Income inequality and the American Dream
[Posted by Karl]
A new poll from The Hill has two-thirds of likely voters saying the American middle class is shrinking, and 55% believing income inequality has become a big problem for the country, so it’s worth a quick update on the latest critiques from left and right.
James Pethokoukis briefly responds to a Columbia Journalism Review blog attack from Ryan Chittum. It’s a restrained response, given the tendentious cherry-picking in the Chittum piece. Unsurprisingly, Paul Krugman loved the Chittum piece, again working the Godwin-ning meme that anyone disagreeing with the lefty line on the issue is a “denier.” Indeed, Pethokoukis has recently agreed that income inequality has increased somewhat in recent decades, which of course would be proof to Krugman of just how devious the deniers are. All that’s going on here is that lefties want to conflate debate over whether income equality is exploding, or a danger to democracy, or proof the rich have been exploiting the poor for decades, with a denial of the existence income inequality itself. It’s a strawman, but sporting a top hat and monocle.
Incidentally, Census Bureau data suggests income inequality has been flat since 1994. If I was as tendentious as Chittum or Krugman, I would note the emergence of Republican Congresses during this period, although it’s likely there were larger forces at work.
Meanwhile, at National Review, Robert VerBruggen either doesn’t understand or isn’t convinced by some of the arguments from the right regarding income mobility and inequality (I would advise him to watch or read the recent PBS interview with Richard Epstein or this Will Willkinson paper to get a better understanding of the inequality issue). VerBruggen’s primary objection is based on the example of someone becoming richer during their lifetime, which according to VerBruggen, is “not the kind of income mobility we mean when we talk about the American Dream (which might be more accurately called class mobility).” However, I doubt he would want to live in an America without the example he describes.
Moreover, it seems that the concept of the American Dream VerBruggen describes is one of intergenerational income mobility. On this point, by one measure, the rate at which people move to income quintiles that are different that that of their families of origin is roughly 60% — slightly less than in the 1960s, the era progressives celebrate as a period of greater income equality overall. By another measure, data from the Pew Economic Mobility Project show that, adjusting for the smaller size of today’s households, four fifths of Americans have surpassed their parents. Could we be doing even better on that score? Although studies showing European countries doing better are open to dispute, America arguably could be doing better. As the Brookings Institution’s Ron Haskins put it in 2009:
Poverty in America is a function of culture and behavior at least as much as of entrenched injustice, and economic mobility calls not for wealth-transfer programs but for efforts that support and uphold the cultural institutions that have always enabled prosperity: education, work, marriage, and responsible child-rearing.
Thus, the inequality debate is not nearly as relevant to the more important question of mobility as it sometimes seems to many advocates and politicians. Inequality is a cloudy lens through which to understand the problems of poverty and mobility, and it does not point toward solutions. Great wealth is not a social problem; great poverty is. And great wealth neither causes poverty nor can readily alleviate it. Only by properly targeting poverty, and by understanding its social, cultural, and moral dimensions, can well-intentioned policymakers hope to make a dent in American poverty — and thereby advance mobility and sustain the American Dream.
Haskins excepted, changing the culture and behavior of poverty, however, is not something that interests most lefties. It’s much easier — and much more comforting — to demonize “the rich.”
–Karl
Ding!
Karl (f8f210) — 11/1/2011 @ 7:05 amWith technology increasing our quality of life and easy credit creating a paper-bubble of riches it was easy thru the 90s to ignore any perceived inequality.
Now, we’re mostly paper-poor. Mutual funds removed $100 Billion from equities in 2010 and is accelerating in 2011 as boomers retire.
Corzine, former Goldman Sachs pillar, just got $12 Million severance for ruining 2800 jobs in like 12 months.
Harder to ignore inequalities like that with homes down 33% and headed well lower with property tax levies in the morning mail.
gary gulrud (d88477) — 11/1/2011 @ 7:38 amI was certainly in different income quintiles when I graduated from college, at age 30 and at age 40. This is a concept of mobility the left want to deliberately ignore, the moving parts under the statistical measures. They seem to have an engrained belief that the same people are stuck in the same quintiles forever, which is far from the truth.
daleyrocks (bf33e9) — 11/1/2011 @ 7:46 amA link-filled piece from Insty this morning. RTWT.
“I can’t help but notice that anti-Americanism, and the various manifestations of what some have called Transnational Progressivism, are most common among people who, well, have state-supported managerial or intellectual jobs, the people who made up what Milovan Djilas and others called the “New Class” of bureaucrats and managers in the old Communist world. Not surprisingly, the New Class was deeply concerned with matters of status and position, and deeply opposed to things that might have led to competition on merit. There’s nothing new about such a view, which predated communism: As David Levy and Sandra Peart note, it’s an attitude that even in the nineteenth century was characteristic of anti-capitalists and anti-semites – and, nowadays, there’s a lot of overlap between anti-capitalists, anti-semites, and anti-Americans.
A common thread among anti-semitism, anti-capitalism, and anti-Americanism is the fear of being outdone by people willing to work harder. It’s not surprising that such a fear exists among a disproportionate number of those who take state-supported jobs. It’s thus not surprising, then, that New Class sensibilities are so often anti-American and anti-capitalist, and increasingly (or perhaps I should say, once again) anti-Semitic, too. The New Class, in this regard, as in many others, is like the old haut-bourgeoisie.”
“The New Class is characterized as much by self-importance as by higher income, and is far more eager to keep the proles in their place than, say, Applebaum’s small-town dentist. It’s thus not surprising that as its influence has grown, economic opportunity has increasingly been closed down by government barriers.”
daleyrocks (bf33e9) — 11/1/2011 @ 8:07 amGreat topic for discussion on many levels. And if the campaign theme pushing the horrors of “income inequality” is not being pursued dishonestly, with vigor, and in complete coordination by the fully reconstituted Journolist/OFA I’ll eat my hat.
The choir is singing the same song. Every mainstream paper, semi mainstream site, and leftist blog has flogged this in near unison over the past two weeks. Coincidence? Oh, I think not, Senor Axelrod. Nearly identical comments left by “Occupiers” from coast to coast on multiple boards and in interviews say “well we may seem a little unfocused and we may not have all the answers, but at least we’re bringing the issue of the 1% to the public square. We’re raising awareness. We’ve forced the media to start addressing basic income unfairness in America. Yeah, kiddoes. Sure you have.
elissa (94a9da) — 11/1/2011 @ 8:24 amI would like to hear someone argue why they think they should be making exactly the same as the protesters in these Howard Stern OWS interviews.
Kevin M (563f77) — 11/1/2011 @ 8:25 am“well we may seem a little unfocused and we may not have all the answers”
elissa – A sign one of my sons saw when visiting with the New York OWSers:
We’re Here
We’re Unclear
Get Used To It
daleyrocks (bf33e9) — 11/1/2011 @ 8:36 amOh dear, it looks like Corzine caused a little more trouble than that in Newark, Camden and Manhatten:
http://www.zerohedge.com/news/liquidity-scramble-begins-mf-commingling-aftermath
Lehman-the Sequel
gary gulrud (d88477) — 11/1/2011 @ 8:47 amit is difficult for one to increase their income, either by landing a new, or even any, j*b, or start a business here in California when pretty much every session of the legislature since the 1970’s and damn near every governor have gone out of their way to make it impossible for businesses to survive here, let alone thrive.
i blame the government (to include the so called educators), the idiots raised to think and vote as if the government can solve every problem for them, and the MFM that drives the reinforcement loop that powers the whole disastrous mess.
redc1c4 (fb8750) — 11/1/2011 @ 8:52 amLooks like background for further discussion:
http://www.d.umn.edu/~bmork/2306/Theories/BAMconflict2.htm
gary gulrud (d88477) — 11/1/2011 @ 9:08 am11. How are inequality theorists like cargo cultists?
gary gulrud (d88477) — 11/1/2011 @ 9:13 amGreetings:
Back, way back to most, during my initial college days, I took a sociology course that dealt with the subject of poverty. The short version is that one of the then hallmarks of the middle class was identified as “the ability to delay gratification”. Basically, that ability was what economists often refer to as the “forced savings” which capitalists and entrepreneurs amass to get their businesses up and running.
Alternatively, the impoverished were thought not to have much of this ability. The example used was the arrival of a monthly welfare check prompts a spending spree that results in no funds being available at the end of the month. Impulsive behavior overpowered their ability to delay gratification.
As to the cultural aspect of poverty, back in the mid-’70s, I spent a short time working in the social service industry. I was an intake interviewer for then President Ford’s “Work Incentive Program” also know by the acronym WIN. I was interviewing a young girl who had dropped out of high school and was living with her mother who was a welfare recipient. As I tried to delve into her psyche to determine what type of training she might be interested in, I asked her about her personal goals. Initially, she seemed unsure about what I meant, so I explained a bit more. Suddenly, her demeanor brightened as she seemed to come up with an answer. “Oh, yeah,” she said, “I want to open my own case.” which meant having her own welfare case and being emancipated from her mother’s. Nice work if you can get.
11B40 (085a33) — 11/1/2011 @ 10:29 amI believe there was some fuss about the Seattle school board asserting that future time orientation was racist. Took that down after some difficulty.
Richard Aubrey (a75643) — 11/1/2011 @ 10:53 amYeah, changing culture requires judgmentalism and sanctions–some pretty harsh like ending assistance–and that makes liberals uncomfortable. They’d rather feel superior to conservatives than to the folks in the ‘hood, which would be the case if they tried to change the culture.
The OWSers are just fear-mongering.
DohBiden (d54602) — 11/1/2011 @ 10:57 amGary, @8: I don’t fully understand the MF Global situation, but it’s pretty scary from what I do understand.
It looks like the company failed in a basic customer service duty in a way which seriously calls into question whether the regulations which allegedly prohibit such failures are being enforced. As such, people are reacting the way they would if there were no regulations: with fear that other similarly situated companies are doing the same thing.
Of such fears are panics produced.
aphrael (5d993c) — 11/1/2011 @ 10:58 amI believe America under Obama is run like a Crime syndicate. They the Obamas want to keep you dependent on them so they can get their paycheck IMO.
DohBiden (d54602) — 11/1/2011 @ 10:59 am15. Traders, like CME the commodity exchange, call for margin, i.e., collateral to make their clients trades.
MF, following the hiring of Corzine, started buying up EU sovereign debt because the yeilds were skyrocketting, e.g., 4-week US notes are paying 0.0%, you earn nothing.
As they ran into trouble MF lost track of the distinction between its clients margin and its cash flow, paying client money in redemptions.
Now small traders are in a world of hurt with redemption calls from their own spooked clients.
Trading volume on some Asian commodity markets has been halved. Liquidity, the crux of the EU Banks problem is spreading to other financial markets.
gary gulrud (d88477) — 11/1/2011 @ 11:25 amLooks like 2007. Or 1931.
:{
aphrael (5d993c) — 11/1/2011 @ 11:27 amRather, a lack of liquidity. US money markets will not lend dollars on short-term basis, to EU banks, therefore Bennie has agreed to start paying directly dollars for any currency they have on hand bypassing the FX markets.
gary gulrud (d88477) — 11/1/2011 @ 11:29 amStop with the fear-mongering
Using your logic Aphrael.
DohBiden (d54602) — 11/1/2011 @ 11:37 am18. Indeed, my intent isn’t to fearmonger, or chase ambulances as much as its to walk, not run, to the fire alarm.
Even tho the CPI since the 90s has a 40% weight in home values current inflation is 4.0%. With a collapse in housing thats a few per cent in yearly drag that’s being overcome by the rise in prices. August producer inflation, prices paid over asked, was 0.8% for the month.
So even Bennie’s “core” inflation is heating up. When he prints money to help the EU, Japan prints money to protect its exports which its doing now. The yen was under 76 per dollar, now with the infusion of 5 Trillion yen, its over 79 this weekend.
Well that means every other currency has to respond by dumping their dollars and we get runaway inflation, probably, because no central banker can stop themselves.
gary gulrud (d88477) — 11/1/2011 @ 11:39 amColumbia ‘journalism’ review. Journalism. Really?
alvah halle (77ff02) — 11/1/2011 @ 11:41 amJournalism. Where? Where, man?
” dumping their dollars ”
While FX traders like holding the yen or the Swiss franc(tho thats changed a bit since the franc is pegged to the euro at 1.2 per since August) because they can get rid of them in any case, and make a profit if their value with respect to the dollar goes up,
no one really wants the Mexican peso. The Mexicans have oil so they have say 50 Billion or more dollars on hand from selling oil that they haven’t spent on themselves. They turn around and buy pesos with those dollars on the FX market and boost the value of the peso and keep their export prices stable, the price of US corn, etc.
These means more dollars on the market, more Japanese yen, more oil dollars for pesos, pounds, kroner, etc., a vicious circle. But the value of the dollar keeps declining since 70% of all sovereign reserves are in dollars.
This nasty side-effect of being the world’s reserve currency means our GDP is inflated spuriously, and our CPI deflated, our prices are going up faster that the Ministry of Truth allows.
gary gulrud (d88477) — 11/1/2011 @ 12:22 pm“…It’s much easier — and much more comforting — to demonize “the rich”…and spend their money!
All the rest is hard work, “a job American’s won’t do”.
FTFY!
AD-RtR/OS! (6cdad1) — 11/1/2011 @ 12:24 pmDohBiden, the slight difference is that Gary proclaimed as fact “this has happened” when it had not, in fact, happened. It’s a bit like CNN reporting that Gabby Giffords was dead when she wasn’t.
That said, this kind of crisis is very difficult to talk about because modern international finance is a confidence game, and talking about the risks undermines the confidence and can cause the game to collapse.
aphrael (5d993c) — 11/1/2011 @ 12:30 pmThe issue with Greece is that following EU union they lost their currency the drachma. Greece doesn’t make anything but ouzo so tourism is all they have, double billing customers in Athens restaurants.
So they’ve been on the dole from Maastricht on. Well two years back they came hat in hand cause they needed an increase in allowance so they were told to cut their debt, standing at 120% of GDP. But they lied, it was really 136%. Then they did no better than 85% of any austerity target.
All the while revenues are contracting 5%. Now their debt is 150% of GDP and they will take in 12 Billion thru December, total, and owe 16 Billion.
To save Greece, Portugal, Ireland, Italy, France, etc., will require Germany, Holland, Austria and Finland risk 56% of their GDP, i.e., they pick up the tab for the shortage on the bank loans ad infinitum as the cost of borrowing leaves orbit for Alpha Centauri.
NFW. It is over, and the fat lady only has the high notes left.
gary gulrud (d88477) — 11/1/2011 @ 12:43 pmThose college degrees in Wimmyns Studies are just not paying off like they used to.
daleyrocks (bf33e9) — 11/1/2011 @ 12:52 pm25. I thought I heard a high C, but being as I no longer hear very well and have to lip read, watch the heave of her bosom, etc., I screwed up by a few days.
gary gulrud (d88477) — 11/1/2011 @ 12:52 pmGary: yeah, you’ve already conceded that and retracted it. I have no issue with you; I was merely mentioning it again to try and distinguish what triggered my comment about ‘fear-mongering’ from whatever it is I’ve said that DohBiden was objecting to.
aphrael (5d993c) — 11/1/2011 @ 12:56 pm29. Gotcha. I read somewhere today, there are more Porsches in Athens than people claiming to earn 50K in euros. Probably hyperbole in which I love to wallow.
“they lost their drachma”
When FX value of ones currency erodes you have two choices, spend dollars or yen to prop it up– the Norks lacking either extort with nuclear threats–or go without. The value of one’s currency is debased and no one affords luxuries.
The Greeks won’t do without but they will burn their country to the ground and declare themselves destitute.
gary gulrud (d88477) — 11/1/2011 @ 1:13 pmIf Corzine got $12MM in severance (by his employment contract I would hope), he’ll need every cent of that to pay his lawyers to;
a) keep out of jail for fraud;
b) pay off the customers of MF who’s funds were comingled with those funds belonging to management and subsequently lost.
And this is a guy who was on the short list to succeed Turbo-Tax Timmie in a Millstone 2nd-term.
AD-RtR/OS! (6cdad1) — 11/1/2011 @ 1:13 pmThe value of one’s currency is debased and no one affords luxuries.
Well, at least not imported luxuries. If you can make the luxuries inside your economy …
What should happen is that a drop in the value of your currency renders things you produce cheaper on the international market, enabling you to sell more of them. But a currency union is hard.
aphrael (5d993c) — 11/1/2011 @ 1:22 pm31. Didn’t know that but it does reinforce the notion that this admin is flat busted(bastard if one slows down and enunciates). Dead Meat has got nothing to run with and his resort to the Undermedicated Left means diminishing returns.
There’s room another national party this one time.
gary gulrud (d88477) — 11/1/2011 @ 1:25 pm32. Agreed. Some believe this is Bennie’s gambit. Pretty desperate since everyone who made anything in the US is either retired or a short timer.
gary gulrud (d88477) — 11/1/2011 @ 1:28 pmA Third-Party movement will just guarantee the continuation of the current administration – unless you can conjure up a scenario that would compare to the lead-up to 1860.
AD-RtR/OS! (6cdad1) — 11/1/2011 @ 1:30 pmBut, how much would another Civil War cost?
DC has been “talking down the Dollar” for two decades – it hasn’t made anything any better.
AD-RtR/OS! (6cdad1) — 11/1/2011 @ 1:33 pmArguably, it has made it worse, since as the Dollar declines in value, the cost of imported petroleum increases, fueling inflationary pressures in the home market.
35. That’s exactly my drift–not that I’m a leader of men, or clued into our fellow citizens empathetically, sympathetically or otherwise.
But we have a profound dissatisfaction with government in general and individuals therein in particular. The Examiner, I believe, had a column up last week showing the lackluster numbers for the GOP well shy of 40 percent nationally were indicative of eventual defeat, but never has an incumbent been so weak.
In 1860 Buchanon did not run for re-election. Hard to be weaker than that.
And there’s the problem that we are short a nationally known Lincoln. But then I’m tipping my hand.
gary gulrud (d88477) — 11/1/2011 @ 1:57 pmLeftys continue playing the race card.
DohBiden (d54602) — 11/1/2011 @ 2:33 pmSo real economic mobility redounds to the causes of smaller, less intrusive government, states rights, tax reform, tort reform, return of state lands, sunsetting of bureaucratic regulation, on and on.
Teabagger platform.
gary gulrud (d88477) — 11/1/2011 @ 2:36 pmSo real economic mobility redounds to the causes of smaller, less intrusive government, states rights, tax reform, tort reform, return of state lands, sunsetting of bureaucratic regulation, on and on.
“Free Soil, Free Labor, Free Men” not much changes.
Kevin M (4eb9c8) — 11/1/2011 @ 3:13 pmMore critically, since a strong part of the issue involves people actually taking responsibility for their own part in their lack of mobility (drugs, lack of schooling, unreliability and irresponsibility by choice, etc.) and does NOT involve giving more power to Leftys in government, it’s a heck of a lot more immediately profitable.
IGotBupkis, Unicorn Entrepreneur (2fb1c2) — 11/1/2011 @ 3:48 pmNice try.
Larry Reilly (becb24) — 11/1/2011 @ 6:27 pmBut ultimately your argument fails because the unemployed can’t eat sophistry, though you and others like you are producing it at such a rate we won’t be off-shoring it for quite a while.
you can’t eat sophistry but you can eat tasty jalapeno starkist tuna
yum!
happyfeet (3c92a1) — 11/1/2011 @ 6:33 pmBut ultimately your argument fails because the unemployed can’t eat sophistry, though you and others like you are producing it at such a rate we won’t be off-shoring it for quite a while.
That is extremely funny stuff coming from a supporter of Mr. Impoverishment, Barry Obama!
ColonelHaiku (fbf87d) — 11/1/2011 @ 6:39 pmKeep your chin up, Lawee, Obama will have you on foodstamps, as he has 42,000,000 other Americans.
That is, if you’re not already on them.
ColonelHaiku (fbf87d) — 11/1/2011 @ 6:44 pmFood stamps aren’t so bad, the glue is really tasty this year.
AD-RtR/OS! (6cdad1) — 11/1/2011 @ 7:10 pmThe way the economy is going we will be forced to go on food stamps.
DohBiden (d54602) — 11/1/2011 @ 7:27 pmJust for the sake of clarity I wonder if Larry sees any difference –any difference at all– between a household comprised solely of multi generational unemployed and unemployable people, versus a struggling family whose breadwinner lost his job repairing pipelines in 2010.
elissa (94a9da) — 11/1/2011 @ 7:30 pmThe petromarket is coming home, though, so what does that do to your comment?
IGotBupkis, Unicorn Entrepreneur (2fb1c2) — 11/1/2011 @ 8:16 pmHow in God’s name does Obama think you can fix a market economy by instituting command-economy practices? Keynes didn’t even believe that; he argued that government should spend to increase demand for the things that the private sector sells, never to prop up and expand bureaucracy for its own sake.
Instead of increasing the force behind the economy through demand, as Keynes suggested, Obama is increasing the friction under it.
(never mind that there are better ways than Keynes, there are worse ones too, and that’s where we are now)
Kevin M (563f77) — 11/1/2011 @ 8:38 pm“Just for the sake of clarity I wonder if Larry sees any difference –any difference at all– between a household comprised solely of multi generational unemployed and unemployable people, versus a struggling family whose breadwinner lost his job repairing pipelines in 2010.”
elissa – Larry is not interested in solutions, just rhetoric.
daleyrocks (bf33e9) — 11/1/2011 @ 9:36 pmIf a libtard was in charge of the CIA we would be selling Israels ecrets to Iran.
DohBiden (d54602) — 11/1/2011 @ 9:55 pmAhhhhhhhhhhh yes the left love to project their views onto us don’t they.
DohBiden (d54602) — 11/1/2011 @ 10:02 pmThe lefts definition of communism?
DohBiden (d54602) — 11/1/2011 @ 10:05 pmsecrets*
DohBiden (d54602) — 11/1/2011 @ 10:08 pmMan, you better not let certain segments of the right-wing blogosphere hear you trying to repress free speech by saying that anyone who uses the word “denier” is using Godwin-tactics.
That word meant what Paul Krugman meant it to mean, not what you mean for him to have meant it to mean. Meany.
Leviticus (624ba1) — 11/2/2011 @ 8:44 amLeviticus, everyone who uses that word, including the slimy Krugman, intends to invoke the image of Holocaust Denial. It shows the lack of character rather clearly.
And similar to the use in the AGW debate, its intended to both smear skeptics and misrepresent the nature of the dispute.
Its slimy and dishonest.
SPQR (26be8b) — 11/2/2011 @ 9:46 am