Inequality much worse than most think

[Thailandnotes]

Re: Inequality much worse than most think

What about the less exceptional? Should the merely hardworking be able to make a living? Raise a family? Be middle class? Lower middle? There was a time when a factory/construction/janitorial/retail worker (not boss/business owner/entrepreneur) could support a family and have hope that the next generation might move up the ladder. You needed train-ability, a work ethic and a saver's mentality.

Now two of those jobs are often insufficient and usually can't be found anyway. And everyone has been conditioned to live in debt. This part of the wealth inequality issue is more disturbing than the fact that I only went up a few rungs and didn't get stinkin' rich.

How many millions are unemployed, under-employed, or the working poor? The solution can't be "be exceptional and entrepreneurial".

Go back to the first post and see how bad the tail of the curve is.

LazyBoy, I was going to post something along these lines.

The change has been enormous and I don’t think there has been a book that nails it.

In the 70's a professor at a small college could buy a nice house, send his three kids to college while his spouse stayed home. An airline baggage handler could pay off his car and rent a nice apartment. Hardworking college kids could earn much of their tuition and living expenses during the summer.

Poof! In one generation...Gone!

[leegs]

Re: Inequality much worse than most think

Great thread! But a lot of the focus has been on how far up the economic ladder the exceptional (those who are also hardworking, aggressive and lucky) can climb. Why not? We're all exceptional here, right?

IMO, this is ignoring the larger part of the wealth inequality issue. What about the less exceptional? Should the merely hardworking be able to make a living? Raise a family? Be middle class? Lower middle? There was a time when a factory/construction/janitorial/retail worker (not boss/business owner/entrepreneur) could support a family and have hope that the next generation might move up the ladder. You needed train-ability, a work ethic and a saver's mentality.

Now two of those jobs are often insufficient and usually can't be found anyway. And everyone has been conditioned to live in debt. This part of the wealth inequality issue is more disturbing than the fact that I only went up a few rungs and didn't get stinkin' rich.

How many millions are unemployed, under-employed, or the working poor? The solution can't be "be exceptional and entrepreneurial".

Go back to the first post and see how bad the tail of the curve is.

EXACTLY! This is really the important subject. All this discussion about how 'easy' it is for a motivated person to rise from the 20th percentile to 80th or 90th or whatever is mostly irrelevant IMO. (BTW I agree with what people have said on the subject - there is still plenty of opportunity for the exceptional.) The sour grapes over how difficult (impossible?) it is to rise to the 99th are even more irrelevant.

The issue is the quality of life and work for the 50th percentile. And I don't mean in terms of the quality of their car, but in terms of security, or at least anti-fragility, among other factors.

[llanlad2]

Re: Where to make it

The other possibly good places to live, Denmark, Sweden, Holland, Taiwan, Singapore, Finland, New Zealand, Australia, Hong Kong, are still trapped in their inherited biases...a tendency towards feudalism.

I prefer the idea of a Republic, and a lot of old fashioned Constitutionality (prior to 1913). If we can but dump the fantasy players on the rest of the world, and avoid it here in America, I believe we can survive well enough.

America is not the only good place to live...but it is still the best.

It is the best for some. The size of the "some" is getting less and less all the time. As a wealthy country "survival" is a very unambitious goal. Conditioning and propaganda are trying to convince people it is. It isn't. Give me Scandinavian feudalism every time. Longer life-expectancy, national health coverage, lower working hours, higher levels of employment. And have you seen the women?

As for debt being imaginary, well that may be true, but when imagination is backed by force, then it becomes all too real.

[santafe2]

Re: Inequality much worse than most think

Great thread! But a lot of the focus has been on how far up the economic ladder the exceptional (those who are also hardworking, aggressive and lucky) can climb. Why not? We're all exceptional here, right?

IMO, this is ignoring the larger part of the wealth inequality issue. What about the less exceptional? Should the merely hardworking be able to make a living? Raise a family? Be middle class? Lower middle? There was a time when a factory/construction/janitorial/retail worker (not boss/business owner/entrepreneur) could support a family and have hope that the next generation might move up the ladder. You needed train-ability, a work ethic and a saver's mentality.

Now two of those jobs are often insufficient and usually can't be found anyway. And everyone has been conditioned to live in debt. This part of the wealth inequality issue is more disturbing than the fact that I only went up a few rungs and didn't get stinkin' rich.

How many millions are unemployed, under-employed, or the working poor? The solution can't be "be exceptional and entrepreneurial".

Go back to the first post and see how bad the tail of the curve is.

In many ways living in the United States has become a blood sport. You must win or lose. Nothing in between is acceptable or understood. You are exceptional or you are fodder. Muddling through is not acceptable. We are opposed to each other for almost any reason and looking for an internal fight.

In no particular order: It is a result of required integration of races and forced acceptance of non traditional lifestyles. It is due to the rise of fundamental religious beliefs. It's due to the belief in white America that life should be easy and incrementally upward moving. It is due to the indoctrination of Fox and MSNBC. It is due to our general disrespect of honest, every day work. It is due to us valuing education, health care and housing as profit centers. It is due to us taking on debt to pretend we're not working class or maybe worse, (see disrespect of honest work). It is due to technology that allows us to withdraw from community. It is due to a tax system that favors success and failure and punishes everything in between.

This is just my off-the-cuff list, feel free to add to it. What it is not driving this is crooked politicians or greedy bankers. They have been around since well before The US was formed and will be around after we fade. Americans are willfully failing each other. We by-and-large don't care about each other. We need to see others fail to feel successful. I see no other explanation.

[jr429]

Re: Inequality much worse than most think

EXACTLY! This is really the important subject. All this discussion about how 'easy' it is for a motivated person to rise from the 20th percentile to 80th or 90th or whatever is mostly irrelevant IMO. (BTW I agree with what people have said on the subject - there is still plenty of opportunity for the exceptional.) The sour grapes over how difficult (impossible?) it is to rise to the 99th are even more irrelevant.

The issue is the quality of life and work for the 50th percentile. And I don't mean in terms of the quality of their car, but in terms of security, or at least anti-fragility, among other factors.

I agree with your comments here. It's still possible for the highly motivated to succeed - but our current political and economic policies have made the majority of americans less wealthy, less successful and less secure. Of course the original thread title is a little misleading.

[jr429]

Re: Inequality much worse than most think

. We by-and-large don't care about each other.

There you go. Morality has degraded into a culture of greed and the increasing inequality of wealth coupled with the reduction of quality of life for the majority of americans has led to a me or him mentality. Pretty sad.

[BadJuju]

Re: Inequality much worse than most think

There you go. Morality has degraded into a culture of greed and the increasing inequality of wealth coupled with the reduction of quality of life for the majority of americans has led to a me or him mentality. Pretty sad.

I don't think it is all that different from history. There hasn't been any degradation in morals.

[vinoveri]

Re: Inequality much worse than most think

LazyBoy, I was going to post something along these lines.

The change has been enormous and I don’t think there has been a book that nails it.

In the 70's a professor at a small college could buy a nice house, send his three kids to college while his spouse stayed home. An airline baggage handler could pay off his car and rent a nice apartment. Hardworking college kids could earn much of their tuition and living expenses during the summer.

Poof! In one generation...Gone!

Chesterton in fact nailed it 100+ yrs ago in "What's wrong with the World" - a great first book to read if you haven't had the pleasure of reading GKC. The story of Hudge (plutocrat), Gudge (Marxist) and Jones (common man). http://gkcdaily.blogspot.com/2013/01...and-gudge.html
full book here: http://www.gutenberg.org/files/1717/1717-h/1717-h.htm

[jiimbergin]

Re: Inequality much worse than most think

In many ways living in the United States has become a blood sport. You must win or lose. Nothing in between is acceptable or understood. You are exceptional or you are fodder. Muddling through is not acceptable. We are opposed to each other for almost any reason and looking for an internal fight.

In no particular order: It is a result of required integration of races and forced acceptance of non traditional lifestyles. It is due to the rise of fundamental religious beliefs. It's due to the belief in white America that life should be easy and incrementally upward moving. It is due to the indoctrination of Fox and MSNBC. It is due to our general disrespect of honest, every day work. It is due to us valuing education, health care and housing as profit centers. It is due to us taking on debt to pretend we're not working class or maybe worse, (see disrespect of honest work). It is due to technology that allows us to withdraw from community. It is due to a tax system that favors success and failure and punishes everything in between.

This is just my off-the-cuff list, feel free to add to it. What it is not driving this is crooked politicians or greedy bankers. They have been around since well before The US was formed and will be around after we fade. Americans are willfully failing each other. We by-and-large don't care about each other. We need to see others fail to feel successful. I see no other explanation.

I guess I just live and associate with folks where I do not see the pessimism that you seem to. I agree that most of the things you mention are causing difficulties, but I really don't see it as a blood sport where you must win or lose. Most of the people I know are reasonably happy with their life, and I am talking about many economic levels.

[jr429]

Re: Inequality much worse than most think

I don't think it is all that different from history. There hasn't been any degradation in morals.

I was reading up on the purchase of the Seal Beach Naval Airstation a few weeks ago - a huge plot of land in southern california. The federal government offered the owner (some lady I don't remember who) a certain amount for the land and she came back with a LOWER counter-offer citing patriotism. I think it's very rare today that a land owner will not try to ream the federal government for every penny and more. I believe "morality" is just a word used to characterize a state of mind. While human nature has always been able to be at its very best and very worse I believe culturally our morality has degraded over the years. In this particular case I suppose greed versus generosity.

[wayiwalk]

Re: Inequality much worse than most think

I’m really amazed by the blindness of the 1%, to have this power and let things head to where they are going. No amount of police, gated walls around their homes/communities, body guards or security systems will help once we pass the tipping point of ubiquitous poverty leading to ubiquitous crime. Unfortunately, I expect that last week’s shooting/murder during a car-jacking at an upscale mall in New Jersey to become more common.

http://www.nj.com/news/index.ssf/2013/12/dustin_friedland_funeral.html

NOTE - I’m not suggesting anything specific related to this particular person in this story being 1% er or anything like that. When things go bad, I’m sure the middle class will suffer as much if not more than the most wealthy….but in general, everything will get crummier for everyone.

[lektrode]

Re: Inequality much worse than most think

I’m really amazed by the blindness of the 1%, to have this power and let things head to where they are going. No amount of police, gated walls around their homes/communities, body guards or security systems will help once we pass the tipping point of ubiquitous poverty leading to ubiquitous crime......

+1

and IF it happens - one wont want to be anywhere near a bluestate urban area, thats for DAMN sure.

[dcarrigg]

Re: Inequality much worse than most think

In the meanwhile, Lek, it's interesting to look at the studies on depression, suicide, and income inequality. I've seen studies from sources as diverse as the Boston Fed and the National Institutes of Health that correlate wider income inequality with higher suicide rates for both rich and poor people. They can find this in state-by-state, country-by-country, and neighborhood-by-neighborhood patterns. Some (less well documented) studies find ditto with depression rates.

And there's a whole range of behavioral economic work that shows people become increasingly loss-averse the more unequal their neighborhood or surroundings. Put simply, people start behaving irrationally in defense of what they have, and even give up better options when they present themselves, the more unequal their neighborhoods are. Human happiness, as opposed to GDP, seems to be about relative income and relative wealth (plenty of studies support this too). It doesn't even matter if you have a very high income floor to alleviate poverty. If things are very unequal, and you're at the bottom, your neighbors will look down upon you, and what's more, they'll fear they'll become you. And this effect seems to get worse the less equal things become.

All-in-all it shouldn't be surprising. Take any pack animal, split the pack up, give sixty cows to one of them, nothing to others, and a cup of kibble to most. Make them all watch it go down. They're going to get neurotic. That's NYC in a nutshell.

[rjwjr]

Re: Inequality much worse than most think

I question the antiquated framework of the social policy debate on economic equality, set as Labor vs Capital. It's a holdover from an era of slow technological innovation and highly limited social and economic mobility.

In Marx's time the chance of any young man or woman starting life as Labor and later in life becoming part of the Capitalist class, per the Marxian conceptions, was so remote as to be irrelevant from the perspective of his analysis of the political economy, yet such is common if not typical today, at least among certain cultural groups. In Marx's day if you were born to a family of laborers then a laborer you would be, too, and if you were born to wealth and privilege then you were forged from birth a Capitalist, so he can be forgiven for conceiving of the conflict between economic classes as between two immutable populations sets. As for the class aspiring to rise from one to the other Marx was contemptuous, referring to them as the Petite Bourgeoisie.

In the United States and a few other countries today social and economic mobility is largely a matter of family and culture, outside the control of the State.

Speaking for a moment from personal experience, I started my working life as a tech wiring and soldering circuit boards for a few dollars an hour and now spend a good amount of my time investing in and helping start-up companies. I had no inheritance to speak of when my parents passed away when I was in my 30s. What I did have was the luck of intelligence, health, education, and culture, some of which are hereditary advantages and others a factors of family and culture.

No matter what it does the State can never compensate for the poor distribution of these advantages among all citizens. It can endeavor to improve by law better equality of opportunity but anything the State tries to do to create equality of result inevitably backfires.

Among the critical factors for economic success culture and family are clearly now the most significant but still the least discussed, despite the clear evidence of this all around us.

A family from China moved in down the street from us during the housing downturn. Prices didn't go down much here but did somewhat and they timed their purchase to the downturn. The house is small, maybe 1500 square feet, with two bedrooms and one bathroom, swamp behind it and power lines beside it. I don't know exactly how many people live there but by rough count there are the mother and father, three kids, and at least one grand parent living in the home. They could have purchased a larger home on a larger and less modest lot in the neighboring town. But what the little house by the power line lacks for amenities it makes up for in one aspect of its location that was of primary importance to the family: proximity to one of the best elementary schools in the country. From there their children can attend to one of the best high schools, and after that be in a good position to get into MIT or Harvard. By moving into the cramped house they know that when their kids grow up they will be well educated, and speak without with an accent and vocabulary that instantly identifies them as part of the educated class. With that they have a ticket to a well paying profession or not, if they so choose.

The upper hand that they will have over the native-born kids the next town over, advantages that will serve them all of their lives, will be entirely due to decisions made by their parents, which decisions are a factor largely of culture. They will have nothing to do with the State.

When I speak with immigrants from Russia or India or China or virtually anywhere in the world they invariably express their confusion at hearing the complaints by native-born Americans about the unfairness of the American economy, as indicated by the fact that some are wealthy while others are poor.

A friend's Russian girlfriend put it to me this way -- paraphrasing. I asked her what she thought of economic inequality in America. Rolling her eyes, she said "All this whining and complaining. 'It's not fair that these guys have so little and these other guys have so much.' In my country as a woman I had no opportunities to advance myself. To even want to advance yourself was bad and unladylike. Your family history, race, religion, gender, accent... all of these narrow you down there. Here no one cares, or, well, not nearly so much. Here your boss cares what you can do for him. Promise results and deliver and it does not matter if you're a woman or African or what you are. If you fail you get to try again! Start over! And if you are broke you have welfare and food stamps, not to live like a king but you will not starve. America is the Socialist dream but better because you can opt-out. What more do people here want than this? I don't understand it."

Incredible post, EJ. I anticipate that future generations and philosophers will marvel at many of your thoughts and posts on many topics (likely more so than some of the contemporary psuedo-intellectual debaters on this site and elsewhere). Even your patience and continued participation in the forums is admirable. It continually shocks me when members complain about the cost of premium membership and/or the low volume of articles. In my humble opinion, the value of your wisdom and insight is the best value I have ever encoutered in my 52 years and am likely to ever encounter again in my lifetime. Thank you for continuing to provide this opportunity.

[jk]

Re: Inequality much worse than most think

great thread, great discussion- some friction for sure, but mostly mutual respect. i'm also impressed by the range of experience and education demonstrated here. we're quite the group! unfortunately, we're so much better at identifying the problems than finding solutions.

some historical trends are likely to ameliorate the problem. the financial sector in the s&p grew to a size comparable to that attained by the materials sector in the late 1970's. that proportion is starting to shrink: these things tend to be mean reverting. the american worker has been getting killed by the global labor arbitrage. but globalization is past its peak and so this phenomenon is likely to subside. technology has been destroying jobs, too, of course, while creating some others. these transitions are always ugly, i think. what happened to ned ludd's fellow weavers? and what happened to all the agricultural workers who were displaced by the reaper and the combine? most were able to move to cities and find work, some didn't adjust as well. as manufacturaing was hollowed out there were increasing slots in the service economy, but most were pretty crappy. there is a cohort of long-term unemployed, many of whom are older workers, who will never have another job. their jobs disappeared, other- new- jobs will appear but will be filled by younger workers. in looking at population outcomes, it never hurts to remember that behind each distribution is a set of individuals. one outcome may look comparable or better than another over the population [e.g. the craftsy weaving jobs disappeared but there were new, higher productivity, industrial weaving jobs], but different individuals win or lose under each scenario.

someone shared a recent piece by ray dalio with me- dalio thinks we're about 1/4 of the way through a secular deleveraging cycle, with just about all the risk to the downside. the fed can withdraw stimulus only very gently if at all, at the risk of crashing the economy. otoh, it's not clear whether more qe can have any positive effect, nor is it clear what other tools the fed might come up with. dalio thinks the deleveraging has been "beautiful" so far, by which he means the pain and losses have been spread around. of course, dalio is a multi-billionaire and that might be affecting his perspective.

perhaps we're close to, or even past, the peak of inequality. is it worse now than it was in the 1920's? a quick google search says no, it's not worse than the '20's, just comparable to the 20's. of course we know how that worked out.

on a more personal note, i found myself really touched, moved, by some of the stories of our own members here. [and remember this is a pretty functional group]. i really wish the best for everyone here. as i look back on the hardest times in my own life, more emotional than material it happens, they are also the times that i think i learned the most, grew the most. your pain is your tuition; you might as well get an education.

i do some giving at the end of each year, and this year for the first time made a donation to a traditional kind of charity - a food bank - instead of just the environmental, preservation or cultural or educational institutions i've favored in the past. [not that i give away so much money- i don't want to mislead people or misrepresent myself here.] anyway, my point here is that i was so offended by the cuts in the food stamp program that i felt i had to do something, a bit. i don't agree with margaret thatcher's position that there is no such thing as society. we evolved in the setting of small social groups, communities or troops. we are social animals. the issue is how far we extend the lines of connection.

[i'll add for you, woodsman, that i thought nozick's anarchy, state, utopia was brilliantly, almost mathematically, argued but kind of laughable in saying - in an early footnote iirc!- that historical atrocities and injustices were impossible to untangle, so he would just ignore them and blithely proceed with his analysis. i think his later, more mature, writing on ethics in philisophical explanations were ultimately more illuminating, or at least more to my taste.]