I'm confused by this. It doesn't quite mesh with the more recent numbers I'm familiar with such as [1], which shows modest gains for the bottom 50% wealth households from 2013 to 2016 [1]. My guess is that the dotcom bust recession and great recession both knocked down bottom-half wealth holders far more than the interim percentage gains to arrive at the net decrease quoted here.
It's hard to actually understands the current state of our economy and I doubt I do to any significant degree, but from what I gathered from your linked article, they're purely looking at net-worth.
This ignores inflation and rising housing costs etc.
> This follows from 30 years in which the top 1 percent massively grew their net worth while the bottom half saw a slight decline in its net worth.
The "top 1%" and "bottom half" are categories, not entities. They are made up of different people in 1989 and 2019, not the same people getting richer and poorer respectively. The author wants you to imagine a bunch of rich people having more and more money each year, and poorer people having less and less. This is not what the statistic means.
So... what is the lesson you want us to take away? It's true that individuals have varying amounts of success and move in and out of any given bracket all the time, but why is that important to what is clearly a demographic point?
On average, if you were poor in the 80's you're poorer now. Some of your poor cohort aren't as poor, and some have lifted themselves out of poverty entirely. Yet more of them are doing worse than they were.
That's bad, right? It's a problem you'd like to see fixed, yes? And it certainly is what the statistic means.
> The author wants you to imagine a bunch of rich people having more and more money each year, and poorer people having less and less.
That's exactly what it means, though. If you hold an investment for a long time, the returns compound. So your wealth grows exponentially.
Conversely, for the poor (debtors, really), compound interest works against you. For example, a college graduate could have an income-based repayment plan and see their student loan balance grow, because of the compounding interest. One of my friends on social media posted about this horror in their financial life this recently.
Do some wealthy people lose everything? Sure, lottery ticket winners often do. Do some poor people ascend to the 1%? Yes, many immigrants of modest means come to the USA and found successful companies within the United States (proportionally, when compared to citizens born here).
But the takeaway of increasing income inequality is very real. A small silver lining: The U.S. middle class is shrinking, but that's because a good number are moving into the upper middle class, depending on where you draw the lines between "middle class" and "upper middle class". Using inflation-adjusted dollars, more households bring in $100k than just two decades ago.
Don't fall for what? The fact that some people move between percentiles during their life doesn't change the fact that the distribution has grown more unequal. What the number means is that, while those who are poor are poorer now in relative terms than 1989, the rich have gotten richer in relative terms.
I think the message is more about general inequality rather than individual progress. Over the past 30 years the histogram of wealth distribution has skewed even more heavily to whomever happens to be at the top at the moment.
We've gone from approximately a 12:1 ratio for 1%:50% to about a 150:-1 ratio. -1!
So, like, everyone gets the same return in the market - say 5% S&P500 avg return - and so the total return on more money is more than the return on less money, because math.
1.05x100<1.05x1000
And, of course, we all know those with capital get better returns on everything and access to all opportunities. Hence the rich get richer. But that's life and math. So?
Those numbers don't match the ones in the article. Or the real world. If the bottom half of society was getting the "same return in the market" (for any definition of market) it wouldn't be poorer than it was in 1980.
Is your shtick to act unsurprised at things? There's more going on here than compound interest friendo, this is not the time for acting suave and ignorant.
Most work for wages. Workers work a few hours a day creating wealth and keeping the wealth they create. The last few hours a day, they keep absolutely none of the wealth they keep - it is expropriated by heirs. It is a social relationship - we work, they live off our labor. They are parasites, and they have little helpers who they give crumbs to and argue their case, including those who tell guileless fools that a magic man who lives in the clouds named Jesus will make sure they never die.
Man, you had me until you went religious. I think -
1) those people have appropriated Christianity since at least King James, as Jesus and his ministry promoted socialism aka selling all of your belonging to fund social programs;
2) we need to stop distracting from the primary topic of wealth inequality / late stage capitalism. Slipping in jabs against capitalism just gives "those" people a leg to stand on and the ability to redirect the conversation.
If anything, we should force them to confront the hypocrisy of their political/economic policies when compared to their religion.
The arguments for the conservative lens in this discussion seem pretty weak. "But the 1% of decades ago isn't the same cohort as it is today!", etc. These talking points are untethered from reality. In the past, your economic quintile had respectively less correlation to your parent's income (e.g., where you come from). Today, it's quite sticky [0]. There's much less income mobility than there used to be. It's still possible to break out, but it's much less likely to occur.
The strongest argument against this might be "it hasn't gotten worse, but it's always been difficult in the US, compared to other industrialized nations". [1] which still leaves one hard pressed to say the economy works for most people. The lion's share of productivity gains go to capital holders, and metrics like life expectancy have plateaued [2].
That "cohorts shift" critique didn't land with me either, until I thought of my own path.
Grad school pushed me way below the -$6k median for the bottom quintile.[0] I pulled that quintile's average down for years, but I wasn't in trouble or part of some kind of social problem.
To be clear -- I don't mean this as a values critique. I definitely want to help those that haven't had the opportunities to succeed like I have, and support charities and programs that I think will have the most impact.
But I still have a methodological quibble. If we want to address poverty, it's important to understand it. For that, we need to separate out the people moving through quintiles due to life stages, and isolate those that are really stuck.
I'm not sure the best way to do that. It'd be nice to see this data separated out by age, I guess, that might be one way.
> I [was in the bottom quintile] but I wasn't in trouble or part of some kind of social problem.
Yeah. But you were poor. And, on average, absent the social change we're looking at now, you were poorer than you would have expected to be in similar circumstances in 1989.
The fact that poverty was tolerable for you doesn't mean that it is for everyone. Would have have been able to support two young children at that level? What if your other support structures (parents, friends, stipend, whatever) failed? What if you weren't living in your middle class university area with nice transportation and had to make do in rural Alabama or central Detroit?
I mean... you recognize that to people who are actually poor, a message like "You don't have a problem. I went to grad school!" is outrageously patronizing, right? Dude, empathy.
Your takeaway was "I don't care about the poor" from a comment where I literally talk about how important it is to help people who didn't have the same opportunities I had.
It's _the opposite_ of what I said.
All I want is to control for age, or use some other technique to improve the data.
Sorry if I laid out that point in a confusing way, maybe this is on me. But saying someone has no empathy is calling them a sociopath. If you're going to lean into personal attacks, don't you at least owe them the common courtesy of re-reading their comment in full to make sure you understand their point?
> It's _the opposite_ of what I said. All I want is [...]
Then I sincerely apologize. What you wrote sounded like excuse making for why the poor don't really have it so bad and why the inexorably increasing income inequality in our society isn't a problem.
If it's not, and you're merely making a dry critique of the analysis... meh. It's still not really helping anyone now, is it? "We need better data" is what climate denialists like to say too.
>People's Policy Project
>The primary mission of 3P is to publish ideas and analysis that assist in the development of an economic system that serves the many, not the few.
Some article titles:
>Tackling Inequality Through the Social Ownership of Capital
>Capitalism is hostile to families. The welfare state can fix that.
>The Difficulty of Using the Firm in Socialist Policy
With this as context, it's pretty easy to see that the thread's post is clearly anti-capitalist, socialist propaganda, with a heavy political agenda to make people mad at "the rich" and support overthrowing "the system."
It's essentially "rich people are richer than me, and that makes me mad." There is no novel idea here to engage with. People have been jealous of wealth since the beginning of time. But now we cloak that jealously with faux moral outrage and elaborate economic "solutions."
Can't it be "poor people are getting poorer because rich people are taking wealth away from them on balance, and that makes us mad". I mean... that's bad right? It should make us mad. We're a wealthier society on average than we were in the 80's, we all should be wealthier, yet we aren't.
I genuinely don't understand the denialism on this. You don't have to be a raving socialist to recognize that an outcome is unfair. Can't you be a free market republican and want to see the poor do better along with the rest of us?
Maybe so. But the poor of today (at least in the US, which the article is about:
- Have smart phones (entertainment)
- Have climate controlled housing
- Have better food than the poor of 1989
- Have fewer diseases and live longer than their 1989 counterparts
- etc.
It's not fun being poor, but there's never been a better time.
In a similar way, the rich don't live that much better than the next lowest classes. A middle class home feels more like a McMansion than the rich/poor housing comparison of 1989.
32 comments
[ 3.0 ms ] story [ 76.8 ms ] thread[1] https://dqydj.com/net-worth-brackets-wealth-brackets-one-per...
This ignores inflation and rising housing costs etc.
> This follows from 30 years in which the top 1 percent massively grew their net worth while the bottom half saw a slight decline in its net worth.
The "top 1%" and "bottom half" are categories, not entities. They are made up of different people in 1989 and 2019, not the same people getting richer and poorer respectively. The author wants you to imagine a bunch of rich people having more and more money each year, and poorer people having less and less. This is not what the statistic means.
There is no language in the article to justify this statement. None.
And btw, statistics on class mobility are pretty damning in themselves, if you care to look them up.
On average, if you were poor in the 80's you're poorer now. Some of your poor cohort aren't as poor, and some have lifted themselves out of poverty entirely. Yet more of them are doing worse than they were.
That's bad, right? It's a problem you'd like to see fixed, yes? And it certainly is what the statistic means.
That's exactly what it means, though. If you hold an investment for a long time, the returns compound. So your wealth grows exponentially.
Conversely, for the poor (debtors, really), compound interest works against you. For example, a college graduate could have an income-based repayment plan and see their student loan balance grow, because of the compounding interest. One of my friends on social media posted about this horror in their financial life this recently.
Do some wealthy people lose everything? Sure, lottery ticket winners often do. Do some poor people ascend to the 1%? Yes, many immigrants of modest means come to the USA and found successful companies within the United States (proportionally, when compared to citizens born here).
But the takeaway of increasing income inequality is very real. A small silver lining: The U.S. middle class is shrinking, but that's because a good number are moving into the upper middle class, depending on where you draw the lines between "middle class" and "upper middle class". Using inflation-adjusted dollars, more households bring in $100k than just two decades ago.
We've gone from approximately a 12:1 ratio for 1%:50% to about a 150:-1 ratio. -1!
You concede the point and then post a hypothetical that's not relevant.
And that hypothetical (meritocratic social mobility) is even dubious.
1.05x100<1.05x1000
And, of course, we all know those with capital get better returns on everything and access to all opportunities. Hence the rich get richer. But that's life and math. So?
1) those people have appropriated Christianity since at least King James, as Jesus and his ministry promoted socialism aka selling all of your belonging to fund social programs; 2) we need to stop distracting from the primary topic of wealth inequality / late stage capitalism. Slipping in jabs against capitalism just gives "those" people a leg to stand on and the ability to redirect the conversation.
If anything, we should force them to confront the hypocrisy of their political/economic policies when compared to their religion.
I gotta say, I'm seeing a shocking amount of mailed-in right wing defensiveness in this topic, by people who clearly aren't reading the article.
The strongest argument against this might be "it hasn't gotten worse, but it's always been difficult in the US, compared to other industrialized nations". [1] which still leaves one hard pressed to say the economy works for most people. The lion's share of productivity gains go to capital holders, and metrics like life expectancy have plateaued [2].
[0]: https://fivethirtyeight.com/features/rich-kids-stay-rich-poo...
[1]: https://www.npr.org/2014/01/23/265356290/study-upward-mobili...
[2]: https://www.google.com/search?q=life+expectancy+us
Grad school pushed me way below the -$6k median for the bottom quintile.[0] I pulled that quintile's average down for years, but I wasn't in trouble or part of some kind of social problem.
To be clear -- I don't mean this as a values critique. I definitely want to help those that haven't had the opportunities to succeed like I have, and support charities and programs that I think will have the most impact.
But I still have a methodological quibble. If we want to address poverty, it's important to understand it. For that, we need to separate out the people moving through quintiles due to life stages, and isolate those that are really stuck.
I'm not sure the best way to do that. It'd be nice to see this data separated out by age, I guess, that might be one way.
[0] https://www.thebalance.com/american-net-worth-by-state-metro...
Yeah. But you were poor. And, on average, absent the social change we're looking at now, you were poorer than you would have expected to be in similar circumstances in 1989.
The fact that poverty was tolerable for you doesn't mean that it is for everyone. Would have have been able to support two young children at that level? What if your other support structures (parents, friends, stipend, whatever) failed? What if you weren't living in your middle class university area with nice transportation and had to make do in rural Alabama or central Detroit?
I mean... you recognize that to people who are actually poor, a message like "You don't have a problem. I went to grad school!" is outrageously patronizing, right? Dude, empathy.
It's _the opposite_ of what I said.
All I want is to control for age, or use some other technique to improve the data.
Sorry if I laid out that point in a confusing way, maybe this is on me. But saying someone has no empathy is calling them a sociopath. If you're going to lean into personal attacks, don't you at least owe them the common courtesy of re-reading their comment in full to make sure you understand their point?
Then I sincerely apologize. What you wrote sounded like excuse making for why the poor don't really have it so bad and why the inexorably increasing income inequality in our society isn't a problem.
If it's not, and you're merely making a dry critique of the analysis... meh. It's still not really helping anyone now, is it? "We need better data" is what climate denialists like to say too.
I genuinely don't understand the denialism on this. You don't have to be a raving socialist to recognize that an outcome is unfair. Can't you be a free market republican and want to see the poor do better along with the rest of us?
[1] https://www.brookings.edu/blog/future-development/2018/09/27...
- Have smart phones (entertainment)
- Have climate controlled housing
- Have better food than the poor of 1989
- Have fewer diseases and live longer than their 1989 counterparts
- etc.
It's not fun being poor, but there's never been a better time.
In a similar way, the rich don't live that much better than the next lowest classes. A middle class home feels more like a McMansion than the rich/poor housing comparison of 1989.