[andyt]

BartSimpson BartSimpson:

andyt andyt:

Do poor people really have equality of opportunity?

Prove otherwise.

What would you accept as proof? Do kids raised in poor households really get the same quality of education and parental support as those in better off households? Does nutrition play a role or not? Living in a high stress neighborhood with only poor role models? Poor people have a lot less resources to invest in their children vs richer parents.

Move up the ladder. Does a kid who has to take loans to go to state really have the same opportunity as kids whose parents can send them to the Ivy League? Did George Bush really have the same equality of opportunity as you did?

And income inequality is not just about opportunity, but what we value as a society. We're saying the wall street types are worth so much more than the average worker. We're nuts to do so.

[BartSimpson]

Andy, what do you propose to do about 'income inequality'? Hmmm?

[Proculation]

andyt andyt:

BartSimpson BartSimpson:

andyt andyt:

Do poor people really have equality of opportunity?

Prove otherwise.

What would you accept as proof? Do kids raised in poor households really get the same quality of education and parental support as those in better off households? Does nutrition play a role or not? Living in a high stress neighborhood with only poor role models? Poor people have a lot less resources to invest in their children vs richer parents.

Move up the ladder. Does a kid who has to take loans to go to state really have the same opportunity as kids whose parents can send them to the Ivy League? Did George Bush really have the same equality of opportunity as you did?

And income inequality is not just about opportunity, but what we value as a society. We're saying the wall street types are worth so much more than the average worker. We're nuts to do so.

Who says so ?

[BartSimpson]

Proculation Proculation:

andyt andyt:

What would you accept as proof? Do kids raised in poor households really get the same quality of education and parental support as those in better off households? Does nutrition play a role or not? Living in a high stress neighborhood with only poor role models? Poor people have a lot less resources to invest in their children vs richer parents.

Move up the ladder. Does a kid who has to take loans to go to state really have the same opportunity as kids whose parents can send them to the Ivy League? Did George Bush really have the same equality of opportunity as you did?

And income inequality is not just about opportunity, but what we value as a society. We're saying the wall street types are worth so much more than the average worker. We're nuts to do so.

Who says so ?

Those nasty free people all across America.

[Proculation]

BartSimpson BartSimpson:

Proculation Proculation:

andyt andyt:

What would you accept as proof? Do kids raised in poor households really get the same quality of education and parental support as those in better off households? Does nutrition play a role or not? Living in a high stress neighborhood with only poor role models? Poor people have a lot less resources to invest in their children vs richer parents.

Move up the ladder. Does a kid who has to take loans to go to state really have the same opportunity as kids whose parents can send them to the Ivy League? Did George Bush really have the same equality of opportunity as you did?

And income inequality is not just about opportunity, but what we value as a society. We're saying the wall street types are worth so much more than the average worker. We're nuts to do so.

Who says so ?

Those nasty free people all across America.

'worth' as 'worth a better salary' or 'worth' as 'worth more as an individual'.

[Benn]

andyt andyt:

Do kids raised in poor households really get the same quality of education and parental support as those in better off households? Does nutrition play a role or not? Living in a high stress neighborhood with only poor role models? Poor people have a lot less resources to invest in their children vs richer parents.

Many still manage, it depends on their parents in a big way. I know a woman who immigrated here with her folks, never spoke a word of English, lived in a poor area and went to the worst school in this half of town. Her teenage boyfriends father spent most of his time in the Joint and now she's my family doctor married to a heart surgeon.

But yes, it is hard to work up from poor areas, damn hard work, but it can and has been done by many, with the right family support of course.

The shrinking middle class is certainly an issue but a workable solution is not so easy.

[andyt]

BartSimpson BartSimpson:

Andy, what do you propose to do about 'income inequality'? Hmmm?

I don't pretend to have all the answers. What comes to mind are higher minimum wages, greater unionization of the work force and higher taxes on high income earners to take pressure off the lower ones. All old ideas, all subject to criticism. But if we just go along as we are, pretty soon we'll look like China or India - is that what you want?

The US was doing far better when income inequality was low, such as the first few decades after WWII. There was a huge surge in the middle class, as wages rose. The average CEO at the time made 20 times more than his workers, now its hundreds of times more. Yet, America did not collapse. CEOs did not leave the country in droves because they felt themselves underpaid. Same with taxes. A 70% tax rate on the highest income bracket certainly sounds high today, yet the rich weren't abandoning America or committing suicide. And highways were being built etc - there was money to build up the infrastructure of the country that doesn't seem to be there now.

Here is the Economist, which doesn't see income inequality as a problem:

$1:

Rather than worrying about how rich some American workers are getting, the focus should be on giving everyone a an equal chance to be successful. This might mean making the tax code less regressive by expanding the earned income tax credit, eliminating tax subsidies to the rich, and improving access to quality education. Filling that last tall order should keep everyone too busy to worry about Paris Hilton's yacht.

Here's someone talking about Robert Reich:

$1:

He makes the case and it’s a solid one that income inequality has so skewed the numbers leaving the middle class (read: most people) sucking air and not able to finance the basic American lifestyle either in reality or aspiration.

He has some proscriptions, and the first was fascinating: a reverse income tax. He tries to sandwich a pretty radical economic proposal by first citing the conservative, Chicago economist Milton Friedman as a father of the concept and the usually popular Earned Income Tax Credit (EITC) as the best working model now in operation. Here’s how it would work:

Full-time workers earning $20,000 or less would receive a wage supplement of $15,000 (i.e. income = $35,000).
Supplement would decline on income changes
o +$10,000 for $30,000 earners = $40,000

o +$ 5,000 for $40,000 earners = $45,000

o + $0 for $50,000 earners capping off the reverse income supplements

Tax rates would also support this pushup from the bottom
o 10% for incomes from $50-$90,000

o 20% for incomes from $90-$160,000

You get the basic idea. He proposes a couple ways of paying for all of this including a 55% tax rate on incomes of the top 1% (making more than $410,000) and 50% for the top 2% (making more than $260,000) with those making more than $160,000 paying 40%.

Given that we just crossed into 2011 and two years of partisan push-and-shove with a lot riding on “hail mary” Presidential vetoes, none of this is in any danger of become reality, but it’s important to start thinking about what needs to be done to level the playing fields in America and why it matters to fight for the chance to restore citizen wealth.

[BartSimpson]

andyt andyt:

BartSimpson BartSimpson:

Andy, what do you propose to do about 'income inequality'? Hmmm?

No fair. I don't pretend to have all the answers. What comes to mind are higher minimum wages, greater unionization of the work force and higher taxes on high income earners to take pressure off the lower ones. All old ideas, all subject to criticism. But if we just go along as we are, pretty soon we'll look like China or India - is that what you want?

Higher minimum wages don't work because they're proven to be inflationary and they cause unemployment in the unskilled labor sector. Despite Utopian wishes otherwise, these are the proven effects of the minimum wage.

Unionization of the workforce is fine up to the point that the union demands wage and benefit packages that cause the employers to offshore production or to go out of business. The decline in union membership in North America over the past 40 years demonstrates this.

Higher taxes on high wage earners does nothing to reduce pressure on the lower classes. It just moves more money to government. It also moves millionaires to tax havens and that exacerbates unemployment in the lower classes as all of the service workers employed by wealthy people no longer have wealthy people to work for...an example of this effect is found in Maryland where their 2009 punitive tax laws against the 3,000 millionaires in the state have reduced the number of millionaires to less than 1,000. The other 2,000 simply packed up and moved away.

Pretty soon, we will look like India or China and that's because we've allowed unfair trade practices to erode our markets. That's got everything to do with trade policy and nothing to do with wage policy.

andyt andyt:

The US was doing far better when income inequality was low, such as the first few decades after WWII. There was a huge surge in the middle class, as wages rose. The average CEO at the time made 20 times more than his workers, now its hundreds of times more. Yet, America did not collapse. CEOs did not leave the country in droves because they felt themselves underpaid. Same with taxes. A 70% tax rate on the highest income bracket certainly sounds high today, yet the rich weren't abandoning America or committing suicide. And highways were being built etc - there was money to build up the infrastructure of the country that doesn't seem to be there now.

Income inequality is actually lower now than ever before.

You complain that a CEO these days makes hundreds of times what his employees make. That's not bad.

In 1900 Andrew Carnegie in a single year made over a million times what his average employee earned. He racked up $430 million dollars that year.

In 1900 the US gross domestic product was $20 billion dollars and Carnegie put a whopping 4% of that in his pocket alone.

By comparison, Bill Gates made his highest income in 1998 with $7.2 billion in a year when the US gross domestic product was $8.995 trillion dollars. Gates' income was a mere 0.00081% of GDP.

To equal the income disparity of Carnegie in 1900 then in 1998 one would need to have earned $359 billion dollars.

But let's comapre with the 'good old days' of the 1960's, shall we?

In 1966 Howard Hughes earned close to four billion dollars in total income.

The US had a GDP of $3,884 trillion that year. So Howard had garnered 0.001029% of GDP to himself - somewhat more than Mr. Gates did in his best year.

If anything, the disparities you complain about just don't exist anymore.

[andyt]

Picking out one case doesn't work Bart. You have to look at the general situation. And I was comparing now to post WWII, the boom period when the middle class vastly expanded. A robust middle class is what creates a decent country to live in, and your (and our) middle class has been taking a shit kicking.

[Yogi]

All economies are based on 'middle income earners'. Middle income is the benchmark by which poverty is measured, as well of course is also the benchmark by which 'rich' is measured. Regardless of the wage-scale, this is how it always has been and will always be.

[BartSimpson]

$1:

Full-time workers earning $20,000 or less would receive a wage supplement of $15,000 (i.e. income = $35,000).
Supplement would decline on income changes
o +$10,000 for $30,000 earners = $40,000

o +$ 5,000 for $40,000 earners = $45,000

The problem with this is you're making the proposal that productive people will work part of their year to subsidize less productive people.

So the guy who busted his hump to get his MBA on his own dime at a private school is expected to donate a sizable chunk of his income to the guy who slept in math class in high school.

Can you see the fatal flaw in that proposal? You're rewarding less productive people for being less productive.

The guy who smoked pot in school and who now rates a job at a donut shop making $15,000 a year is supposed to get a 100% annual bonus from the government for being a f*cking loser while the person who did all the right things and sacrificed to improve their lot in life gets punished with a 20% penalty for having done so.

That's not a sustainable model.

Especially when the majority of marginal people decide it's easier to be a layabout and get $30,000 a year in total income as opposed to actually earning $30,000 a year by studying and gaining work experience.

[andyt]

No, I was thinking that idea was problematic too. It's also subsidizing business - allows them to pay workers less because the govt will top up.

But too high an income inequality rots a country out, as would a too low one (we do need incentives). It's creates a lot of medical and judicial costs.

I wish you could see the problem Bart. Your middle class is being decimated, and it's middle classes that keep countries strong and free.

[BartSimpson]

andyt andyt:

Picking out one case doesn't work Bart. You have to look at the general situation. And I was comparing now to post WWII, the boom period when the middle class vastly expanded. A robust middle class is what creates a decent country to live in, and your (and our) middle class has been taking a shit kicking.

A good friend of mine, Frank Cook, of Cook Realty in Sacramento, once told me to look at the 'real estate index' to see how the economy was doing.

In the mid-to-late 1800's the average 'middle class' home was typified by the Haas-Lilienthal House of San Francisco: http://en.wikipedia.org/wiki/Haas-Lilienthal_House

It's a Queen Anne Victorian of approximately 3,800 square feet with rooms for servants included.

In the 1910's the Craftsman movement displaced the Victorian movement with modestly smaller homes that were absent the servants quarters. The middle class homes of the time were approximately 2,500sf.

In the 1920's there was a post-WW1 recession and the homes shrunk accordingly to a more modest 1,200 to 1,500sf.

By the late 1930's and into 1941 home sizes surged again and were typically around 2,100sf.

Post WW2 saw the rise of the subdivision and home sizes in the age of mass production were a modest 1,500sf well on into the late 1980s.

The 1990's saw home sizes surge past the sizes of a century before and 'middle class' homes absent servant quarters were 4,000 to 7,000sf and that was the norm up until fall of 2008. Entire subdivisions of 'McMansions' are now just ten years later are oft become veritable ghettoes occupied by low-income families. Much like how the graceful Victorians and Craftsman neighborhoods fell into decline in the 1960's and 1970's.

Small is back in fashion again and home sizes are, again, as little as 1,200sf.

The middle class will recover and in a generation or so we'll see big homes again.

I guess I don't dwell so much on the middle class as I do on the pool of unskilled labor who always dominate the fringe of the employment sectors. When people who dropped out of high school can readily find work then things are generally good. When those people lose their jobs to people with advanced degrees is when I get worried. Mostly, though, I worry for those now-unemployable people who've been knocked out of the economy because the wage at which they'd be competitive is an illegal wage for an employer to pay; thus, they don't get paid at all.

[BartSimpson]

andyt andyt:

I wish you could see the problem Bart. Your middle class is being decimated, and it's middle classes that keep countries strong and free.

I agree. But you don't make one group of people wealthier by beggaring another group with the force of government power in the form of punitive taxation.

Especially in the modern world where people have the right to move to a lower tax jurisdiction. Seems that's been the case with plenty of Canadians who move to the USA so they can keep more of their income.

Canada's tax schemes more or less send your most productive citizens packing to the USA where they can keep more of the fruits of their labors.

I will say that I appreciate it! My general practitioner doctor, Dr. Mitchell, hails from Toronto and she moved to the USA after medical school and were it not for your 'progressive' tax schemes I'd be out a fabulous doctor!

So what am I doing trying to convince you to leave things alone?

I should be encouraging you!

Yeah...raise your tax rates to 99% on the highest income earners! Make it 50% on the middle class wage earners, and then make it a -100% for the lowest wage earners!

That way all of your productive people will move here and all of our slackjawed cretins can move there.

[andyt]

The middle class has been under attack since Reagan. This isn't just some phenomenon of the latest financial scam. And I don't see the omens you do that will see the middle class recover? Based on what?