Yes, the wealthy, too, want us to focus on inequality among the 99% instead of shining our light on the 1% or the 0.1%. They always want to talk about education and skills gaps instead of talking about how they've shaped laws and institutions to make sure they retain their wealth and power. Meanwhile, wages have been stagnant and debt increasing for everyone who is not in the 1%. Mr. Autor's arguments are a red herring.
Income mobility in the US hasn't changed. This is the strongest counterargument to complaints about income inequality leading to unfairness I am aware of. Growing up in America I was raised not to be jealous of my neighbors' wealth and influence, but to take stock in the fact that America was a country where opportunity made it so you could become wealthy. It seems this hasn't changed, but the notion that some have more than others is considered inherently unfair seems to be a new phenomenon.
That's a tremendously strong statement that I've never seen any factual support for, only opinion pieces with cherry-picked data from 'think-tanks'.
Rigorous looks have found precisely the opposite, for instance, from the Boston Fed's 40-year retrospective[1]:
> A variety of measures indicate that U.S. family income mobility has decreased over the 1969–2006 time span, and especially since the 1980s. Most overall relative mobility measures fell, on net, with mobility significantly lower in the 1995–2005 period than in the 1977–1987 period. Origin-specific measures also declined, with families starting in the poorest quintile less likely to make far moves (to the middle or higher quintiles) during the 10 years from 1995 to 2005 than within the 1977–1987 period.
> Similarly, absolute quintile mobility declined overall and for poor families after 1981–1991 (when real post-government income growth began to slow). Thus, families have become increasingly less likely to change rank or move out of their (relative or absolute) decile or quintile of origin, and when they move, to move less far; this appears to be the case overall and for those who start rich or poor.
Probably the best citation is a remarkable, rigorous paper by Chetty et al (2014) that uses individual IRS returns [1].
To quote those authors: “We find that children entering the labor market today have the same chances of moving up in the income distribution (relative to their parents) as children born in the 1970s. However, because inequality has risen, the consequences of the ‘birth lottery’ – the parents to whom a child is born – are larger today than in the past.”
This may or may not be true, but it's not important. What is important is that a society where there is a gap between those with education, wealth, and power and those without is (presumably) less stable than one in which everyone feels as if they are in the same boat.
Additionally, I would postulate that creating a class of people who are less educated and where both parents need to work 40 or more hours a week will not create ideal households for raising children (when looked at in aggregate). They also seem to have their children at younger ages, and higher divorce rates, which again, may not lead to desirable outcomes.
> Income mobility in the US hasn't changed. This is the strongest counterargument to complaints about income inequality leading to unfairness I am aware of.
It's not because it hasn't changed that it's fair and can't be improved.
> America was a country where opportunity made it so you could become wealthy.
"Several large studies of mobility in developed countries in recent years have found the US among the lowest in mobility"
The studies you're referencing are very misleading. Many countries have much lower variation in income than the US. Imagine two normal curves, but one (the US) is very flattened and one (northern Europe) with a sharp peak.
In the US moving from X to X+Y might only push you a few percent higher in rank, there are still a lot of people in the fat tails on both sides, while the same change in Scandinavia might represent a substantial rank change.
Perhaps the problem isn't that it's hard to move up in the US, the problem is that in northern Europe it's impossible to escape the rat race.
"the notion that some have more than others is considered inherently unfair seems to be a new phenomenon"
the notion that some have more than others happens amongst the 99%, but the notion that it's reasonable for the owners of companies like Wal-Mart and McDonald's to profit massively while refusing to pay a living wage, provide health care, or even follow basic employment laws is a growing problem that did not happen to the same extent in generations past [since employment laws were established, of course].
The notion that the people making the money are "earning" it while people doing actual work are "greedy" and "should try to get a better job if they aren't happy" etc.. is incredibly unhealthy and it is political propaganda fed to members of the 99% with a proclivity for consuming it, paid for by members of the 1% who much prefer that there is infighting amongst the various worker classes over who has a bigger house or a nicer car rather than to see that the entire system rigged against us is keeping us from living the natural lives we could all be living. you can only get someone to work a job selling a snake oil dream if you give them a taste of it and underwrite a sense of entitlement that encourages the belief that people who aren't succeeding are simply not trying, rather than the truth, which is that they aren't going along with the lie of the game, and the rest of us (self included) and our obsession with the trappings of the game keep us from living in the true reality of the world with the rest of them.
It's very beneficial to these oligarchs to remind us that, while yes, there will always be someone starving and they might just be right outside your doorstep, if you buckle up, save up for your children's college, their doorstep might be a little further from the poor.
>did not happen to the same extent in generations past
I have never seen supporting evidence of this. You can't compare perks of manufacturing jobs of the past to grocery baggers and greeters in Walmart today. An equivalent would be to compare it to a grocery store clerk in the past as well. I know they did not provide a living wage or health care back then either because my father was one in the 60s.
>The notion that the people making the money are "earning" it while people doing actual work are "greedy"
This is basic economics. If what you are doing has little demand, you won't be paid highly for it. To understand what I mean, go into a field and dig holes all day long and then demand that someone pay you for doing 'actual work'. Unless someone desperately needed those holes, you won't be paid anything regardless of the effort you put into it.
>from living the natural lives we could all be living
And what natural life would you be referring to? Tribes roaming around foraging and fighting each other for food? An even redistribution of wealth across the entire globe would drastically reduce the quality of life of >95% of US citizens.
Say we just rob and kill off the 1% since you seem to think they don't contribute. You have just eliminated many executives at large companies, most doctors, most good lawyers, many professors, and many highly-skilled senior specialists in various engineering fields. Now that you have wiped out all of these people that spent years mastering their fields, what exactly is it that you have accomplished? What lesson did we learn? They earned high salaries because they were in high demand. Is it to make sure that you never become so good at something that you will earn lots of money?
Perhaps you are confused and you didn't mean the top 1% but instead meant something like the top %0.01? 1 in every 100 people isn't a conspiring billionaire as you've concocted in your mind. Doctors and small business owners aren't getting together in a secret club each weekend to determine the political propaganda they will feed to the 99% that week.
P.S. Currently, your post is mostly nonsensical run-on sentences. Break them up if you want people to read it.
> Meanwhile, wages have been stagnant and debt increasing for everyone who is not in the 1%.
That is factually inaccurate. People in the top 50% are doing fine. The issue is that people in the bottom 15% are having their teeth kicked in.
The "99%" are not a coalition. That's why the Occupy movement fell apart. They had no goals, because as soon as you start talking specifics you realize that people at the 50th percentile don't want the same policies as people at the 15th percentile.
Obvious example: The mortgage interest tax credit. Get rid of it and the government would have more money to spend on programs to help the poor, and meanwhile it would reduce real estate prices, which would lower rents for non-home owners. It's a policy that hurts the poorest in society, but the top 1% couldn't care less about it. The reason it stays is that the middle 60% want it.
You didn't really mean that, did you? US real income by quintile since 1967[1]. Income in real dollars has been stagnant for everyone but the wealthy.
I can't find household debt by quintile but if I do I'll include it here. It's gone down a bit since the financial crisis (part of the cause of the ongoing depression) but had been growing.
The graph is visually misleading because putting the top 5% on it (and then including a blank bar even on top of that) makes changes in all the other lines look smaller. The top three quintiles are all upward sloping prior to 2000, and since then the top 5% line is flat too, which is attributable to the recession(s) following the dotcom bust, 9/11 and the housing crisis.
And be careful with the debt numbers. The thing you really want there is net worth anyway. Otherwise you get silly outcomes like people buying homes causing "debt" to increase dramatically even though assets increase by an equivalent amount at the same time.
It's not visually misleading at all. The point is that the wealthy have taken a vastly disproportionate share of income growth. The vast majority of the income growth in the top quintile is in the top 5%. The majority of growth in the top 5% is in the top 1%. The majority of the growth in the top 1% is in the top 0.1%.
Edit: Also, if we're going to look at changes in net worth, that will also support my argument. Increases in net worth compound over time, which is why fortunes tend to grow. I.E., the entire thesis of Thomas Picketty's book.
> The point is that the wealthy have taken a vastly disproportionate share of income growth.
Of course they have. If you make $5 and you just ate, you invest the money. If you make $5 and you have no food, you buy food. Tomorrow the person who invested money still has the investment and is reinvesting the interest but the person who bought food is hungry again. And the top 1% reinvest nearly 100% of their income.
But that's capitalism. Unless you're suggesting to confiscate their assets so they can't keep reinvesting the interest, the solution has to be to bring the middle class up rather than bringing the 1% down. Which we certainly aren't doing as effectively as we could if we committed to the idea, but it's not like engineers and middle managers are out starving in the streets.
I don't even know if we're arguing about anything. Whether median incomes being up 3% over some period of time is equivalent to them being flat is not a very interesting question. What pretty much everybody wants is for the average American to have more of the good life. Is there a policy proposal on the table to do that? "Kill the rich" sure sounds good but it might not be as effective as it would be satisfying.
>Meanwhile, wages have been stagnant and debt increasing for everyone who is not in the 1%.
But the article contains graphs showing that wages for people with bachelor's degrees are growing, and wages of people with master's degrees are growing faster.
And I don't really see the logic of your argument: your could say "X may be true, but it distracts us from talking about Y" about literally anything.
These discussions are useless if you don't factor in housing and childcare costs. If a couple consists of two working professionals, they pay a steep penalty for childcare.
Comparing my personal situation to my parents 30 years ago, I'd argue that we're easily making 25-35% more relative to my folks in the 80s (mostly because we had kids later), but I think that we are less well off in several respects compared to my family in childhood.
> we are less well off in several respects compared to my family in childhood.
Yeah, my grandfather never stepped foot on a college campus, yet he could support four kids and a housewife, own a summer house on a lake with several boats, own a winter house in Florida, upgrade his huge RVs regularly, retire with a large pension at 55, and live a life of leisure for more than 30 years during which he mostly played golf.
Your grandpa's lifestyle was pretty far from normal. The only normal part is being able to support a family on his own. The bit about owning several homes, boats and RVs was not what the majority of that generation was allowed to enjoy.
Also keep in mind that they weren't expected to put kids through college; and, even if they did, the cost was negligible compared to today. Kids back then were much cheaper.
My grandfather was a Sanitation foreman who worked nights as well. They owned a house in NYC and a summer place -- it wasn't common, but far more achievable than today.
> This public debate is dominated by the discussion of the top 1 percent. And the top 1 percent is important, but focusing on the top 1 percent conveys the message that the game is all rigged, that if you’re not in the elite stratum, there’s nothing to shoot for. And that’s just not the case.
Perhaps, but if you want to actually change things it is important to look at where political leverage is concentrated.
But you repeat yourself. It's in the 1% interest to contend that inequality has nothing to do with economics, regardless of the fact that it's what defines a specific and articulable inequality.
I've believed for a long time that unrestricted international trade, and having well-paying jobs for people with minimal education, are fundamentally incompatible -- it's an either-or choice. There are simply too many poor people overseas that are willing to take lower wages and out-compete domestic workers.
It's nice to see someone with economic credentials who agrees with me. Which end of the either-or proposition should we take? That depends largely on your politics.
I think global free trade would be a nice thing in the happy imaginary world where having a seat in the UN means your country always puts the interests of the whole of humanity above your own. But the simple and obvious reality is that most countries look out for themselves first, and so if we make policies and choices based on our happy imaginary world instead of the darker (or at least greyer) real world where we actually live, we're going to be quite sorry about some of those choices sooner or later.
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[ 4.4 ms ] story [ 69.5 ms ] threadThat's a tremendously strong statement that I've never seen any factual support for, only opinion pieces with cherry-picked data from 'think-tanks'.
Rigorous looks have found precisely the opposite, for instance, from the Boston Fed's 40-year retrospective[1]:
> A variety of measures indicate that U.S. family income mobility has decreased over the 1969–2006 time span, and especially since the 1980s. Most overall relative mobility measures fell, on net, with mobility significantly lower in the 1995–2005 period than in the 1977–1987 period. Origin-specific measures also declined, with families starting in the poorest quintile less likely to make far moves (to the middle or higher quintiles) during the 10 years from 1995 to 2005 than within the 1977–1987 period.
> Similarly, absolute quintile mobility declined overall and for poor families after 1981–1991 (when real post-government income growth began to slow). Thus, families have become increasingly less likely to change rank or move out of their (relative or absolute) decile or quintile of origin, and when they move, to move less far; this appears to be the case overall and for those who start rich or poor.
[1] - http://www.bostonfed.org/economic/wp/wp2011/wp1110.pdf
To quote those authors: “We find that children entering the labor market today have the same chances of moving up in the income distribution (relative to their parents) as children born in the 1970s. However, because inequality has risen, the consequences of the ‘birth lottery’ – the parents to whom a child is born – are larger today than in the past.”
[1] http://obs.rc.fas.harvard.edu/chetty/mobility_trends.pdf
This may or may not be true, but it's not important. What is important is that a society where there is a gap between those with education, wealth, and power and those without is (presumably) less stable than one in which everyone feels as if they are in the same boat.
Additionally, I would postulate that creating a class of people who are less educated and where both parents need to work 40 or more hours a week will not create ideal households for raising children (when looked at in aggregate). They also seem to have their children at younger ages, and higher divorce rates, which again, may not lead to desirable outcomes.
It's not because it hasn't changed that it's fair and can't be improved.
> America was a country where opportunity made it so you could become wealthy.
"Several large studies of mobility in developed countries in recent years have found the US among the lowest in mobility"
http://en.wikipedia.org/wiki/Socio-economic_mobility_in_the_...
In the US moving from X to X+Y might only push you a few percent higher in rank, there are still a lot of people in the fat tails on both sides, while the same change in Scandinavia might represent a substantial rank change.
Perhaps the problem isn't that it's hard to move up in the US, the problem is that in northern Europe it's impossible to escape the rat race.
the notion that some have more than others happens amongst the 99%, but the notion that it's reasonable for the owners of companies like Wal-Mart and McDonald's to profit massively while refusing to pay a living wage, provide health care, or even follow basic employment laws is a growing problem that did not happen to the same extent in generations past [since employment laws were established, of course].
The notion that the people making the money are "earning" it while people doing actual work are "greedy" and "should try to get a better job if they aren't happy" etc.. is incredibly unhealthy and it is political propaganda fed to members of the 99% with a proclivity for consuming it, paid for by members of the 1% who much prefer that there is infighting amongst the various worker classes over who has a bigger house or a nicer car rather than to see that the entire system rigged against us is keeping us from living the natural lives we could all be living. you can only get someone to work a job selling a snake oil dream if you give them a taste of it and underwrite a sense of entitlement that encourages the belief that people who aren't succeeding are simply not trying, rather than the truth, which is that they aren't going along with the lie of the game, and the rest of us (self included) and our obsession with the trappings of the game keep us from living in the true reality of the world with the rest of them.
It's very beneficial to these oligarchs to remind us that, while yes, there will always be someone starving and they might just be right outside your doorstep, if you buckle up, save up for your children's college, their doorstep might be a little further from the poor.
and isn't that what it's all about, after all?
I have never seen supporting evidence of this. You can't compare perks of manufacturing jobs of the past to grocery baggers and greeters in Walmart today. An equivalent would be to compare it to a grocery store clerk in the past as well. I know they did not provide a living wage or health care back then either because my father was one in the 60s.
>The notion that the people making the money are "earning" it while people doing actual work are "greedy"
This is basic economics. If what you are doing has little demand, you won't be paid highly for it. To understand what I mean, go into a field and dig holes all day long and then demand that someone pay you for doing 'actual work'. Unless someone desperately needed those holes, you won't be paid anything regardless of the effort you put into it.
>from living the natural lives we could all be living
And what natural life would you be referring to? Tribes roaming around foraging and fighting each other for food? An even redistribution of wealth across the entire globe would drastically reduce the quality of life of >95% of US citizens.
Say we just rob and kill off the 1% since you seem to think they don't contribute. You have just eliminated many executives at large companies, most doctors, most good lawyers, many professors, and many highly-skilled senior specialists in various engineering fields. Now that you have wiped out all of these people that spent years mastering their fields, what exactly is it that you have accomplished? What lesson did we learn? They earned high salaries because they were in high demand. Is it to make sure that you never become so good at something that you will earn lots of money?
Perhaps you are confused and you didn't mean the top 1% but instead meant something like the top %0.01? 1 in every 100 people isn't a conspiring billionaire as you've concocted in your mind. Doctors and small business owners aren't getting together in a secret club each weekend to determine the political propaganda they will feed to the 99% that week.
P.S. Currently, your post is mostly nonsensical run-on sentences. Break them up if you want people to read it.
Yet the number one wealth predictor, having wealthy parents, is more true now than it was fifty years ago.
That is factually inaccurate. People in the top 50% are doing fine. The issue is that people in the bottom 15% are having their teeth kicked in.
The "99%" are not a coalition. That's why the Occupy movement fell apart. They had no goals, because as soon as you start talking specifics you realize that people at the 50th percentile don't want the same policies as people at the 15th percentile.
Obvious example: The mortgage interest tax credit. Get rid of it and the government would have more money to spend on programs to help the poor, and meanwhile it would reduce real estate prices, which would lower rents for non-home owners. It's a policy that hurts the poorest in society, but the top 1% couldn't care less about it. The reason it stays is that the middle 60% want it.
You didn't really mean that, did you? US real income by quintile since 1967[1]. Income in real dollars has been stagnant for everyone but the wealthy.
I can't find household debt by quintile but if I do I'll include it here. It's gone down a bit since the financial crisis (part of the cause of the ongoing depression) but had been growing.
[1]http://www.advisorperspectives.com/dshort/charts/census/hous...
And be careful with the debt numbers. The thing you really want there is net worth anyway. Otherwise you get silly outcomes like people buying homes causing "debt" to increase dramatically even though assets increase by an equivalent amount at the same time.
Edit: Also, if we're going to look at changes in net worth, that will also support my argument. Increases in net worth compound over time, which is why fortunes tend to grow. I.E., the entire thesis of Thomas Picketty's book.
Of course they have. If you make $5 and you just ate, you invest the money. If you make $5 and you have no food, you buy food. Tomorrow the person who invested money still has the investment and is reinvesting the interest but the person who bought food is hungry again. And the top 1% reinvest nearly 100% of their income.
But that's capitalism. Unless you're suggesting to confiscate their assets so they can't keep reinvesting the interest, the solution has to be to bring the middle class up rather than bringing the 1% down. Which we certainly aren't doing as effectively as we could if we committed to the idea, but it's not like engineers and middle managers are out starving in the streets.
I don't even know if we're arguing about anything. Whether median incomes being up 3% over some period of time is equivalent to them being flat is not a very interesting question. What pretty much everybody wants is for the average American to have more of the good life. Is there a policy proposal on the table to do that? "Kill the rich" sure sounds good but it might not be as effective as it would be satisfying.
But the article contains graphs showing that wages for people with bachelor's degrees are growing, and wages of people with master's degrees are growing faster.
And I don't really see the logic of your argument: your could say "X may be true, but it distracts us from talking about Y" about literally anything.
Comparing my personal situation to my parents 30 years ago, I'd argue that we're easily making 25-35% more relative to my folks in the 80s (mostly because we had kids later), but I think that we are less well off in several respects compared to my family in childhood.
Yeah, my grandfather never stepped foot on a college campus, yet he could support four kids and a housewife, own a summer house on a lake with several boats, own a winter house in Florida, upgrade his huge RVs regularly, retire with a large pension at 55, and live a life of leisure for more than 30 years during which he mostly played golf.
Also keep in mind that they weren't expected to put kids through college; and, even if they did, the cost was negligible compared to today. Kids back then were much cheaper.
Perhaps, but if you want to actually change things it is important to look at where political leverage is concentrated.
The 1% rules.
It's nice to see someone with economic credentials who agrees with me. Which end of the either-or proposition should we take? That depends largely on your politics.
I think global free trade would be a nice thing in the happy imaginary world where having a seat in the UN means your country always puts the interests of the whole of humanity above your own. But the simple and obvious reality is that most countries look out for themselves first, and so if we make policies and choices based on our happy imaginary world instead of the darker (or at least greyer) real world where we actually live, we're going to be quite sorry about some of those choices sooner or later.