US income inequality at record high

[BawanaRik]

I don't have any super strong answers, and I don't represent anybody else at TB, but here are my humble thoughts...

Who are the protests directed at? I think that public protests can influence public opinion.

What would I have them do? Get informed, and vote.

How can "fairness" be enforced? Perfect fairness can't be enforced. That would be utopian. Some disparity is needed in order to give an economy room to grow. But it can reach a level where it ceases to have any moral justification, at which point massive economic disparity becomes a source of social instability and decay, rather than prosperity and security.

I think things are remarkably fair. Maybe not perfect but pretty darn fair.

 

[UncleFluffy]

Only tangentially related, but us old folks from gen X or earlier may find it amusing...

http://www.waitbutwhy.com/2013/09/why-generation-y-yuppies-are-unhappy.html

 

[i_got_a_mohawk]

This isn't directed at any specific post, but is just an amusing thought.

In my view, there are ideas that make good morals but poor economic theory. The labor theory of value is an example. "Work hard and follow the rules" is a good prescriptive moral message, that I embrace. But it's not a good descriptive statement of how the world works.

It also reminds me of something that one of my high school technical (shop) teachers used to say - "Don't do as I do, do as I say".

 

[fdeck]

Is there such a thing as a descriptive moral message?

No. That's my point.

Can it even be defined?

Not precisely. But the lack of precise definitions for terms has never stopped people from debating issues and trying to improve things.

 

[KJung]

I guess, as a fan of history, one must remember that PRIOR to the 20th century, literally a handful of people had virtually ALL the money. So, this is all relative to the comparison time period.

One must also remember that much of the inequality is driven by 'paper profits' (which can be very temporary) in the stock market.

 

[wrp]

I'm currently reading The Great Deformation by David Stockman, and learning a lot about decisions made during the last 80-100 years that have led to the current state of our global economy.

 

[BawanaRik]

Only tangentially related, but us old folks from gen X or earlier may find it amusing...

http://www.waitbutwhy.com/2013/09/why-generation-y-yuppies-are-unhappy.html

I'll bet you can go back and pick out the people this article is referring to.

 

[sloasdaylight]

Pass whatever you're on bro.

Everyone espousing the bootstraps approach, not everyone can start their own business. Who would work in the business? We need people to do the "menial" tasks that are much harder than going to college and getting a desk job will ever be, shouldn't they make such a wage that they can enjoy life?

The business owner. There is an E-cigarette store by my house that I go to to get my supplies for that particular vice of mine. The owner of the business started it and worked 6 days a week with another employee, maybe his wife or girlfriend, I'm not sure, working on Sundays, and part of the day on Saturdays. The two of them did that for months, taking all the money they made from sales and putting it back into inventory and sprucing up the store. Fastforward about a year and they how have 3 employees there selling at any one time, and I only see the owner on occasion, mostly because he's in the back now handling paperwork, inventory, and the like. When he could afford to bring more people on, he did, and when there were gaps, such as people calling in sick, he worked instead. My good friend is seriously considering buying a now defunct motorcycle repair shop and is going to be working it by himself, calling in help when needed from other contacts he knows in the business.

More small business owners start businesses on their own than you would think, and expand them by hiring more employees later. Starbucks started with 3 guys. So to answer your question directly, the owner at first, typically. There are other small business owners on this forum, so I'm sure they can provide a better answer than what I've given based on my second hand experience.

 

[NWB]

One must also remember that much of the inequality is driven by 'paper profits' (which can be very temporary) in the stock market.

Great observation Ken!

Rather than paper though, I'd say electronic bytes of profits and wealth these days. All of which can vaporize rather quickly.

 

[two fingers]

I don't have any super strong answers, and I don't represent anybody else at TB, but here are my humble thoughts...

Who are the protests directed at? I think that public protests can influence public opinion.

What would I have them do? Get informed, and vote.

How can "fairness" be enforced? Perfect fairness can't be enforced. That would be utopian. Some disparity is needed in order to give an economy room to grow. But it can reach a level where it ceases to have any moral justification, at which point massive economic disparity becomes a source of social instability and decay, rather than prosperity and security.

While I think you are both smart and nice, answers like your seem to be why there can't be any sort of meeting of the minds on this subject. All of you can clearly define what you DON'T like and DON'T want, and a few of you can define some things that you want to be the end result (albeit vaguely such as a "living wage" or "enough money to be happy") but I have yet to read/hear any opinions of what exactly SHOULD be done to "solve the problem".

 

[aborgman]

I think things are remarkably fair. Maybe not perfect but pretty darn fair.

Problem is - humanity and its skills/abilities are largely defined by normal distribution, and the economy is largely moving to a bimodal distribution.


http://www.npr.org/2013/09/12/221425582/tired-of-inequality-one-economist-says-itll-only-get-worse

Economist Tyler Cowen has some advice for what to do about America's income inequality: Get used to it. In his latest book, Average Is Over, Cowen lays out his prediction for where the U.S. economy is heading, like it or not:

"I think we'll see a thinning out of the middle class," he tells NPR's Steve Inskeep. "We'll see a lot of individuals rising up to much greater wealth. And we'll also see more individuals clustering in a kind of lower-middle class existence."

It's a radical change from the America of 40 or 50 years ago. Cowen believes the wealthy will become more numerous, and even more powerful. The elderly will hold on to their benefits ... the young, not so much. Millions of people who might have expected a middle class existence may have to aspire to something else.

"Imagine a very large bohemian class of the sort that say, lives in parts of Brooklyn," Cowen explains. "... It will be culturally upper or upper-middle class, but there will be the income of lower-middle class. They may have lives that are quite happy and rewarding, but they may not have a lot of savings. There will be a certain fragility to this existence."

 

[aborgman]

but I have yet to read/hear any opinions of what exactly SHOULD be done to "solve the problem".

The problem CAN'T be solved.

It can only be improved by constantly combatting it.

 

[MatticusMania]

Provide everyone with food, shelter & education.

 

[Lee Moses]

The problem CAN'T be solved.

It can only be improved by constantly combatting it.

Perhaps by doing more to discourage dependence on government aid?

 

[Kaa]

Provide everyone with food, shelter & education.

Wouldn't this create more of a "welfare state" mentality? Not being argumentative, just want to hear your thoughts.

 

[two fingers]

Pass whatever you're on bro.

Everyone espousing the bootstraps approach, not everyone can start their own business. Who would work in the business? We need people to do the "menial" tasks that are much harder than going to college and getting a desk job will ever be, shouldn't they make such a wage that they can enjoy life?

Now, that would be a different conversation altogether. What would be great is enough people TRYING to better their lives, going back to school, doing some sort of job training, maybe MOVING from where they are to a place with a better job market, that we had a SHORTAGE of people who were available to do menial tasks. But we DON'T have that situation because they AREN'T doing those things.

Now, I never said that everyone could start a business. All I said was that you all have yet to explain to me WHAT FORCES EXACTLY are keeping ANY ONE PERSON in this country from bettering his situation. Live in a poor inner city? Got it. Get up every morning and catch the free (or extremely cheap) bus to government funded college (either through loans or grants). Then go to work at night at McDonald's. Then go home and FIND the time to do your homework. Rinse and repeat for about two years. Then go get a slightly better job with your associate's degree and continue to go to school at night to do even better. I have seen this very story play out time and time again.

So, WHO CAN NOT DO THIS and WHY?

Single mom? Government subsidized daycare. (My kids go to one of the more expensive preschool in my town and are surrounded by children who are there using tax dollars..... which is fine by me as long as their parents are out doing something with their time that will improve their situation.)

Disabled? There are job training programs and funds to help you along as well.

Now, I can try once again. (sigh) Tell me HOW someone can be PREVENTED from bettering his life in this country. Tell me what roadblocks are in place to KEEP someone (who has the drive and desire) from achieving more than he is today or has up until this point. Just saying "You don't get it, man." isn't an answer. I AM LIVING IT. I am back in school at 42 years old. I have two young children. I do two part-time jobs, gig, maintain four acres of land, and somehow find time to be a husband and dad. And I am not special in any way. I CHOSE to do it, so I AM doing it. NOT doing it all isn't an option. End of story. So, if I can do it, being of average intelligence and having no super powers, then why can't ANYONE?

Of course, you may not be able to start your own business TODAY. But there is no excuse whatsoever for anyone to NOT be able to do it five years from today if they so choose (and, again, put forth a metric crapload of EFFORT). An associates degree in business and a government backed business loan are available to just about anyone.... poor or not. But even if you don't start your own business, you can at least get a job/better job.

 

[peledog]

Revolutions have been started for less.

 

[MatticusMania]

Wouldn't this create more of a "welfare state" mentality? Not being argumentative, just want to hear your thoughts.

I dont know, maybe. Maybe that isnt even such a bad thing, though.
I dont really have any thoughts on the matter one way or the other.
I was just thinking about a quote my gf showed me last night.

"We must do away with the absolutely specious notion that everybody has to earn a living. It is a fact today that one in ten thousand of us can make a technological breakthrough capable of supporting all the rest. The youth of today are absolutely right in recognizing this nonsense of earning a living. We keep inventing jobs because of this false idea that everybody has to be employed at some kind of drudgery because, according to Malthusian-Darwinian theory, he must justify his right to exist. So we have inspectors of inspectors and people making instruments for inspectors to inspect inspectors. The true business of people should be to go back to school and think about whatever it was they were thinking about before somebody came along and told them they had to earn a living."

http://en.wikipedia.org/wiki/Buckminster_Fuller

Id imagine we could acheive a lot for civilization if peoples needs were taken care of and we had more time to educate ourselves, each and every one of us.
Im sure such a society would still have lots of problems. Of course some people would still have to work, labor is a necessity (at least until we've created machines to do all of our manual labor), and there'd still need to be people running things.
I just found it interesting and thought it worth mentioning. I was going to start a thread with just that quote, lowner it, and let people argue back and forth on it, but it seems theres enough of that going on in this thread already.

 

[Lee Moses]

I dont know, maybe. Maybe that isnt even such a bad thing, though.
I dont really have any thoughts on the matter one way or the other.
I was just thinking about a quote my gf showed me last night.

"We must do away with the absolutely specious notion that everybody has to earn a living. It is a fact today that one in ten thousand of us can make a technological breakthrough capable of supporting all the rest. The youth of today are absolutely right in recognizing this nonsense of earning a living. We keep inventing jobs because of this false idea that everybody has to be employed at some kind of drudgery because, according to Malthusian-Darwinian theory, he must justify his right to exist. So we have inspectors of inspectors and people making instruments for inspectors to inspect inspectors. The true business of people should be to go back to school and think about whatever it was they were thinking about before somebody came along and told them they had to earn a living."

http://en.wikipedia.org/wiki/Buckminster_Fuller

Id imagine we could acheive a lot for civilization if peoples needs were taken care of and we had more time to educate ourselves, each and every one of us.
Im sure such a society would still have lots of problems. Of course some people would still have to work, labor is a necessity (at least until we've created machines to do all of our manual labor), and there'd still need to be people running things.
I just found it interesting and thought it worth mentioning. I was going to start a thread with just that quote, lowner it, and let people argue back and forth on it, but it seems theres enough of that going on in this thread already.

This is not a shot at you, MM, but that quote is nutty as a fruitcake. "Nonsense of earning a living"?!? People who think that way absolutely deserve poverty.

 

[KJung]

Problem is - humanity and its skills/abilities are largely defined by normal distribution, and the economy is largely moving to a bimodal distribution.

Kind of. More accurately, human ABILITY (i.e., the potential to obtain a skill) is reasonably normally distributed (+1 to your point there). Obtaining a skill that makes use of that ability is bimodal, and has been pretty much since the beginning of time (i.e., I'm sure there were many serfs back in the old days who could have run the farm if they were given the opportunity and training).

The economy is moving BACK to a more bimodal distribution of 'haves and have nots' due to the fact that there are many fewer, highly paid unskilled jobs available at this time, and training these days is becoming as expensive and complex as it was back in the middle ages, and through the era of 'expensive private schools that only the rich attended (basically through much of the 20th century.

Interestingly, this is pretty much as it has been in the last 1000 years or so. The US post war boom (1946 through the 50's and to a lesser extent through the 90's) was actually the anomaly and outlier.... i.e., that big bump of highly paid, unskilled jobs in factories, etc.

THAT was the outlier. The current '1% thing' is more on trend given the last 1000 years or so.

Retirement was also a strange outlier during the post WWII boom. Formal retirement was pretty much unheard of until the New Deal, and is again 'regressing toward the mean of history', with pensions disappearing as fast as 'highly paid unskilled jobs'.

So, again, IMO, the situation today is 'back on trend'. It just seems like a shock to those of us between the ages of 35 and 60, where our parents mostly had cheap health care, good jobs, and a vested pension.