The Geography of U.S. Inequality

You're confusing two different things. Theories of markets say that in the long term competition will drive profits in any given industry to a nominal level. They don't say that the people who already have capital won't be able to use that capital to keep riding the wave of large profits in industries before they hit equilibrium.

It's not profits that will drop to zero, it's economic profits. That includes implicit costs, which are excluded by accounting profits.

http://www.investopedia.com/ask/answers/033015/what-differen...

Of course, this is irrelevant to a graph of market income. Market income simply reflects how scarce certain skillsets are, income is not profit.

The answer of why people aren't riding the elephants back onto the trunk might simply be because they can't - the implicit costs are too high. For example, suppose I gave you $1M to spend. Could you turn a nurse into a top trader, managing a $50M book? What if I gave you $2M?

One very interesting theory about why this increase is happening now is the headhunter theory: historically, oligopolistic corporations were keeping pay down for the highest productivity employees. Now, as the market has become more competitive, executives/traders/high end developers/etc are better able to capture a larger piece of their true economic value.

https://editorialexpress.com/cgi-bin/conference/download.cgi...

> So, what is off-kilter here?

Unfortunately, at least in the software industry, not everyone can do the work. There is a barrier to entry that may be grounded in innate ability and is exacerbated by educational inequality. As evidence of the former, I would point to all of the first-year engineering students who drop their major because they struggle with the work. These people have same educational opportunities at the collegiate levels as those who don't drop. There may be inequalities with primary and secondary educational opportunities that follow a student into college, but this is not the problem in all cases.

In the terminology of Michael Porter, this is an almost perfect moat: it limits barrier to entry, it's widely accepted by those who must pay higher prices as a result, and it costs little to enforce. Contrast the latter point with medical careers, whose practitioners must pay much in time and money to dig an institutional moat that prevents competitors from entering their employment market.

If software is indeed eating the world, this problem will only get worse.

Excepting the very rich is what the point of the article is I believe.

The growth of economic indexes is meaningless. The gains are going massively onto the people who already own capital. That's the engine of inequality.

Also... You don't "trust" that chart? You can probably calculate it yourself if you want. That chart is data. If you have any reasonable arguments against the accuracy of that data Id love to hear it.

> If the per capita GDP of U.S. grew by 12.4%

Where did you get that number? No way that's right. Here are the numbers from the Fed: https://fred.stlouisfed.org/series/A191RP1Q027SBEA

Annual per capita GDP growth never exceeded 7% from 2000-2014.

All the gains went to the richest in this country.

The middle class in America shrank considerably following 2009.

Numbers of this sort are usually fucking worthless because of the manipulation applied to them in accordance with political goals.

Forget the government figures and look at the market. Sure you might make a buck more an hour but the price of meat has doubled (roughly) in the past five years.

But the curious thing is we live in an era where being poor isn't as fucking horrible as it was in the past. While homeless I was able to have a smartphone, a laptop, and a couple of things of liquid nicotine. That's a sanity keeping pack right there.

I don't care if the rich guy can order custom-made marbelized sculpted horse anuses, my quality of life as a homeless man was increased precisely because rich men were assholes enough to create products general and well-built enough for many environments.

The problem of course is the almost never-ending stream of propoganda which tells people to eat sub-standard food and adopt sub-standard lifestyles. You stuff a population full of terrible diets, little personal physicality, and constant dopaminergic stimulation...

Well I suppose if I were a rich man I'd be chuckling at the peons who are literally segregating themselves physically as a separate species. It'd make breeding and consolidation a bit easier if you could tell a peon visually by their body fat ratio.

GDP growth and income growth are not equivalent - for example, corporate profits that aren't distributed would count towards GDP but not towards individual incomes.

GDP != quality of life or standard of living

One reason could be that they are using average household income - which is also affected by marriage rates.

GDP is a piss poor way of measuring the prosperity of a nation across all of its people.

It's heavily skewed towards the richest in society, and yet people keep harping on about GDP increases in all of these questionable free-trade agreements we keep hearing about.

Increased GDP should not be a reason for adopting anything.

GDP is a horrible measure of prosperity. If one giant corporation exchanged 2 trillion dollars with of goods with another giant corporation in some way, you'd see an uptick in GDP. Doesn't mean that 99.9999999999999% of people ever saw any change.

That especially looks incredible (if not outright impossible) that since 1990 to 2014, real GDP per capita in the U.S. has increased by 39.8%. And the chart somehow implies that average income remains approximately unchanged.

There must be something distorting that chart, like: it is a chart of household income dynamics, and the average size of household has decreased.

I can appreciate the general sentiment, but at least for this post specifically I'm not sure I agree.

The subtle aspects of these two charts are really interesting. Like, the only non-rich group to see income gains in the US is the ~15th percentile group? That's striking, and deserves some consideration. (At a guess, EITC and Clinton's work-for-benefits programs have helped the employed-near-minimum-wage cohort, but not the very poor.) The 2000-2014 numbers are similarly interesting - we see that the ~90th percentile (e.g. surgeons) was insulated from the crash better than the middle class or the very rich, but that the very rich have rebounded completely.

So yes, signaling is different from actual action, but I'm filing this one under 'education'. For me at least, I'm interested more by the subtleties than by the basic restatement of "this is an issue".

I feel like I am educated and fairly high income (will clear $200k this year) but I honestly feel like I have no way to affect change.

Contacting representatives yields nothing but form responses, protesting has had no real effect. Volunteer work and charitable donations are about all I seem to be able to do and that's not on any appreciable scale.

I honestly feel like I have no way to cause anyone to make changes outside of voting. Which, to be honest even when I vote I feel like my voice is not heard.

Marginal utility of money decreases, which means these "pennies" at the hands of literally billions of poor make a whole world of difference to them.

The American Middle Class has the right to be angry about their stagnation, but it's undeniable that the world is better for most people if you compare it to the 90's and early 00's.

What harm is there in the richest people being richer? If they hoard their money, they're temporarily increasing the value of everyone else's. If they spend it, they're trickling it back down to the poor.

Someone living on $2/day (the generally accepted figure for extreme poverty) is living on about $730 per year. A single year of 10,000% growth would get that person to an annual income of $73,000 which would be well into the global 1%.

Annual growth of 10,000% for even a single decade would give that person an annual income of:

$73,000,000,000,000,000,000,000

That's 73 sextillion dollars. For reference Gross World Product is around 100 trillion.

I think you're setting the bar a little high!

I mean, I think it's informative even if percentage results are misleading in some ways. In particular, it's relevant because growth is a good representation of status relative to local prices.

If I remember, a tantalum miner in the DR Congo makes several dollars a day - a bit above the $2/day threshold, but then you have to correct for extortion/pay-to-work. In those Congo mining towns, buying a hot dinner costs around $0.05.

So for those miners, seeing your income double is a hell of a big deal, even if it's only to $4/day. Getting $10/hour wouldn't be a big raise, it would be bizarre hyperinflation.

To be clear, I don't think this means $4/day is a good outcome. Even with low local prices, it's still a pittance and the people getting it are living horribly in global terms. I share your annoyance with "extreme poverty is being eradicated!" stories, because they imply movement to a good position, rather than a less atrocious one.

But for the sake of analysis like this, I think percentage change is still a useful way to go. Raw dollars just means that everything at the bottom is effectively zero, while growth reveals interesting effects like the 5th percentile seeing near-zero gain while the 10th sees real growth.

A - The "capitalist system", much like evolution, does not have goals. Capitalism is just people trading with each other. The USA has had a similar system for hundreds of years, where the rich have gotten richer, but the poor have also gotten richer. So blaming capitalism itself is not a good answer. What has changed within capitalism to make the results from 1776 - 1990 different from 1990 - 2014? Either this is just a temporary decrease for the bottom percentiles, or there are other factors that have caused this shift (globalization, technology, government policies, personal choices, etc).

B - Do you really want to own the business you work for? If you work at a chocolate factory, and own the chocolate factory - your entire livelyhood is tied to that chocolate factory. If the company goes under, you lose your job and your savings. Wouldn't you rather own bits and pieces of many other companies, to share in their success?

But regardless, I believe your point is that it sucks not having savings / capital. Obviously true - but how do you propose people get savings / capital? Confiscate capital from the rich to give to the poor?