The article is a bit... skewed.
many valid points, but stating that "Increasing scholarships for working-class children won't make a difference" is BS.
Just throwing money at a problem NEVER works, but having those programs available AND encouraging people to use them DOES work.
Also, somehow saying that the rich do not pass judgement on the poor is another load. Most of the criticism I hear is from people who believe they are "morally better' than their counterparts and are never shy when it comes to expressing their dislike of anything they believe is not "The American Way".
Blaming everything on the release of some ephemeral moral code of responsibility in the 1960's is hogwash. Maybe the responsibility lies more in the widespread portrayal of what is the goal of life in America as portrayed by the media is a more reasonable scapegoat. Maybe the increase of superficial luxury items and easy financing brought on by international outsourcing and unscrupulous banking policies has more to do with our problem than Unwed Mothers not going to church.
just maybe, you think?
"Life sequestered from anybody not like yourself tends to be self-limiting. Places to live in which the people around you have no problems that need cooperative solutions tend to be sterile. America outside the enclaves of the new upper class is still a wonderful place, filled with smart, interesting, entertaining people."
Sorry...but outside of the "enclaves" the US is mostly a horror show.
But I'm supposed to live there... after I've dropped my "nonjudgmentalism".
Oh boy.... I'm sure that would go over well....
Last edited by Fabrizio; January 25th, 2012 at 02:03 PM.
Actually Fab, they are not "horror shows" but you do have a point.
Growing up in Bergenfield NJ, with an extended blue-collar family all within walking distance, I can see both good and bad from those neighborhoods.
Willingness to be a part of "volunteer" fire departments, men out mowing the lawns on a sunday afternoon, kids playing in each others yards on swing-sets or above ground pools. There are more community events and gatherings, more people willing to come out and watch the fire trucks and ambulances go by on the main road on Labor Day or other holidays.
What we DIDN'T have any exposure to was culture. I did not have decent Chinese food until college. I never had Hummus, Falafel, Pita bread, Sushi, Kimchi, or any one of a dozen different culinary genres not contained within typical anglo-saxon/germanic roots.
Even moving to a more "affluent" suburb, my musical exposure remained stifled to what I heard on a few radio stations (which, even with their limited range, were much better than todays purchased stations) which were expanded greatly on entrance into college.
There are merits to the different castes we have in society today, but shoving it all into one category "needed", or qualifying it as a "horror show" is just not fair, or accurate.
Bottom line is, people are stupid, no matter how well educated they are. We have our own little comfort zone based on our own "pack" evolution and tribal socio-economic development. We will always divide into little groups of people we feel comfortable with, for whatever reason. But as our communities get more densely packed and our awareness (due to modern media and communication) gets more widespread, we will become more and more aware of the differences that have been further exaggerated by world commerce.
This article points out the social striation that is coming about that, ironically, has little to do with the actual problems we are experiencing in regards to our power and wealth structure. It is nice to point out that Joe Schmoe STILL wont eat quiche, but the fact that 90% of the "flakes" that do ALSO have little voice in how this country is being run is the important fact that most of these stories dance around like the elephant in the room.
Americans Want to Live in a Much More Equal Country (They Just Don't Realize It)
We asked thousands of people to describe their ideal distribution of wealth, from top to bottom.
The vast majority -- rich, poor, GOP and Democrat -- imagined a far more equal nation. Here's why it matters.
Aug 2 2012, 12:41 PM ET
The inequality of wealth and income in the U.S. has become an increasingly prevalent issue in recent years. One reason for this is that the visibility of this inequality has been increasing gradually for a long time--as society has become less segregated, people can now see more clearly how much other people make and consume. Owing to urban life and the media, our proximity to one another has decreased, making the disparity all too obvious. In addition to this general trend, the financial crisis, with all of its fall out, shined a spotlight on the salaries of bankers and financial workers relative to that of most Americans. And on top of these, and most recently, the upcoming presidential election has raised questions of social justice and income disparities, bringing the issues into focus even more.
It is relatively easy to think about inequality as being too great or too little in abstract terms, but ask yourself how much you really know about wealth distribution in the U.S. For example, imagine that we took all Americans and sorted them by wealth along a line with the poorest on the left and continuing as wealth increases until on the right we have the richest. Now, imagine that we divide them into five buckets with an equal number of citizens in each. The first bucket contains the poorest 20% of the population, the next contains the second wealthiest tier, and so on down to the wealthiest 20% (see Figure 1).
With this in mind, from the total pie of wealth (100%) what percent do you think the bottom 40% (that is, the first two buckets together) of Americans possess? And what about the top 20%? If you guessed around 9% for the bottom and 59% for the top, you're pretty much in line with the average response we got when we asked this question of thousands of Americans.
The reality is quite different. Based on Wolff (2010), the bottom 40% of the population combined has only 0.3% of wealth while the top 20% possesses 84% (see Figure 2). These differences between levels of wealth in society comprise what's called the Gini coefficient, which is one way to quantify inequality.
This is the level of wealth inequality that exists in America, and it is clearly higher than people think, but in Goldilocks-esque fashion, we can ask: Is the real level of inequality too high, too low, or just right? When economists consider the desirable level of inequality, they usually define the ideal inequality from the perspective of economic efficiency: What level of inequality will motivate people to be the most productive and move up the wealth ladder? What level of inequality will allow those at the top to lift up society as a whole (say, by having the resources to invent new technologies)? What level of wealth will keep salaries low and competition high? And so on.
This is one approach to assessing the desirability of wealth inequality, but Mike Norton and I wanted to examine this question from a different perspective--that of regular (non-economist) people--and we wanted to examine inequality in terms of its effect on society as a whole, not just in terms of economic efficiency. After all, inequality is not just about economic efficiency. It's also about our day-to-day experience as citizens, the influence of envy, our social mobility, the importance of equal opportunity, our mutual dependency on each other, etc.
But what does it mean to ask people what level of inequality they want? And how do we get people to respond to such a question without being influenced by their current state of wealth? After all, wouldn't the rich want a higher degree of inequality and the poor want a more even distribution of wealth?
HOW MUCH INEQUALITY DO YOU WANT?
We took a step back and examined social inequality based on the definition that the philosopher John Rawls gave in his book A Theory of Justice. In Rawls' terms, a society is just if a person understands all the conditions within that society and is willing to enter it in a random place (in terms of socio-economic status, gender, race, and so on). In terms of wealth, that means that people know everything about the wealth distribution and are willing to enter that society anywhere along the spectrum. They could be among the poorest or the richest, or anywhere in between. Rawls called this idea the "veil of ignorance" because the decision of whether to enter a particular society is disconnected from the particular knowledge that the individual has about the level of wealth that he or she will have after making the decision.
With this definition in mind, we did two things. First, we asked 5,522 people to create a distribution of wealth among the five buckets such that they themselves would be willing to enter that society at a random place. Their answers could range from a perfectly even distribution with 20% of wealth in each quintile to a fully biased distribution with 100% of wealth in one and 0% in the rest.
We found that the ideal distribution described by this representative sample of Americans was dramatically more equal than exists anywhere in the world, with 32% of wealth belonging to the wealthiest quintile down to 11% by the poorest (see Figure 3).
What was particularly surprising about the results was that when we examined the ideal distributions for Republicans and Democrats, we found them to be quite similar (see Figure 4). When we examined the results by other variables, including income and gender, we again found no appreciable differences. It seems that Americans -- regardless of political affiliation, income, and gender -- want the kind of wealth distribution shown in Figure 3, which is very different from what we have and from what we think we have (see Figure 2).
We understood that setting up an ideal wealth distribution is a rather difficult proposition, so in another task, we made things simpler (see Figure 5) and asked people to choose between two unidentified distributions (again under the veil of ignorance). The first option, unbeknownst to participants, reflected the distribution of wealth in America. For the second option we modified the distribution found in Sweden, making it substantially more equal (we referred to this fictional nation as "Equalden").
We discovered that 92% of Americans preferred the distribution of "Equalden" to America's. And if one were to assume that the 8% who preferred America's distribution was made up of wealthy Republican men, he or she would be mistaken. The preference for "Equalden" was slightly different for Republicans and Democrats, and in the expected direction, but the magnitude was very small: 93.5% of Democrats and 90.2% of Republicans preferred the more equal distribution. While this 3.3% difference is substantial when we think about the economy of an entire country, if we look at it from the perspective of the gap between Equalden and the U.S., it's clear that the similarity across the political spectrum is far more substantial than the differences. And once again, participant's gender and income level did not produce any appreciable difference in this preference.
LEARNING FROM (THE VEIL OF) IGNORANCE
There are a few lessons that we can learn from this. The first is that we vastly underestimate the level of inequality that we have in America. Our society is far more uneven in terms of wealth than we believe it is. Second, we want much more equality than both what we have and what we think we have. Apparently, when asked in a way that avoids hot-button terms, misconceptions, and the level of wealth people currently possess, Americans are actually in agreement about wanting a more equal distribution of wealth. In fact, the vast majority of Americans prefer a distribution of wealth more equal than what exists in Sweden, which is often placed rhetorically at the extreme far left in terms of political ideology--embraced by liberals as an ideal society and disparaged by conservatives as an overreaching socialist nanny state.
A third lesson concerns the political gap between Democrats and Republicans: Given the extraordinarily polarized and derisive rhetoric flying back and forth between Democrats and Republicans, one would think there was an insurmountable gap between their positions. So how is it possible that we found so little difference between them in our study? One reason for this could be our inability to separate our ideology from our current state of wealth. Our interests tend to color our view both of how things are and how they should be. Another reason could be politicians, who, in order to rally people to their side, try to generate feelings of greater difference and opposition--and therefore conflict--than actually exist. From this perspective one could claim that politicians obfuscate similarities by using galvanizing but elusive terms like "small government," "tax relief," and "freedom."
Rawls' veil of ignorance deals with such superficial and irrelevant influences on what we think by prompting people to consider all possible socio-economic situations rather than just their own and the interests and ideologies that come along with that. The veil of ignorance accomplishes something similar to blind taste testing. Take wine, for instance. If a person knows the appellation and price, and realizes that French wine is usually preferable to Finnish, his or her perception and opinion of how good each wine tastes will be influenced by these preconceived notions. Similarly, when we express opinions about politics and life in general, we can't help but be influenced by our own varying degrees wealth and ignorance of others' lives. The veil of ignorance works to separate our core beliefs from the biases and prejudices we develop over time and through the subjective experience of being part of a certain class and demographic.
As for what this means about changing the level of inequality, which from our study seems almost unanimously objectionable, there are essentially two paths: education and taxation. Improving education works in a sense to change the input into the economy--better-educated workers are more resourceful and employable, and can move up the economic ladder. Changing taxation deals with the output--those who prosper pay more into the system than those without the same benefits. Our study doesn't tell us anything about which of these two approaches to reducing inequality would be preferable, but in practical terms, bridging the huge gap between what we currently have and what we want to have would require a mixture of both. Our study also doesn't deal with how to bring what people say they want under the veil of ignorance into line with what they're willing to do when it's their money and resources that are about to be distributed. It is one thing to get people to tell us what kind of society the would want to join, and another to get them part with their money in order to create that society.
With all these objections in mind, it still seems that the political discourse could benefit from a Rawlsian approach. Taking this path could help us understand what it is that we really want and then allow us to consider ways to get there. If our politicians also accepted this starting point, they might argue less about ideology and differences and more about paths to get closer to our common goal--a much less extreme level of inequality.
Social justice and optimal wealth distribution are highly complex topics, and it's hard to imagine that any study could dramatically change opinions about education, welfare, or tax reform. But consider this. When we ran the same basic experiment in Australia, we found Australians did not differ much from Americans in their views of the ideal distribution. When we ran another version of it with NPR listeners, and then readers of Forbes Magazine, the results were still basically the same. And most likely, if you participated in one of our tests, your response too would have fallen in line with these findings.
So whatever you think the current state of wealth distribution is, and whatever you believe the ideal level of wealth distribution to be under the veil of ignorance, there probably is a gap, and a large one, between the two. Awareness of the disparity between what we have and what we want implies that, ultimately, we as a society need to face the problem and find a solution.
Dan Ariely is a best-selling author and the James B. Duke Professor of Psychology and Behavioral Economics at Duke University. His latest book is The Honest Truth About Dishonesty
Copyright © 2012 by The Atlantic Monthly Group
As could be expected, most of the election rhetoric is about the wrong issues. As I've stated before, here is the right one.
Standard of Living Is in the Shadows as Election Issue By DAVID LEONHARDT
WASHINGTON — Taxes and government spending. Health care. Immigration. Financial regulation.
They are the issues that have dominated the political debate in recent years and have played a prominent role in this presidential campaign. But in many ways they have obscured what is arguably the nation’s biggest challenge: breaking out of a decade of income stagnation that has afflicted the middle class and the poor and exacerbated inequality.
Many of the bedrock assumptions of American culture — about work, progress, fairness and optimism — are being shaken as successive generations worry about the prospect of declining living standards. No question, perhaps, is more central to the country’s global standing than whether the economy will perform better on that score in the future than it has in the recent past.
The question has helped create a volatile period in American politics, with Democrats gaining large victories in 2006 and 2008, only to have Republicans return the favor in 2010. This year, economic anxiety, especially in industrial battlegrounds like Ohio, is driving the campaign strategies of both President Obama and Mitt Romney.
The causes of income stagnation are varied and lack the political simplicity of calls to bring down the deficit or avert another Wall Street meltdown. They cannot be quickly remedied through legislation from Washington. The biggest causes, according to interviews with economists over the last several months, are not the issues that dominate the political debate.
At the top of the list are the digital revolution, which has allowed machines to replace many forms of human labor, and the modern wave of globalization, which has allowed millions of low-wage workers around the world to begin competing with Americans.
Not much further down the list is education, probably the country’s most diffuse, localized area of government policy. As skill levels have become even more important for prosperity, the United States has lost its once-large global lead in educational attainment.
Some of the disconnect between the economy’s problems and the solutions offered by Washington stem from the nature of the current political debate. The presidential campaign has been more focused on Bain Capital and an “apology tour” than on the challenges created by globalization and automation.
But economists and other analysts also point to the scale of the problem. No other rich country — not Japan, not any nation in Europe — has figured out exactly how to respond to the challenges. “The whole notion of the American dream,” said Frank Levy, an M.I.T. economist, “described a mass upward mobility that is just a lot harder to achieve right now.”
For the first time since the Great Depression, median family income has fallen substantially over an entire decade. Income grew slowly through most of the last decade, except at the top of the distribution, before falling sharply when the financial crisis began.
By last year, family income was 8 percent lower than it had been 11 years earlier, at its peak in 2000, according to inflation-adjusted numbers from the Census Bureau. On average in 11-year periods in the decades just after World War II, inflation-adjusted median income rose by almost 30 percent.
Matching the growth rates of the postwar period — when the country was poorer, when harsh discrimination against women and minorities was receding and when the rest of the world was weaker — is probably impossible. Yet there is still a vast difference, both economically and politically, between incomes that are rising modestly and not at all.
Historically, periods of economic stagnation have tended to bring pessimism, political turmoil and a lack of social progress, said Benjamin Friedman, an economic historian and the author of “The Moral Consequences of Economic Growth.” The political volatility and partisan rancor of the last several years seem to fit the pattern.
The recent stagnation has also led, economists say, to confusion and even scapegoating about the real sources of the problem. The causes that can seem obvious, and that often shape the political debate, are not necessarily the correct ones.
Take immigration, especially illegal immigration. Whatever other problems it may cause, evidence suggests that it has not played a significant role in the income slump.
It may have caused a slight decline in the wages of native-born workers without a high school diploma (and maybe not even that). But most illegal immigrants lack the skills to compete with the bulk of native workers, according to research by Giovanni Peri, Chad Sparber and others. Notably, incomes in some states with large immigrant populations, like California, have risen faster than in states with relatively few immigrants, like Ohio.
The minimum wage, similarly, appears to play only a minor role in the income slump. It has risen faster than inflation since 2000, even as overall pay at the bottom of the income distribution has not. And the size of the federal government also looks like a dog that is not barking: Washington collected taxes equal to 15.4 percent of gross domestic product last year, down from 20.6 percent in 2000.
A second group of much-cited forces have indeed played a role in middle-class stagnation and inequality, many economists argue, just not as big a role as automation, globalization or education.
Health care costs have grown sharply over the last decade, leaving employers with less cash to use on salaries. Labor unions have shrunk; all else equal, unionized workers earn more, often at the expense of corporate profits. Tax rates have fallen more for the affluent than for anyone else, directly increasing the take-home pay of top earners and indirectly giving them more incentive to earn large amounts.
But many of these factors are particular to the United States, while globalization and automation are obviously universal forces.
One of the more striking recent developments in economics has been economists’ growing acceptance of the idea that globalization has held down pay for a large swath of workers. The public has long accepted the idea, but economists resisted it, pointing to the long-term benefits of trade. “That is starting to change only in the face of very strong evidence over the past decade,” said Edward Alden of the Council on Foreign Relations.
In particular, job growth and wage growth have been weaker in sectors exposed to global competition — especially from China — than in sectors that are more insulated.
Automation creates similar patterns. Workers whose labor can be replaced by computers, be they in factories or stores, have paid a particularly steep price. The American manufacturing sector produces much more than it did in 1979, despite employing almost 40 percent fewer workers.
Workers with less advanced skills have also suffered disproportionately. The pay gap between college graduates and everyone else is near a record. Despite the long economic slump — and the well-chronicled struggles of some college graduates — their unemployment rate is just 4.1 percent.
What is the solution to this thicket of economic forces?
That question is the one that Mr. Obama and Mr. Romney are trying to convince voters that they can best answer. They both accept that the government and the market have a role, but they put a different emphasis on those roles.
It is hard to see how either globalization or automation can be stopped. The proposed solutions instead tend to involve managing them.
If the economy can be made to grow fast enough, incomes can still rise across the board, as they did when the unemployment rate fell below 5 percent in the 1990s and briefly below 4 percent in 2000. If educational attainment rises, more people will be able to get jobs that benefit from technology and global trade, rather than suffer from it. And if inequality continues to soar, the government could choose to use the tax code to ameliorate it — a solution that Democrats favor and Republicans say will hurt economic growth.
Maybe the biggest reason for optimism is that there is still a strong argument that both globalization and automation help the economy in the long run. This argument remains popular with economists: Trade allows countries to specialize in what they do best, while technology creates opportunities to extend and improve life that never before existed.
Previous periods of rapid economic change also created problems that seemed to be permanent but were not. Neither the cotton gin nor the steam engine nor the automobile created mass unemployment.
“When technology reduces the need for certain kinds of labor, we know that some inventive people will one day come along and find a way to use that freed-up labor making things that other people want to buy,” said Mr. Friedman, the economic historian. “That’s what in the long run made the Luddites wrong.”
He added, “How long does it take the Luddites to be wrong — a few years, a decade, a couple of decades?”
Perhaps just as important, what happens to the workers who happen to be living during a time when the Luddite argument has some truth to it?
The author above is talking about income stagnation over the last decade.
The main point of this thread is that income and wealth inequality, the difference in share of national wealth owned by the not-rich and very-rich has been widening for more than 30 years. And the conditions described above should also exist in countries similar to the US, yet the US is unique among industrialized countries as to the scale of income inequality.
Do we have to drag out the charts from previous posts?
And when did this election become about issues? Since one candidate doesn't even seem to have a position on issues, the election has been mostly a horse race.
The issue is that inequality isn't the issue. At most its a symptom of what the author is talking about. Many people already, and many more to come, are economically irrelevent. The ones who end up on high end of the income spectrum are the ones who figure out how to stay relevent.
Growth and income inequality began to spread in the 80's coinciding with the Reagn Revolution and drastic changes to tax rates on high income earners. Coincidence?
The fact is that most of the rich were born into wealth, they did nothing to 'figure out how to stay relevent'. And since the 80's, it is more and more the case that if you are born into the underprivledged class the deck is stacked against you. The single greatest predictor of wealth, is the wealth of your parents.
I repeat. The author doesn't explain why the inequality is so much more in the US than similar economies.
Maybe it's a tax rate and governmental assistance that's more favorable to rich people in the US than in these other countries.
That's an election issue.
Inequality IS an issue. How can the haves NOT be stagnated when the have not's (or the have some's) are? Why are we not seeing a UNIVERSAL STAGNATION of incomes. That gap has become wider and wider due to the people with money writing all the rules.
Add to that the cannibalistic globalization of our own capitalization and you have a country where the few are not working the many, they are EATING them.
Now, the article you posted does have some good points about how the global stagnation of the middle class is a difficult issue to address directly (and thusly almost impossible to successfully soundbyte), it is also, as Zip has pointed out, not a controling factor in the widening gap.
If EVERYONE were stagnant, if growth fell for everyone, maybe it would be the latest phase of the subject of this thread. But since the rich are still outpacing the middle class....
Has there ever been a study to compare rated of entrepreneurial or other financial success that was achieved by those that were not strongly connected to wealth in the first place?
We have exceptions like Facebook, but even that has its own incongruities.
I think a true measure would be what percentage of Americans have been able to achieve "the dream" in the past 10 years, as opposed to previous decades...
Oh, I do think other countries try to forcibly level the playing field (most of Europe comes to mind.) But on an overall basis, they're not doing any better, and much of Europe is doing worse. Looking at Europe, if you want to consider income redistribution as a way of stimulating economic growth, it seems like a significant failure.
"Overall" isn't the point of this thread.But on an overall basis, they're not doing any better, and much of Europe is doing worse.
You're confusing two separate issues. One is about societal fairness, whether or not the economy is advancing or declining. There have been upturns and downturns in the past, and some people made it and some didn't; that has always been accepted. What has happened over the last 30 years is that the opportunity has been skewed by government interference.Looking at Europe, if you want to consider income redistribution as a way of stimulating economic growth, it seems like a significant failure.
The other issue - what is addressed in the article you posted - is about economic stagnation. That's an election issue, but not the same as the topic of this thread.