Patterico's Pontifications

11/24/2015

Bernie Sanders Is Wrong: Part 1: The Bottom 20% Does Not Remain Constant

Filed under: Economics,General — Patterico @ 9:08 am

Lately I have been reading The Thomas Sowell Reader — a collection of essays and passages from across the gamut of Sowell’s writing. One of Sowell’s most valuable contributions comes in the form of hard statistics showing that people like Bernie Sanders are wrong.

Over the next few days, I will present some of the most compelling statistics in different categories, showing Bernie Sanders is wrong. I’ll start with movement between income categories.

MOVEMENT BETWEEN INCOME CATEGORIES

Sanders implies that the top 20% of income earners is a block of powerful people, getting rich at the expense of everyone else:


Sanders fails to recognize that income categories are not stagnant, but that most people move in and out of them throughout their lives. When we hear about how “the top 20% is doing better than the bottom 20%” we are not, by and large, talking about the same people. The people in the top 20% do not stay there. Nor do the people in the bottom 20%. Consider:

  • Only 5% of those in the bottom 20% of income earners in 1975 were still there in 1991.
  • More then 3/4 of working Americans with incomes in the bottom 20% in 1975 were in the top 40% of income earners by 1991.
  • 29% of those initially in the bottom 20% of income earners in 1975 had risen to the top 20% by 1991.

Studies in Britain, Canada, New Zealand, and Greece show similar results.

Perhaps the most staggering error comes from measuring income and not wealth. When Sanders says “you have 99 percent of all new income today going to the top 1 percent” (not true, by the way, because it’s a statement about income pre-tax), you would, again, get the impression that the top 1% is this static category of the same people.

So I’ll tuck the next statistic under the fold and make you guess. Among those in the top 1/100 of 1% of income earners in 1996, what percentage do you think were still there in 2005? Is it more or less than 90%?

Answer below the fold.

Here’s your answer:

  • Among those in the top 1/100 of 1% of income earners in 1996, only 25% were still there in 2005.

Only 25%! That’s it.

The bottom line: having the top 20% do better is a good thing. It means that, when you move into the top 20% from the bottom 20%, as many people do, you will be better off today than when you made the same move in 1995.

And if you make it to the top 1%, or the top 1/100 of 1%, there is no guarantee you’ll stay there.

Tomorrow, Sanders’s misleading minimum wage statistics.

UPDATE: I should note that Tom Woods has a free e-book titled Bernie Sanders Is Wrong — but that concept seems so self-evident that I would say it’s in the public domain.

33 Responses to “Bernie Sanders Is Wrong: Part 1: The Bottom 20% Does Not Remain Constant”

  1. Ding.

    Patterico (86c8ed)

  2. It;s not only Sanders who fails to realize that there is movement between income categories.

    It’s everybody in Washington, whenever they design a government program.

    Much of Obamacare – the subsidies et all – is premised on this.

    Sammy Finkelman (4d9cfa)

  3. Consider his audience. As long as his line of crap appeals to young, Socialist hippies who want to believe that productive people are bad and bums who love to overbreed are good and that theft is the only role of government, he’ll win 2016 in a landslide. Make sure your passport is up to date, folks.

    CrustyB (69f730)

  4. CrustyB: Your passport is up to date? To go where? Sanders’ brand of socialism has a lot of countries under its spell.

    Joshua (9ede0e)

  5. I don’t even have a passport, but the gun safe is full.

    Greg (b80e5f)

  6. Bernie Sanders was born to be an apparatchik drone. Outside a few short stints at odd jobs (claimed) he has been feeding from the government trough all his life. Go bite a kulak, Bernie.

    nk (dbc370)

  7. NK, what do you get when you scratch a kulak?

    felipe (b5e0f4)

  8. I don’t know, felipe.

    nk (dbc370)

  9. Kuties.

    felipe (b5e0f4)

  10. yeah, I know, lame. I was counting on you to knock it out of the park. Then i could just say “bingo” and take some of the credit.

    felipe (b5e0f4)

  11. Well, a kulak is a widcat (lynx, I suppose), the term used pejoratively for the small farmers who were starved to death when they were collectivized by Stalin. Kultivation? Kulawed?

    nk (dbc370)

  12. Poor Robin Williams, we need him on this one.

    felipe (b5e0f4)

  13. Q. What do you get when you scratch a kulak?
    A. You can keep his shoes, Vladimir, but the watch goes to the kommissar and everything else gets divided among the rest of the detachment.

    nk (dbc370)

  14. OOH, that’s cold, sir. I feel guilty laughing at that. And I did laugh.

    felipe (b5e0f4)

  15. speaking of jews did you know ann franks father applied for refugee status in ameriKKKa and was turned down.

    dog gone it (b0daaa)

  16. Hush, Perry.

    JD (34f761)

  17. Did you know that it was FDR who did that? Did you also know that as log as Hitler was allied with Stalin, the left in America was Nazi Germany’s best friend and the loudest voice for keeping America out of the war even after the invasion of most of Europe, from Dunkirk to Crete, which the British were fighting along with whatever Greeks and Free French had managed to make their way to North Africa?

    nk (dbc370)

  18. Patterico, we have to do something. Despite all our efforts and exhortations, the bottom quintile stubbornly remains stuck at twenty percent!

    Surely we can do better. If Bernie Sanders is elected president, the bottom quintile would contain 30%, 40%, even 50% of the citizenry. What’s wrong with us?

    Dafydd

    Dafydd Abhugh (d4fbf5)

  19. Patterico, we have to do something. Despite all our efforts and exhortations, the bottom quintile stubbornly remains stuck at twenty percent!

    LOL!

    felipe (b5e0f4)

  20. Bernie lies:

    Chart Of The Top Income Earners And Tax Contribution

    The table also tells us a number of things about equality or inequality, namely that the top 1% of tax payers pay 38% of all income taxes yet only have a 20% share of total AGI. Furthermore, the top 50% of tax payers pay practically all of the nation’s federal taxes (97.3%) while commanding 87.25% of total AGI. This table from the IRS is the source for the often politically bantered argument that 47% of American income earners pay zero federal income taxes. – See more at: http://www.financialsamurai.com/how-much-money-do-the-top-income-earners-make-percent/#sthash.br1LpftN.dpuf

    Rev. Barack Hussein Hoagie™ (f4eb27)

  21. I get notifications on Facebook every time Bernie’s FB monkey puts up a new post. His fans absolutely cannot find anything about his to question at all, and it’s a rare one who can respond to arguments with something other than the equivalent of, “You’re a big poopyhead.” These people who worship him, who “feel the Bern” yet will not seek medical assistance, they hate free speech and the have the most ridiculous ideas about economics, and I’m very worried that they will actually vote for once.

    They actually think there is enough income in the “1%” that they can pay for everything that Bernie wants them to pay for. And tell them that this 1% is not a flock of sheep standing around waiting to be fleeced and they have no idea what you’re talking about. The idea that the 1% might be smart enough to keep their money out of the hands of government has never ever occurred to Bernie’s fools. It’s astonishing.

    Tonestaple (39740c)

  22. That’s the benefit of teaching African Dance rather than Economics 101 in college, Tonestaple. At least it’s the benefit for the democrat/socialist party.

    Rev. Barack Hussein Hoagie™ (f4eb27)

  23. You had me at “Bernie Sanders is Wrong”

    Kevin M (25bbee)

  24. It;s not only Sanders who fails to realize that there is movement between income categories.
    It’s everybody in Washington, whenever they design a government program.
    Much of Obamacare – the subsidies et all – is premised on this.

    If by that you mean, the subsidies are meant to punish people for daring to increase their income out of the lower-middle-class (up to $10K for a 60-year-old couple), then yes, they are indeed premised of preventing that.

    Kevin M (25bbee)

  25. Kevin M (25bbee) — 11/24/2015 @ 4:43 pm

    If by that you mean, the subsidies are meant to punish people for daring to increase their income out of the lower-middle-class (up to $10K for a 60-year-old couple), then yes, they are indeed premised of preventing that.

    the subsidies aren’t meant to punish people for increasing their income – they have that effect (because a lot of the subsidy can be clawed back – and that’s also true for Medicaid. *)

    They are premised on the idea that incomes don’t change, and administered mostly that way.

    Now to what degree people know better is another story.

    * except that they don’t actually claw it back also. Just maybe send a $15,000 claim to adebt collection agency as punishment for getting a job and not going out of their way to cancel the Medicaid, thinking it was enough just not to use it.

    Sammy Finkelman (4d9cfa)

  26. I can forgive young people of old parents for not understanding how people shift among the income quintiles in their lifetimes, but why on earth does anyone else buy this? Just think of your own life. Remember being a poor student, then a struggling young person, then getting a good job and raises and promotions. (I would also be remiss to not point out that the “bottom quintile” includes students, people getting a lot of income and benefits from welfare, retirees, etc.).

    How many Patterico readers have been in the bottom quintile of income earners? How long did it take you to get to the top half? Quarter? Quintile?

    Maybe it’s worth a reader poll……

    bridget (842c4d)

  27. What I want to see is a graph of the surface
    z = p(income,age),
    where p(income,age) is the probability density function
    of the two independent variables income and age.

    melanerpes (42fe72)

  28. Hopefully, the older one gets, the more wealth one accumulates, melonherpes.

    Colonel Haiku (2601c0)

  29. Ben & Jerry’s has announced a new seasonal flavor – Potemkin Pumpkin – and a new one in honor of Vermont’s senator cum presidential candidate Bernie Sanders… Bernie Dingleberry.

    Colonel Haiku (2601c0)

  30. Colonel Haiku #29 – that first flavour should be POT(US)emkin Pumpkin … at least until January, 2017 …

    Alastor (2e7f9f)

  31. Without stasis, Progressivism makes no sense. It’s a correction for a non existent problem.

    Mike Giles (3dc5b9)

  32. If I remember correctly, one of the counties in the US with one of the highest percentage of people below the poverty line is Stanford county, CA. Can you spell premed, engineering, law school, etc?
    (N.B. Stanford University)

    Leon (9be591)

  33. Sammy, have you every worked through the details of Obamacare policies as if your family’s health depended on it? If not, STFU you have no idea what you are talking about. Not that that has ever stopped you in the past.

    Kevin M (25bbee)


Powered by WordPress.

Page loaded in: 0.5527 secs.