Shrinking Income Inequality

Not to be too pedantic, but the $200B is Bezos, not Buffett.

Regardless, taxing the weathy can feed poor children by literally funding programs like food stamps.

The covid payments are effectively unfunded, and taxes are the primary source of revenue for the government

We're going to need to pay for these programs somehow. I'd personally be pretty happy with a lot of inflation, give how much my house cost, but I dont think that that would be the best solution for the country as a whole.

The fact that an individual can accumulate that kind of wealth while another individual can work three jobs and barely live is an indication of some fundamental imbalance.

I'm glad you used Warren Buffet as an example. He has made a point to illustrate how he pays a significantly lower effective tax rate than his secretary. Oversimplifying, it is because his income isn't labeled "income" - it is gains from investments. His secretary, however, has "income". the two are taxed much differently. That example alone shows how the wealthiest are taxed at a lower rate than at least the middle class. And very much simplifying the equation, you can see how two people with different tax rates would see their wealth increased at different rates.

But the really fundamental problem is not taxation of individuals. It is:

- monetary policies which have allowed one group to create money and keep it amongst themselves

- loosening of rules regarding corporations and their employees which allow companies to pay less and provide less benefits now than they did when the Baby Boomers and their parents grew up

- globalization, which has allowed a small few to take labor and resources from distant lands and profit (at the expense of the people in those distant lands)

You've let a bit slip with the "alcoholic parents" phrase. Wouldn't it be convenient if we could explain why poor people who grow up in a slum have few opportunities just because their parents were alcoholics? It doesn't work like that. Without doing research, I would bet that alcoholism is as high or higher amongst the wealthier class than the poorest class.

How about higher education? How has that changed in the last few decades? Student debt? Have starting salaries increased in line with cost of education? No, absolutely not. The value proposition for higher education has diminished significantly, but the requirement of having a college degree has increased.

There's so much more going on than most people notice.

> So what's happening is this artificial grouping "college graduate" has massively expanded, whilst maintaining its average. That's a remarkable increase in wealth for the 40% "left out" three decades ago.

You are leaving the cost of education out of the equation, which has increased massively over the past 30 years. Most Americans graduate under a mountain of debt. If salaries have remained stagnant, for the 10% who would have been that amounts to a net lower salary, at least for the first X years of employment until the debt is paid off. For the other 40%, they might have had the option to go work in a steel mill or an auto plant with a high-school degree, and now they have to go to university, and acquire a massive debt to have a hope of competing for a job outside the service industry.

I'm not so convinced this is a net win for anyone involved.

> Let's be clear. The top 1% in 1950 lived more differently than the rest of society in 1950; more so than the top 1% do of society today. Today the top 1% live much more like the top 10% who live much more like the top 50%, and so on.

I'm also not so convinced this is the case. If you want to make the argument that I am living like Jeff Bezos because we can both have an LCD TV and and iPad, I think this is a very shallow argument.

While the cost of consumer goods has not risen significantly in the past few decades, the cost of the markers of a middle-class existence absolutely have. For instance, due to the increased cost of housing, the rate of home ownership among millennials is much lower than that of previous generations. Due to student loan debt and the high cost of healthcare, many young people who might have risked leaving a 9-to-5 job to start a business don't feel safe to do so.

Low cost consumer goods are nice, but the "American Dream" has always been about owning your own future, and being able climb into the next social class above your origins with hard work and ingenuity. Due to income inequality, the price of getting a seat at the table is what has increased out of the reach of almost everyone.

I care most about non-consumption spending. Having more money to invest means you decide what gets built.

Sure, but income doesn’t measure all consumption. How would you consider a third home in the Hamptons? Certainly not income, but definitely both wealth and consumption. Wealth is probably a better proxy for consumption.

Seems factually accurate, though the editorialized moniker of "rich-people money shuffler" is probably unnecessary.

https://en.wikipedia.org/wiki/Phil_Gramm#Career_with_UBS

How can a layperson believe anything these respected publications publish? It seems everything is twisted or manipulated - super annoying. It is time the media took a serious look at themselves.

Interesting that he's arguing in this article that taxes are a successful way to shrink inequalities, yet is also pushing for lower taxes.

Yes, they specifically mention "adjustments" due to changes in the way the Census collects data. They don't explain what those adjustments were and why they were needed. It all feels very much like adjusting the axis on a graph to make a big slope look smaller or to take small slope and make it look like a hockey stick. Smells very much like manipulating data to get the results you want.

That's your choice, but it might be useful for you to know:

I checked some private healthcare insurance where I live, and the difference in cost between these plans was in fact only $800.

The high deductible plan likely comes with an HSA which is perhaps the most tax advantaged way to store funds. That may not be as valuable to you as $2000 deductible coverage but the equation isn’t as stark as that dollar amount.

Anecdotally, every time I run the numbers for my family the high deductible plan comes out ahead so I view an offer without one as less appealing. Though most employers offer both.

While I do agree, it's also often incredibly difficult to compare monetarily.

Plans vary in coverage and out of pocket expenses significantly combined with the fact you don't know what you will need to use the insurance for, if anything at all.

When you're younger, it's less likely it's valuable, when you're older, it's more likely that it's valuable.

If you have a preexisting condition (say someone needs dialysis), it's a little bit more straightforward because you already know what sort of services you need. Ultimately you don't know what you service provider will end up charging the insurance to cover costs, how little your insurance will try and provide, and what you'll have left to pickup on the tab.

Furthermore, employers are known to shop the market for better deals, so the insurance you sign up for could shift in 6-12 months. I factor insurance into comp but I look at only the most general attributes and I don't weight these as directly as compensation because I (knock on wood) am fairly healthy and tend not to use my insurance.

I would agree with you but healthcare isn't a liquid/tangible asset like own stock or making cash is. I can't take out my healthcare the same way I can sell stock or collect a paycheck. Which in my opinion makes all the difference when calculating income. Its a much easy argument to make when healthcare's cost can be much greater than funds paid out. For instance if the equation for income was Income = Wages + Asset_growth (simplistic) but you could compare two people person A makes 10$ person B makes 100$. There is a lot of income inequality but if you add healthcare to that which is only "cashable when sick" of say 20$ both parties have a real delta of 100$ but there % difference lowered significantly in this case it went from 90% to 75% even though the actually income which people can choose how it is spent and use still has a 90% difference. Sounds like adding extraneous variables to mask more interesting differences

It's also disingenuous to not factor in the massive wealth transfer in progress via the US health care system in an article on income inequality that counts healthcare as income.

The US pays almost double per capita for health care compared to its northern neighbour Canada.

Did you reduce your employee wages each by $7800, at that time, or have you declined to give pay increases of $7800?

Which state are you in that forces employers to buy insurance? I'd like to know the details why you can't just give people the $7800.

Also, this may be state specific, but another benefit for the employee of doing it this way, is their portion is from pre-tax money.

And if they each had to buy their own health care they would pay much more than $7800/yr. Negotiating premiums with carriers is easier as part of a group of EEs than as an individual.

I read it more as "it's unhealthy when, in the absence of government redistribution, some people are starving on the streets while others are making more money than God."

Which I would think is an even bigger indictment of what we've got now, since we already have a moderate amount of government redistribution, but still have people starving in the streets and others making more money than God.

How are you defining lazier, diligent, unproductive?

I've seen this argument, but i never understand the people making this argument. China is called the factory of the world, and it is undeniable that a lot of chinese labor force works in manufacturing. So if jobs weren't lost due to outsourcing, then what are these industries and jobs doing in china? I think the standard response is that usa's manufacturing output has increased, but comparing 1970s manufacturing output to 2020 isn't at all fair. You need to consider the alternate world, where globalism wasn't this big a force, and most manufacturing stayed in usa. There would be even more manufacturing in USA, so globalism did lead to job loss.

Yep. Even if the US brought manufacturing back (whatever that means since output is higher than ever), the jobs would not come back.

This belief, that US manufacturing is doing better than ever and job losses are due to automation is false and based on statistics that overvalue microprocessors. Here’s a great paper on that with an excerpt from the introduction.

http://www.upjohn.org/MEG/papers/Measuring%20Mfg_Houseman_Ba...

First, it is generally unknown that the robust growth in real GDP in the manufacturing sector is largely driven by one industry: computers and electronic products. For most of manufacturing, real output growth has been relatively weak or negative.5 When the computer and electronic products industry is excluded, real GDP growth in manufacturing falls by two- thirds between 1997 and 2007, the decade leading up to the Great Recession. In 2011, without computer-related industries, real GDP in the manufacturing sector was actually lower than in 2000. The computer and electronic products industry similarly drives real manufacturing output growth in most U.S. states. Real manufacturing GDP growth between 1997 and 2007 falls by more than half in a majority of states and by at least 25 percent in all but 10 states. Furthermore, the extraordinary growth in real value added and accompanying productivity growth in the computer and electronic products industry results largely from prices for two sets of products: computers and semiconductors that, when adjusted for quality improvements, are falling rapidly. These quality improvements, in turn, largely reflect better design and increases in the density of electronic circuitry. While changes in manufacturing processes are necessary to produce these improved designs, the production processes in computer and semiconductors have been automated for many decades. Thus, the high growth in real value added and productivity in the computer and semiconductor product segments, and by extension the manufacturing sector, reflects, to a large degree, product improvements from research and development rather than automation of the production process. Unlike productivity resulting from automation, which involves the substitution of capital for labor, productivity arising from improvements to product design and production processes does not, in and of itself, cause job losses.

Ironically, the extraordinary growth in real value added and productivity in the computer and semiconductor industries does not signal the competitiveness of the United States as a manufacturing location for these products. Drawing on new market research data, we provide evidence of the shift in the location of computer and semiconductor manufacturing to Asia. Few personal computers and servers are assembled in the United States today, and consequently the United States runs a large trade deficit for these products. The United States retains a significant presence in semiconductor wafer fabrication, but over the last decade manufacturing capacity has expanded much more rapidly in Asia, and, as a result, U.S. market share has declined rapidly. Although many of the computers and semiconductors produced overseas are still designed in the United States, the shift in the location of production has important implications for the number and types of U.S. jobs.

Um... I was hoping the report was for a layperson... maybe I need to recalibrate a bit...! The https://wid.world website is quite a good start. And there's Piketty's book, it's a slog but is aimed at the intelligent general reader. I haven't read his new one.

I guess my point is that by including government payments in calculation of income inequality they are legitimizing the use of government payments to reduce inequality.

I live in highly-developed country with socialized healthcare and education. Still, people here are obsessed with inequality too.

In ever measure there is, life has been getting better for centuries. Life expectancy, abolishment of oppression (slavery, debtor's prisons, serfdom, involuntary servitude, military conscription in many countries), educational attainment, and even standard of living have all improved.

Finally, the word "poor" needs to be retired. I've met lots of people with no money, and very few of them were poor people.

Eventually these pandemic unemployment checks are going to end, and reality will set in.

When you’re competing against another business, you’re on relatively even footing.

When you’re competing against a government dropping taxpayer money out of metaphorical helicopters, it’s not exactly an even competition.

Competing? On one hand we have businesses trying to pay people to do work. On the other we have the government paying people to do nothing.

Wow gee I guess businesses just need to up their game.