably happy, notwithstanding current circumstances.

Not sure what the point is here- the majority of Americans are de facto correct? Why raise the other (frequently inaccurate) points if the truth of the matter rests here?

[liberal japonicus]

Poverty then makes poverty today look like the middle class. How many sharecroppers do you hear of today?

McT, The 4 Yorkshiremen sketch has already been done...

[Gary Farber]

LJ, I prefer The 1948 Show's version.

[liberal japonicus]

That version is ok, but the tiny set and the close-ups really break it up too much for me. This one is memorable because Cleese gets Terry Jones to lose it at the end, and but not having Idle and Chapman had me choose the other one.

[ajay]

"In a rural/agricultural society, pretty much everyone is equal. Aside from living off the land, there isn't much surplus to go around."

This is amazing. McK, try spending some time in a rural/agricultural society one of these days. Or talking to someone who has. Or reading a history book. Or travelling to another country.

[Phil]

Ok, income equality--in 1943, the economy was a fraction of the size it is today. Poverty then makes poverty today look like the middle class

Yeah, see, we don't live in 1943, is the thing.

. . . what is life like for the bottom 30-60%? Horrible, unsustainable? No, it's not bad, compared to any country our size or any country half our size.

Yeah, we don't live there, either, is the other thing.

And instead of comparing ourselves to countries "our size," we should be comparing ourselves to countries that are culturally and demographically similar, since "size" is far, FAR from the only important metric here. Except if we do that, then suddenly our bottom 30% - 60% don't come out so well, since the culturally and demographically similar countries tend to have more generous social safety nets, universal and/or single payer health care, extensive vacation time allowed at all levels of employment, extremely generous maternity leaves, etc.

f the majority of Americans today shared these views, this would be a center/left if not left country. It isn't.

Well, except it is. When American are polled on individual items, they tend to come out pretty leftish. They like Social Security, they like Medicare, they favor higher unemployment benefits, they favor progressive taxes, they want better access to health care, etc.

[Tom M]

No mention of the Piketty=Saez data? Income inequality decreased significantly in the post WWII period in the US. Until about 1980 when the curve takes a negative slope. Unions? Productivity? What caused the change to occur and what made it stay like that during the Bush I, Clinton and Bush II reigns?
I live in Pittsburgh and think this story encapsulates at least a part of the problem. In 1973, the Pittsburgh area produced about 2.5 million tons of steel. There were 13 mills employing about 55,000 people. Union jobs, good pay, great benefits.
In 2005, Pittsburgh produced 2.5 million tons of steel, with 1 mill (Edgar Thompson) and 5,000 jobs. Good jobs, union jobs, good pay, great benefits but the valley lost 50,000 jobs. The city of Pittsburgh has lost over 250,000 in population in the last 40 years.
Steel gets made, just as much of it but what economic impact does the loss of 50,000 jobs have?
Productivity changes have caused a fair bit of the income inequality, not just the structural shifts in the economy.

[cleek]

the continuous din of pro-business propaganda...

which is really pro-business-owner propaganda, since businesses are perfectly happy to send all the non-upper-management jobs overseas, if that's what the numbers for next quarter say.

"pro-business" is never about the low-level employees; it's always about the owner.

hence, rising inequality.

[Hartmut]

Not owners actually. That would be the shareholders who may or not be interested in shipping jobs overseas. It's the people that 'run' the company (not in the physical sense, that would be the workers who do not count) that the 'pro-business' is for.

[russell]

Ok, income equality--in 1943, the economy was a fraction of the size it is today. Poverty then makes poverty today look like the middle class.

Both statements are true. The latter is true largely because the range of entitlements or other welfare programs available to the poor is larger.

So, fewer people have to go live with aunt and uncle out on the farm, like my mother in law did. Although in some communities, being sent to live with grandma and grandpa, or to aunt and uncle who happen to have jobs, is still not so rare.

Here are other true statements:

About 1 in 6 people who oughta be and want to be working either are not, or are working fewer hours than they would like to be, involuntarily.

For people who are working, real wages have been stagnant for at least a decade.

Over 100,000 home foreclosures in September.

1.3 million non-business bankruptcy filings in 2009. About 950K of those were Chapter 7, meaning total liquidation rather than reorganization of debt.

So, it ain't all milk and honey out there.

How many sharecroppers do you hear of today?

Damned few. Not that many people work in agriculture anymore, period.

How many full-time blue and white collar jobs have turned into temp jobs recently?

[liberal japonicus]

This via Crooked Timber, is Richard Rothstein's reply to the Klein/Rhee union busting piece. Not directly related but this is worth thinking about

Consider the implications of this catastrophe for our aspirations to close the black–white achievement gap. The national unemployment rate remains close to an unacceptably high 10%. But 15% of all black children now have an unemployed parent compared to 8.5% of white children. If we also include children whose parents have become so discouraged that they have given up looking for work, and children whose parents are working part-time because they can’t find full-time work, we find that 37% of black children have an unemployed or underemployed parent compared to 23% of white children. Over half of all black children have a parent who has either been unemployed or underemployed during the past year.{v} Thirty-six percent of black children now live in poverty.{vi}

The consequences of this social disaster for schools are apparent, and include:

Greater geographic disruption: Families become more mobile because they can no longer afford to keep up with rent or mortgage payments. They are in overcrowded housing; they often have to double up with relatives in apartments that were already too small. Children have no quiet place to study or do homework. They switch schools more often, fall behind in the curriculum, and lose the connection with teachers who know them well enough to adapt instruction to their individual strengths and weaknesses. Inner-city schools themselves are thrown into turmoil because classes must frequently be reconstituted as enrollment rises and falls with family mobility. Even the highest-quality teachers cannot fully insulate their students from the effects of this disruption.{vii}

Greater hunger and malnutrition: When more parents lose employment, their income plummets and food insecurity grows. More children come to school hungry and/or inadequately nourished and are less able to focus on schoolwork. Attentive teachers realize that one of the best predictors of how their students will perform is what they had for breakfast, if anything at all.{viii}

Greater stress: Families where parents are unemployed are under greater psychological stress. Such parents, no matter how well-intentioned, often become more arbitrary in their discipline and less supportive of their children. Children from families in such stress are more likely to act out in school and are less able to progress academically. The ability to comfort and support such students may be a more important indicator of a teacher’s quality than her students’ test scores, which may still be lower than the scores of students coming from stable and secure homes.

Poorer health: Families where parents lose employment are also more likely to lose health insurance.{ix} Their children are less likely to get routine and preventive health care and more likely to miss school days because of illness. They are less likely to get symptomatic treatment for illnesses like asthma, the most common cause of chronic school absenteeism. Children with asthma, even when they attend school, are more likely to come to school irritable, having been up at night with breathing difficulty.{x}

If someone is really concerned about bottom up, these points should have you wondering what could be done, not patting yourself on the back for doing such a good job.

[McKinneyTexas]

Rural economies and Africa have great income equality, compared to the US--it just depends on how you draw your comparisons. The masses are at subsistence level, very equal, almost fatally so, but at least they are all the same.

From the first city-state thru the present, no civilization has existed without a concentration of wealth at the very top. The more liberal the civilization, the more wealth appears in the rest of society. Distribution, however, will always be uneven and imperfect. Individual circumstances will always vary and some will be in extremis and others not. There is no gov't solution that will fix individual variability unless, like Africa, we reduce almost all of ourselves to having virtually nothing.

About 1 in 6 people who oughta be and want to be working either are not, or are working fewer hours than they would like to be, involuntarily.

For people who are working, real wages have been stagnant for at least a decade.

Over 100,000 home foreclosures in September.

1.3 million non-business bankruptcy filings in 2009. About 950K of those were Chapter 7, meaning total liquidation rather than reorganization of debt.

So, it ain't all milk and honey out there.

So if we went back to the economy of, say, 2004, would everyone here be happy? No, not at all. We are really talking about two separate issues, maybe three. First, we have the immediate fallout of a really awful recession with differing views on how to turn things around. Second, we have income/wealth inequality issues--this is entirely different from the near term fallout of a recession. Some posts back, Russell cited a study showing that the top 20% control 80 or 90 percent of the country's wealth and have done so since 1970. Yet, commenters here frequently claim that today income is unequal, but back in the day, pre-Reagan, it was not. Well, to me, we have a study for nearly every occassion, but that's just an aside.

So, even if we were to address the acute, recession-generated issues, we'd still have the inequality piece to keep the discussion going.

The third issue is wage stagnation: is this at all a function of education level and occupation? Are there averages at work here? How are these numbers derived? My sense is that some sectors are stagnant, others are growing. I would expect semi-skilled and service industry work to stagnate--it's the cheapest, most fungible labor there is. It's also usually entry level work for most of us.

If someone is really concerned about bottom up, these points should have you wondering what could be done, not patting yourself on the back for doing such a good job.

Assuming we don't have a highly partisan, heavily slanted bit of writing underpinned by broad statistical license.

[yods]

"Rural economies and Africa have great income equality, compared to the US--it just depends on how you draw your comparisons. The masses are at subsistence level, very equal, almost fatally so, but at least they are all the same."

First of all, can people (not just McKT) stop referring to Africa as though it was some kind of homogeonous whole.
Secondly, of course those at subsistence level are equal. Those who are not at subsistence lever are not.

[liberal japonicus]

This link might help you out McT. Seems to suggest that the trend started in the 80's and has reached an all time high now. The graph pretty much invalidates your argument that somehow things were the same under Reagan as they are now.

[Carleton Wu]

Rural economies and Africa have great income equality, compared to the US--it just depends on how you draw your comparisons. The masses are at subsistence level, very equal, almost fatally so, but at least they are all the same.

I linked to numbers from Africa- your statement is factually incorrect. It does not matter 'how you draw your comparisons', unless by drawing your comparisons you somehow exclude wealthy Africans. Which is, bluntly, a pointless and trivial exercise- yes if you exclude the wealthy, the rest of *any* country has a relatively equal income. I can, if you'd like, prove that Germany has high income inequalty, if I "draw my comparison" by excluding the middle class.
I sit in bemused wonderment as you steadfastly refuse to accept facts and instead reshape reality to fit your theories.
Now, if you picture in your mind a poor community of subsistence farmers, yes that community has income equality. But pray tell, what does that thought experiment tell us about the benefits or costs of greater income equality in the US? Are we expected to believe that just because you can picture a community with high income equality and low income that "low income" is a necessary condition of income inequality?
That is, you are both factually incorrect and, even if you were correct I have no idea what your point is supposed to be. Other than we *could* achieve greater income equality if we were all much poorer, but no one is proposing that solution except for you. Or if you think that poverty is a necessary condition of income equality, allow me to falsify that theory as well by presenting Europe as a counterexample.

From the first city-state thru the present, no civilization has existed without a concentration of wealth at the very top. The more liberal the civilization, the more wealth appears in the rest of society. Distribution, however, will always be uneven and imperfect.

Another strawman- no one here has argued for total leveling of income. If you read my last comment I specifically disavowed that idea, speaking for myself.

I would expect semi-skilled and service industry work to stagnate--it's the cheapest, most fungible labor there is. It's also usually entry level work for most of us.

I wouldn't. Looking over longer timescales- say, since the Civil War- you certainly ought to expect that semiskilled and service labor costs in the US would roughly keep up with productivity gains. Roughly. Even when productivity gains don't come to that specific field, the general cost of labor increases as labor productivity rises across the economy.
Perhaps you can explain why these jobs aren't getting the same real wage they received in 1776, or why you assume that they would, or should, still be receiving such a wage.

[Hogan]

The graph pretty much invalidates your argument that somehow things were the same under Reagan as they are now.

And also the argument that current income inequality is just a fact of nature, like gravity, and not the artifact of changes in public policy that began under Reagan and continue now.

[hairshirthedonist]

I don't see what point is being made by saying that we've had an historically bad economic crisis after a couple of decades of growing income inequality, or at least not a point that somehow demonstrates that excessive income inequality cannot be problematic.

First, we have the immediate fallout of a really awful recession with differing views on how to turn things around. Second, we have income/wealth inequality issues--this is entirely different from the near term fallout of a recession.

But I think "entirely different" isn't the same as "totally unrelated." There was a lot of capital in the hands of a relatively small number of people looking for a place to put it to make a return. There was a relatively small number of people who stood to make a very large income quickly if they could manage to find a place for those people to put their money.

Greater income inequality makes for a greater likelihood of the kind of recession we're now sufferring - one resulting from a speculative bubble, one resulting from inordinate power in the hands of too few colluders influencing their regulators and willing to ignore potential longer-term problems.

Greater income inequality also produces the sorts of social problems described in Jacob's post, involving money being spent on relatively useless things - a poor allocation of resources at most levels - while people at the bottom are struggling to manage their day-to-day lives for lack of resources.

Greater income inequality leads to people having no clue what it's like to struggle for one's basic needs, sometimes no clue that such a struggle exists at all.

Some of these things may have (known) fixes, and some may not. Some of those fixes may involve the government at one level or another, and some may not. But no one's going to fix anything until they know something is broken, so trying to identify and understand the problem is the first step, and a necessary, even if not sufficient, step.

[Slartibartfast]

Even when productivity gains don't come to that specific field, the general cost of labor increases as labor productivity rises across the economy.

Would you care to explain that a bit further? It seems to me that occupations that see productivity gains over time are going to get paid more, as they produce more for less cost. OTOH, ISTM that occupations that don't see productivity gains will not keep pace, in terms of real wages.

They'd maybe see some gains in terms of billing rate, as overhead productivity increases (assuming that actually happens), but the laborers themselves would not see much of those rising billing rates.

I could be wrong about all of that, and would be interested in hearing how I'm wrong.

[Marty]

Actually, Slart, this happens in a micrcosm in the tech services industry. The pay for a .NET programmer has been reasonably flat and the pay for a SharePoint architect has skyrocketed. The equivalent changes have happened across technologies as the pay for SAP ABAP programmer has been reasonably static since the end of the Y2K surge(bubble?). I don't have cite, but I have been selling these various services and the discrepancy in billing rates translates directly to deltas in pay.

The other interesting area is that many more jobs today require a college degree, we required one for executive assistants. This has definitely driven the average pay down for recent college grads for example.

[russell]

It seems to me that occupations that see productivity gains over time are going to get paid more, as they produce more for less cost.

I'm not sure that's even true.

You can wash dishes by hand, or use a washing machine. Let's assume one person can wash 20 times more dishes per unit time with a washing machine.

If the restaurant invests in the washing machine, the dish washer doesn't get a 20x raise. Most likely some number of dishwashers are going to get laid off.

Somebody in the dishwashing industry will make a few bucks.

I think that's more the way it plays out.

All of the "gain in productivity" talk raises a couple of questions for me.

A lot of "gains in productivity" come, IMHO, by reducing the actual value of the good or service rendered by making it more of a commodity.

You can't really get a medium-rare hamburger anymore unless you go to a sit-down restaurant and pay about eight bucks for it. Ditto a toasted bun, or white toast instead of a bun, or no bun at all. You can get extra ketchup or mustard because you put it on yourself.

As a kinda dumb example.

The same phenomenon shows up in "self-service" stuff like purchasing things over the internet, or trying to get post-sale customer service for pretty much any piece of software or consumer electronics.

A lot of "productivity" increases are really a matter of deliberately making the labor contribution as bone-headedly fungible as possible, so that the labor can either be totally shifted to the consumer, or so that jobs that might usefully actually involve some level of skill can actually be done by unskilled, low-paid people.

Or, in other cases, so that little or no human intervention is required to make the good or service happen, allowing for massive scaling.

I don't know what the hell farmers do anymore.

The net result is quite often an actually crappier consumer experience. But it wins the day because it can usually beat the alternatives down on a cost basis, at least for long enough to drive the other guys out of business.

IMO it's a net shift of value to ownership, not just from labor, but from the actual consumer.

Just an observation.

[hairshirthedonist]

http://en.wikipedia.org/wiki/Baumol's_cost_disease

Intro:

Baumol's cost disease (also known as the Baumol Effect) is a phenomenon described by William J. Baumol and William G. Bowen in the 1960s. It involves a rise of salaries in jobs that have experienced no increase of labor productivity in response to rising salaries in other jobs which did experience such labor productivity growth. This goes against the theory in classical economics that wages are always closely tied to labor productivity changes.

[hairshirthedonist]

Here's a more entertaining excerpt:

The original study was conducted for the performing arts sector. Baumol and Bowen pointed out that the same number of musicians are needed to play a Beethoven string quartet today as were needed in the 1800s; that is, the productivity of Classical music performance has not increased. On the other hand, wages of musicians (as well as in all other professions) have increased greatly since the 19th century.

[McKinneyTexas]

First of all, can people (not just McKT) stop referring to Africa as though it was some kind of homogeonous whole.

Africa is ethnically diverse, but economically homogeneous, or at least pretty much so.

The graph pretty much invalidates your argument that somehow things were the same under Reagan as they are now.

First, I didn't make that argument, second your link is hardly to an objective source.

I linked to numbers from Africa- your statement is factually incorrect.

I looked at your link. Not useful. Africa has widespread poverty and limited wealth, heavily concentrated at the top. Ratios between top deciles and bottom deciles don't mean much if the raw numbers are in the toilet.

Africa is emblematic of the inequality argument. You always have inequality--we agree on this--but in Africa you have a lot more equality, it's just all at the really crappy end of the stick.

A lot of "productivity" increases are really a matter of deliberately making the labor contribution as bone-headedly fungible as possible, so that the labor can either be totally shifted to the consumer, or so that jobs that might usefully actually involve some level of skill can actually be done by unskilled, low-paid people.

If what you are saying is: we have $2 burgers and we have $8 dollar burgers. One tastes better than the other. The reason is one costs more to fix. I agree with this. Labor drives the cost of goods, along with cost of materials, overhead, etc.

[Carleton Wu]

A lot of "productivity" increases are really a matter of deliberately making the labor contribution as bone-headedly fungible as possible... The net result is quite often an actually crappier consumer experience.

I dont think I agree. A lot of productivity gains happen on factory floors or via computers improving office efficiency. And while there are some downgrades in terms of customer service today:
1)They're being chosen by consumers. Personally, there are a lot of things Id rather buy online and not worry about crap customer service, if it means saving a few dollars. Just as the demand for chef-cooked burgers v quick and cheap burgers is clearly won by the latter- and not because of pressure by business owners.
2)There have been a lot of technological improvements too, even in customer service. I can call my bank and get through their automated system to do a number of routine tasks without ever having to wait for a CS rep. My monthly bills are paid automatically. etc.

To some extent what you're saying is true and maybe regrettable- in the sense that a semiskilled worker with a machine making pants may not produce the fine quality that a talented, experienced tailor could, but since he does so at a tenth of the cost the tailor-made pants become a luxury rather than a necessity. But in that exchange, I think you discount the impact of making those sorts of goods available cheaply, even if it does mean that the average pair of pants isn't as nice as it might have been in the past.

[Jacob Davies]

I said the America that someone born in 1943 grew up with, so, covering the 40s, 50s, and 60s. Which was certainly a place with a lot of problems, but was also a place where income growth was widely shared:

McKT: "Africa has widespread poverty and limited wealth, heavily concentrated at the top."

That is the definition of inequality.

[russell]

second your link is hardly to an objective source.

Dude, the link is to data from Emmanuel Saez, Professor of Economics at UC Berkeley, winner of the John Bates Clark medal, and a MacArthur fellow.

With respect, it seems to me that whenever you encounter data you don't like, you disparage it as being "not from an objective source".

You made the same claim about the freaking CIA Factbook numbers.

If you want to dispute numbers, you need to show where and how they are wrong, not just disparage the source.

And for the record, "equality" that consists of 90% of the people holding a pittance of the wealth is kind of a bad joke. Ain't nobody laughing.

If what you are saying is: we have $2 burgers and we have $8 dollar burgers.

What I'm saying is that you used to be able to get a $2 burger at a short order joint, cooked the way you like it, on the kind of bread you liked.

There aren't many short-order joints anymore because mass franchise operations have more or less run them out of town.

So, if I want a $2 burger, it's going to be crap beef, well done, with crap garnish and a styrofoam roll.

But anyone with a pulse can make it because the process by which it is made has been rationalized to a fare-thee-well.

See also "Subway" in the world of deli sandwiches and "Dominoes" in the world of pizza.

Good for the franchise owner, good for the franchise parent organization, not that great for the worker, crappy for me.

And it ain't just confined to food.

In a sane world, conservatives would be all about, for lack of a better word, terroir. In our world, they're all about money.

[liberal japonicus]

First, I didn't make that argument,

You did write

Some posts back, Russell cited a study showing that the top 20% control 80 or 90 percent of the country's wealth and have done so since 1970. Yet, commenters here frequently claim that today income is unequal, but back in the day, pre-Reagan, it was not.

What exactly is your argument? Or is it simply another jab at 'commenters here', without any argument to speak of?

second your link is hardly to an objective source.

The link was chosen for the graph, the underlying data and analysis are at http://elsa.berkeley.edu/~saez/ If you just saw Wolff's name and your knee jerked, well, at least you are consistent.

[Catsy]

I was sitting in the middle of the floor with our 1 year old boy today and we were flinging Duplo in all directions and I was thinking, you know, you really don't need much more than this. Four walls, a roof, a floor, indoor plumbing, refrigeration, cooking, heating, storage, Internet access, Lego.

Truer words have never been written on this site.

Then again, I'm the resident AFOL here, so I /would/ say that. You should see our den my workspace. :)

[russell]

But in that exchange, I think you discount the impact of making those sorts of goods available cheaply, even if it does mean that the average pair of pants isn't as nice as it might have been in the past.

That's a good point, and I don't discount it. I don't think automation and productivity gains through automation are universally bad things.

What I'm saying is that, in many areas, "increased productivity" has come at the cost of the quality of the good or service. Sometimes that yields a lower price, sometimes it doesn't. And where it does, quite often the lower price is achieved by the consumer doing more of the actual work.

Yes, it's convenient to buy stuff online, but for anything above and beyond tube socks it generally requires that you put in some time doing your own homework to figure out the value equation - what features are available, which ones are available in which combinations on what products, how do you compare the relative costs of each.

Self-service means you do the heavy lifting. Sometimes that translates as "convenience" because you can do it at 11:00 at night in your jammies, but nonetheless, the service is being provided by you.

And in the area of food, specifically, the kind of rationalization that supports industrial food production and delivery has become not just a matter of quality, but of public health.

[Jacob Davies]

Catsy: You should see our den my workspace.

Somewhat out of date setlist.

On the bottom-up/top-down thing, I thought it was fairly clear that I was looking at bottom-up. I talked about the fact that if you can obtain the essentials of a comfortable modern life in America, you are in a very good place. Unfortunately, securely obtaining those essentials has become more difficult rather than easier for much of the population.

The primary cause of that change is employment insecurity and (related) income-growth inequality leading to large absolute income and wealthy inequality. That makes obtaining and holding onto the basics of life more difficult, because secure employment is harder to find, disruptions in the housing market have made it harder to make sensible investments in real estate, and bidding-up effects have made it harder to buy a range of positional goods.

That old bit about "how does it make you worse off that your neighbor is richer?" never made any sense to me. It makes you worse off because your neighbor can and will out-bid you for goods and services and access of all kinds, starting with land and housing, also medical services and education, and also political access. As we've seen, politicians are more inclined to listen to those with a lot of money, because they can offer the best bribes.

In other words, it hurts you for your neighbor to be rich if you are poor. If everyone is rich, no problem, but that hasn't been the path we've been on.

[Hogan]

Not entirely OT: something for the lawyers in the house.

[McKinneyTexas]

What I said: Yet, commenters here frequently claim that today income is unequal, but back in the day, pre-Reagan, it was not.

What I didn't say: an argument that somehow things were the same under Reagan as they are now.

What exactly is your argument? Or is it simply another jab at 'commenters here', without any argument to speak of?

You can find nearly any article or statistic you want to justify pretty much any position you want to take. Progressives today are pointing to a past to make their point about current matters. They were doing the same damn thing back in the day. I was there. I saw it, read it, listened to it in class. The arguments are the same, yet you'd think with modern progressives' fondness for the past, it would be a movement that just got started, since things were so dandy back then, progressives weren't needed until now.

"equality" that consists of 90% of the people holding a pittance of the wealth is kind of a bad joke. Ain't nobody laughing.

Never said it was funny, it just happens to be what widespread equality looks like. Which is why I make my comparisons at the bottom and measure from the bottom up. Here, pretty much everyone measures from the top down.

it seems to me that whenever you encounter data you don't like, you disparage it as being "not from an objective source".

Generally, I view Marxist, Chamber of Commerce, American Prospect, National Review, New Republic or American Enterprise Institute-sponsored stats as suspect. Always have, always will. I distrust the vast number of advocacy stats. I did, however, go back and look at the chart. Pre-WWII, the numbers were about what they are today. A big decline at the beginning of WWII (anyone want to guess why). The disparity begins to build again, then flattens out from late sixties through the mid-Carter years. It's been steadily increasing ever since, now reaching pre-WWII levels.

1. What significance do we draw from this?

2. What policy solutions will make things better?

3. What is the definition of "better"?

If you just saw Wolff's name and your knee jerked, well, at least you are consistent.

See above for AEI et al. Bias selection plays a big role in what stats are selected and how they are interpreted.

[Uncle Kvetch]

I imagine that Jacob, Catsy, and any other Lego fans out there are already aware of this, but just in case...

[russell]

Pre-WWII, the numbers were about what they are today. A big decline at the beginning of WWII (anyone want to guess why). The disparity begins to build again, then flattens out from late sixties through the mid-Carter years. It's been steadily increasing ever since, now reaching pre-WWII levels.

1. What significance do we draw from this?

Pre-WWII: Depression and its after-effects, hard times.

Post-WWII: Broad economic well-being, extremely productive period in America's history, pretty good times for a lot of people economically speaking.

Reagan to now: Steady return to Pre-WWII kinds of inequality, growth in wealth limited to upper quintile, lots of folks having hard times.

Let's quit going back to pre-WWII.

[Phil]

Approximately during the time that McKTx says inequality has been "steadily increasing ever since," the number of tax brackets has collapsed from more than ten to five, and the top rate has -- with one notable exception, under Clinton -- been repeatedly slashed, from 91% to 39.6%. Pure coincidence, I'm sure.

You'd think, after nearly forty years, that trickle-down effect would finally kick in. How long, exactly, are we supposed to wait for that before we decide that it's not gonna happen?

[cleek]

You'd think, after nearly forty years, that trickle-down effect would finally kick in. How long, exactly, are we supposed to wait for that before we decide that it's not gonna happen?

$10 says the true believers have a long list of things which are preventing trickle-down from working. and all of those things are liberals' fault.

in other words: in a perfect economy, it would work just fine; but we don't have that economy.

see, also: real communism has never been tried.

[Carleton Wu]

You can find nearly any article or statistic you want to justify pretty much any position you want to take.

As a critique of a specific analysis, this is not useful. I mean, I understand that it's hard and all when the people on the other side of the debate are taking the time to come up with facts and numbers to support their positions, but if you've got a specific gripe about a specific fact or number please bring that up. A paen to innumeracy is downright anti-intellectual.

1. What significance do we draw from this?

Not sure what you mean. What factors are driving it? Id say offshoring and increases in globalization (combined with protection for the upper income earners again eg doctors) and decreases in unionization. Maybe something about the lack of effective corporate governance. Some more winner-take-all effects, although those are limited to specific fields.
There certainly isn't a general "as the economy grows, income distribution becomes more unequal" trend- if anything, the opposite has been true over moderately long periods of time, but I think that's more down to changes in sociopolitical structures. And those aren't useful for our discussion I think eg the change from hunter-gatherer to agrarian leads to much income inequality.

2. What policy solutions will make things better?
3. What is the definition of "better"?

I think a more progressive income tax would be better (and/or taxing capital gains as income) , combined with improvements in healthcare reform (aiming at severing the job-insurance link) and a renewed societal commitment to subsidizing education. The goals are: eliminating the deficit without cutting services, making the job market more flexible, and increasing the meritocracy and inter-class mobility, especially generational mobility. Which has iirc been dropping over the past 30 years.
I dont think that moderate increases in taxation at higher brackets would do much in the way of discouraging investment, either directly or 'investment' in one's career (eg going to medical school), esp judging by the historical impact of somewhat higher rates.

While I think that some of the forces driving income inequality are extrinsic to our society, just as with free trade I think it's important for the 'winners' to subsidize the 'losers' of such exchanges to smooth the transition (and, fundamentally, to prevent social forces from mobilizing against globalization which provides a net benefit to society). And some of these forces are intrinsic to our society- to the extent that this is the case, the damage to eg meritocracy and inter-class mobility is self-inflicted by the desire for that second porsche.
I think unions aren't an optimal solution, because they only serve to protect certain sectors and certain jobs, and can even work to the advantage of present-day workers and the disadvantage of future workers. The best solution would be society-wide: recognize that providing healthcare and education for members of the society is in the best interests of the society as a whole.

Personally, I dont care if people want to spend their money on McMansions or other conspicuous consumption. It's not even the income inequality that's problematic to me so much as the fact that vital goods (rather than luxuries) are being eroded out of the reach of many people. Without access to education and healthcare, we risk creating a relatively static underclass and a relatively static upper class, and that's a recipe for tremendous loss of human potential (as well as tremendous political instability).

[bc]

I'm not sure how effective only looking at real income is. Frex:

My uncle complained a few years back (about 7) that his brand-new GMC pickup cost him too much compared to the brand-new two-tone GMC he purchased in 1973. I remember the first truck. So I right there got on the internet and converted the $5k he paid in 1973 to then- (2003?) dollars. Came out around $26k. He then said "See!! Told you so!" (he paid around $28k). I then pointed out that his truck had 1) an extended cab; 2) anti-lock brakes; 3) 285 HP; 4) non-acid rain emissions, etc. etc. Yes, his purchasing power for at least a truck was greater in 2003.

I'm sure that doesn't apply across the board. I keep hearing purchasing power is diluted, especially when it comes to the basics of life, but our daily "must" expenditures now include cable tv, cell phones, a daily latte, etc. If we all lived in the post-WWII 2-3 bedroom bungalows we grew up in, canceled cable, dropped the I-phone, went back to one car, I wonder what our disposable income would be . . .

It looks like all income levels have increased since 1979. I get the disparity. But what to do? I thought raising taxes on the upper percentiles was to balance the budget. Are we talking about straight income redistribution? Larger tax credits? Why? Why give an incentive to end up at the bottom?

I'm fine with programs that allow one to subsist. I'm open to going beyond that too, but at some point we incentivize not improving your own lot in life, at least for most. For those that cannot, sure, we help more.

So I join with McKinney Texas in asking

What policy solutions will make things better?

and

What is the definition of "better"?

[russell]

What policy solutions will make things better?

What is the definition of "better"?

I'd say see Carleton's 4:02, on both counts.

[McKinneyTexas]

I think a more progressive income tax would be better (and/or taxing capital gains as income) , combined with improvements in healthcare reform (aiming at severing the job-insurance link) and a renewed societal commitment to subsidizing education. The goals are: eliminating the deficit without cutting services, making the job market more flexible, and increasing the meritocracy and inter-class mobility, especially generational mobility. Which has iirc been dropping over the past 30 years.

We agree on some point, others not.

I see, at the beginning, three elements here: a tax increase to pay for health care and more/better education. Which would then lead to a better economy. That's the premise. But, even if we had national, single payer health care right now and if we'd spent twice over the last 20 years on education than we did, we'd still be where we are today, which, leaving aside the question of whether more money spent on education will get us better student results, raises the cause and effect between health care/education and a better economy.

the fact that vital goods (rather than luxuries) are being eroded out of the reach of many people. Without access to education and healthcare, we risk creating a relatively static underclass and a relatively static upper class, and that's a recipe for tremendous loss of human potential (as well as tremendous political instability).

Which vital goods? Who lacks access to education and where? Leaving aside the health case access debate, the country has survived more than 230 years without universal health coverage with no resulting political instability. What do you see changing?

Carleton, I have several disconnects and one over-arching concern. The first is the cause and effect between universal health care and fueling an economy. Second, how would income inequality be redressed by somewhat higher taxes (higher taxes make people less interested in making money?)? My concern is that the progressive list of gov't priorities isn't short. It isn't cheap either. We can add X incrementally to the marginal rate for one priority, then add Y to the rate for another priority, then add Z yet again. In time, there won't we any more room to jack up taxes and there will be huge, immovable entitlements.

[McKinneyTexas]

Approximately during the time that McKTx says inequality has been "steadily increasing ever since," the number of tax brackets has collapsed from more than ten to five, and the top rate has -- with one notable exception, under Clinton -- been repeatedly slashed, from 91% to 39.6%. Pure coincidence, I'm sure.

Thanks for this, Phil. It was out there all the time and I missed it. Another recurring theme by some on the left is that confiscatory tax rates don't necessarily discourage people from working and making as much as they can. Yet, as rates fell, those that could make more did make more. All those extra dollars, taxes were paid on them (or should have been), thus showing that lowering taxes increases tax revenues by increasing the desire to earn more money. Thanks, Phil!

[Uncle Kvetch]

thus showing that lowering taxes increases tax revenues

And yet I keep hearing all this fuss about a "budget deficit." But I'm sure the people complaining about that are just looking at the wrong sources.

So, what else is there to say? We just have to wait for the next Republican administration. Another round of massive tax cuts for the wealthy will result in higher revenue, which can then fund a better safety net for the people at the bottom. It's win-win! Color me convinced!

[russell]

the country has survived more than 230 years without universal health coverage with no resulting political instability

The folks in my town did burn a private smallpox hospital down, partly out of a general dislike for having a smallpox clinic around, and partly because folks thought (with some justification) that only rich people would get treatment.

We're a historically rowdy town. But that's kind of another story.

For "health care" substitute "wealth disparity", set the way-back machine to the turn of the 20th C., and you will find lots of social unrest and political instability.

Bombs, assassinations, riots, strikes complete with private armies dueling it out with workers in the streets. Violence, bloodshed, and mayhem.

Good times.

This is not an academic discussion.

[Hogan]

the country has survived more than 230 years without universal health coverage with no resulting political instability.

Of course, for most of that time doctors had pretty much no idea what they were doing. Now they do, a lot of the time, and what they're doing costs money.

[Carleton Wu]

Another recurring theme by some on the left is that confiscatory tax rates don't necessarily discourage people from working and making as much as they can. Yet, as rates fell, those that could make more did make more.

First, correlation is not causation.
Second, the Clinton-era tax increases and Bush tax cuts don't demonstrate this kind of change (despite predictions by many on the right that they would do so).
Third, if these tax rates were inhibiting economic activity the economic expansion postwar doesn't seem to make sense.
Fourth, all taxes are confiscatory. Perhaps you mean "high".
Fifth, look at the chart again. Do you see the burst of economic activity as the already-wealthy work harder and make even more money after 1980? You do not. What you see is income stagnation among the poor, not a burst of economic activity among the already-wealthy.

[McKinneyTexas]

Bombs, assassinations, riots, strikes complete with private armies dueling it out with workers in the streets. Violence, bloodshed, and mayhem.

Good times.

This is not an academic discussion.

Russell: I am as "On the Beach/Alas Babylon/Nature Abides" pessimistic (in a non-biblical way) as anyone, but a revolution fueled by current or projected income inequalities is not high on my list of likely culprits to bring about the End of the World as We Know IT. Think of all the countries much worse off than the US and note that widespread revolution is not taking place. Population overload, disease, the inevitable and irreversible consumption of non-renewables, these are where the rubber meets the road. Not a damn thing to be done about it either, as a practical matter.

Of course, for most of that time doctors had pretty much no idea what they were doing. Now they do, a lot of the time, and what they're doing costs money.

Fair point. Do you see revolution on the horizon if 85% of the population is insured privately? Or even 75%? Given the presence of medicare/medicaid?

[Carleton Wu]

If we all lived in the post-WWII 2-3 bedroom bungalows we grew up in, canceled cable, dropped the I-phone, went back to one car, I wonder what our disposable income would be . . .

That may be true. But some things- education and health care in particular- have got a lot more expensive. And you're asking people to go back 50 years in their standards of living.
Since the late 70s, real income has barely budged for many people in America while those two things have skyrocketed. So they're getting further and further out of reach. So yeah, maybe the middle class could reclaim those two things by radical downsizing to the lifestyle of 1950. But isn't that asking a bit much, when the US has achieved a great deal of growth in GDP during the last 30 years? If we were facing some national disaster that required us all to sacrifice, that would be one thing. But what we're facing is exploitation by the wealthy and the pressures of globalization.
It's similar to the siutation in the early 2000s- we were told that America had to sacrifice to wage war in Iraq and Afghanistan- but that we also had to cut taxes on the wealthy. Rather than shared sacrifice, we have sacrifice by one class and the reaping of the benefits by another.

I see, at the beginning, three elements here: a tax increase to pay for health care and more/better education. Which would then lead to a better economy. That's the premise. But, even if we had national, single payer health care right now and if we'd spent twice over the last 20 years on education than we did, we'd still be where we are today...

Do you mean, facing this particular financial crisis (possibly), or with the same levels of income inequality (unlikely IMO)? And, if you mean the current crisis- sure, I expect that there will be crises and bubbles and recessions on into the future, but that doesn't mean that an economy with a better-educated and more mobile citizen base would not be healthier and more productive than one where education and healthcare were/are increasingly dependent on socioeconomic class.

Which vital goods? Who lacks access to education and where? Leaving aside the health case access debate, the country has survived more than 230 years without universal health coverage with no resulting political instability. What do you see changing?

Perhaps you have heard about increases in college tuitions in the past decade or two? Simple economics dictates that, as you make something more expensive, you make it harder and harder for individuals to purchase.
As for healthcare- for a long time effective healthcare wasn't even a possibility. Healthcare now is becoming too expensive for those without insurance- and similarly to what I said to bc,you cannot expect people to forego this, and the fact that eg chemotherapy was unavailable to Paul Revere is no comfort to someone who loses a loved one because it is unobtainable to them. Thinking that people would not be upset about losing loved ones to treatable diseases so that the doc or insurance exec can get that second porsche is a unusual, let-them-eat-cake view of human nature.
Furthermore, effective healthcare, especially 1)for pregnant women and young people and 2)preventative care and diagnostic tests, are incredibly cost-effective for individuals and for society as a whole.

Second, how would income inequality be redressed by somewhat higher taxes (higher taxes make people less interested in making money?)

Like I said, I dont want to make income inequality go away; it's an important incentive towards self-improvement and entrepenurialism. I want to maintain high socioeconomic mobility by making sure that people of all economic classes have the resources to improve themselves, and that the next generation is not hampered by either medical issues or lack of education from jumping to the next strata. Healthcare is similar, insofar as poor health tends to strand people in their current positions or even make the into burdens on their families rather than contributors to them.
I dont want everyone to make the same amount of money. I dont want everyone to have 5 cars, it's perfectly fine for the successful to waste money in the manner than they choose. But when they get to the point of crippling the lower classes' chance for advancement, then I think it's a serious problem. There is a difference between milking the cow and making steaks from it.

[Phil]

Wow, I wish I was well off enough to play the glib Panglossian. Must be nice.

[liberal japonicus]

Pre-WWII, the numbers were about what they are today.

It must be nice to have the personal time machine with the goalpost storage. But be aware that the time you spend jetting from era to era means that you often miss what is being discussed.

[Phil]

Another recurring theme by some on the left is that confiscatory tax rates don't necessarily discourage people from working and making as much as they can. Yet, as rates fell, those that could make more did make more.

Actually, not a single thing shows that they made more. It shows only that they were taxed less at the same income levels.

I also love, love, love all the things that need to be unpacked from "those that could make more," and am HIGHLY interested in your glib analysis of those that could not make more, if you'd be so kind as to entertain me.

Troll harder next time.

[russell]

I am as "On the Beach/Alas Babylon/Nature Abides" pessimistic (in a non-biblical way) as anyone, but a revolution fueled by current or projected income inequalities is not high on my list of likely culprits to bring about the End of the World as We Know IT.

I never read any of those books, so I'm not sure what you're referring to. I'm not talking about the End Of The World, and I'm not talking about the Third World, that's not where I live.

I'm talking about people shooting at each other and blowing each other up because they're pissed off about getting a crap economic deal, whether real or imagined.

That kind of stuff happened, here, at a significant level and for an extended period of time in the years immediately leading up, and after, the turn of the 20th Century.

McKinley was assassinated, Wall St was bombed, other government officials and institutions were targeted for violence, there were riots. Those were the anarchists.

The early labor movement was marked by *a lot* of violent unrest, which was often countered by business owners hiring private armies to fight striking workers, with guns.

There are lots of other examples. I do mean lots.

It's not some weird Armageddon fantasy, it's American history.

People got pissed off and shot at each other. Over money, and the disparate level of access thereto. That shouldn't come as a surprise to anyone.

This is not a theoretical or academic discussion.

If we all lived in the post-WWII 2-3 bedroom bungalows we grew up in, canceled cable, dropped the I-phone, went back to one car...

You know, not for nothing, but when I was a kid we had milk, bread, and eggs delivered right to our door a couple of times a week, a guy came around in a truck to sharpen knives while you waited, and doctors made house calls.

The arc of convenience and/or value added services doesn't just go in one direction.

[Phil]

I'm talking about people shooting at each other and blowing each other up because they're pissed off about getting a crap economic deal, whether real or imagined.

That kind of stuff happened, here, at a significant level and for an extended period of time in the years immediately leading up, and after, the turn of the 20th Century.

Isn't "disgruntled worker gets fired, returns and shoots up workplace" a common enough occurrence that we can say it's happening now? I mean, sure, it's not happening en masse, but I don't see any indicators that it's getting better rather than worse, either.

[McKinneyTexas]

People got pissed off and shot at each other. Over money, and the disparate level of access thereto. That shouldn't come as a surprise to anyone.

Anarchists and Marxists did these things. Not because they were poor but on behalf of the poor, or workers, or what have you.

It must be nice to have the personal time machine with the goalpost storage. But be aware that the time you spend jetting from era to era means that you often miss what is being discussed.

Well, I am pretty sure it was a chart showing income inequality going back to the beginning of the 20th century. Not a time machine, no goalpost moving, just a chart

[Jacob Davies]

McKT: Which vital goods? Who lacks access to education and where?

Housing, food, healthcare?

Housing:

After holding steady at 12 percent in both 1980 and 2000, the share of severely burdened households (spending more than half their incomes on housing) jumped by a third, to 16 percent, in 2008 (Figure 29). A record 18.6 million households faced these high cost burdens that year, an increase of 640,000 since 2007 and 4.7 million since 2001. Living within these households were 44.2 million Americans, including 13.7 million children. ... The nation’s 4.5 million single parents in the lowest income quartile, along with their 9.1 million children, face the worst affordability challenges. They have greater space needs and must worry more about safety and school quality when choosing homes than households without children. Half of lowincome single-parent households spent 63 percent or more of their incomes on housing in 2008. Low-income minority single-parent households had even harsher cost burdens. ... Between 2006 and 2009, the number of bankruptcies per year climbed from 600,000 to 1.4 million, while the number of homes entering foreclosure per year (based on reports from servicers of roughly 85 percent of all mortgage loans) tripled from 800,000 to 2.4 million

Food:

http://www.ers.usda.gov/Publications/ERR83/ERR83.pdf

Eighty-five percent of American households were food secure throughout the entire year in 2008, meaning that they had access at all times to enough food for an active, healthy life for all household members. The remaining households (14.6 percent) were food insecure at least some time during the year, including 5.7 percent with very low food security — meaning that the food intake of one or more household members was reduced and their eating patterns were disrupted at times during the year because the household lacked money and other resources for food. Prevalence rates of food insecurity and very low food security were up from 11.1 percent and 4.1 percent, respectively, in 2007, and were the highest recorded since 1995, when the first national food security survey was conducted.

Healthcare: