PatsFanInVa

Find a way to structurally prevent extremes of inequality



Or, root for the "fair" accumulation of more and more wealth in the hands of the very few -- and guarantee its demise.

Commies.

The Brandon Five

Interesting that the previous peak followed the Clinton glory years, which had higher concentration of wealth than the Reagan reign of terror. I wonder how their tax policies compare?

Wolfpack

I'm not sure this graph demonstrates anything. As B5 points out, there was a "peak year" right before the great economy of the 90's. Also I couldn't help but notice the lowest year on the graph was 1976. Some pretty crappy years economically came in the wake of that statistic as well.

patsfan13

Why are people so envious of others?

__________________
"Some guys play in all-star games, some guys don't. I don't know who picks all those all-star teams. In all honesty, I don't know who picks the combine, for that matter," Belichick said. "How does (Miami-Ohio offensive lineman Brandon) Brooks not get invited to the combine? How did Vollmer not get invited to the combine? I don't know. We can't really worry about that. We just have to try to evaluate them the best we can."

PatsFanInVa

First, to WP - Clinton left office in 2000 (actually, Jan. 2001). Hence B5's statement about the peak that "followed," rather than "preceded," the Reagan years.

To Brandon: As you know -- and as is illustrated by the income inequality graph in the thread about how anybody who talks about inequality is a socialist waging class warfare to replace the stars in the US flag with a hammer, sickle, and maybe a fleur-de-lis -- the disparity has been increasing, yet the earnings of the 99% are flat, decade after decade. The explosion of economic growth during the Clinton years is, of course, the stuff of legend. So, had that growth been met with stronger structural supports for "revenue-sharing," if you will, with those who actually work for a living, you may have a plateau rather than a peak after the run-up. However, the level had not yet been reached that would result in the collapse. That level was, however, achieved by 2007, after a further redistribution toward the top of the income earned nationally, to the (I believe, going from memory) 23-24% level that this graph says precedes economic collapse.

However, there is a net progressive affect of whatever social net we have.

The apparent lesson of the graph in question is that the concentration of wealth at a certain level has, twice out of the two times we've achieved it, attended a depression (or a deep, deep recession, depending on whether you think we have a depression now.)

I'll let you have at the mechanism, but I'll float a hypothesis.

Evidently, in the Clinton years, with flat real earning power by "the rest of us," the very rich accumulated wealth to a certain level, but not to the level that attends collapse.

How the northward redistribution happens is another question. Under Clinton, we could certainly claim that a rising tide was lifting all boats. Under Bush, we were simply blowing up big bubbles, distributing the wealth from those bubbles northward via the usual flat real wages in combination with reverse-robin-hood taxation, and letting the chips fall.

At a certain point, to offer a simplistic mechanism, once we have allowed all income and wealth increases to accrue to the top, the only way to accrue more seems to be a large amount of financial activity on margin, whether directly in equities on the stock market or in various techniques to commoditize home values in the real estate bubble that was roughly coeval with the passage of Gramm-Leach-Bliley in 1998 through the collapse of 2008; the borrow-and-spend policies of the Bush years guaranteed enough national debt that we could easily obstruct most government action to address the effects of the collapse.

To answer your question of why the rising inequality during the Reagan and Clinton years did not, regardless of trend, result in the enormous downturn, to use our two-data-point analysis, the inequality was not severe enough. Whether the severity is symptom or cause will depend on the explanatory mechanism you use.

You can also choose to say that income and wealth inequality has nothing to do with it, and that it's just a coincidence. But if you have a society with a Gini coefficient of 1 (or 100, as the 0-1 scale is now usually expressed as a 0-100 scale,) I think it's clear that economic demand will collapse, since one guy has all the money. So at some point inequality of wealth is so destructive to capitalism that government intervention is necessary -- this last time so clearly that ultra-righties nationalized a gigantic insurance company as a gift to the financial sector (among other actions). Prior to that point, the "rising tide can lift all boats," but at a certain point (in my above theory,) the "rising tide" begins to be extracted from the future condition of the 99% although the tide isn't (fundamentally) rising at all. The ride the rich is on must continue until the wheels come off, and then everything freezes up for a few years.

What would you say is happening?

PatsFanInVa

Or, in the immoral words of Starship,

Stipulated: Industries other than rock and roll are necessary to any urban economy, and rock and roll in this application is merely the stand-in for mass economic activity, as signified by low unemployment and a competitive labor market. That is all.

PatsFanInVa

I don't think the very rich are truly envious of the poor, but they do seem unwilling for their lot to be bettered -- speaking as a class, of course. But as I said elsewhere, I think they're fine people I would love to have a beer with, etc., and must be very nice. They merely occupy the place at the top of the hierarchy where their further enrichment (without parallel enrichment of the rest of society) predicts further economic turmoil.


By the way, whether you meant the middle, the poor, or the rich, ascribing to them one of the seven deadly sins is pretty insulting. You should stick to a more distanced analysis. This class warfare business on your part is getting on my nerves.

All classes are as likely as others to produce people of wonderful or terrible characters. Now: what's the economic impact of allowing all wealth to flow to one "master class?"

patsfan13

If you actually LOOKED at your chart you will notice that the times when "income inequality" came down drastically were the times when the economy cratered (see the 70's and the Great depression.

Socialist defnintion of equality = shared misery.


I don't care if Trump makes 10M or 100 M, if my kids can aspire to make 100k instead of 20k, see the unemployment among the young....

Class warfare is for fascist and communist not americans (I hope).

BTW are you upset that government union employees are getting far more than their peers in the private sector?

Should we tie their income to the averages in the private sector?

My guess is that you and your union buddies aren't interested in THAT sort of equality.l

__________________
"Some guys play in all-star games, some guys don't. I don't know who picks all those all-star teams. In all honesty, I don't know who picks the combine, for that matter," Belichick said. "How does (Miami-Ohio offensive lineman Brandon) Brooks not get invited to the combine? How did Vollmer not get invited to the combine? I don't know. We can't really worry about that. We just have to try to evaluate them the best we can."

Wolfpack

OK I misunderstood that remark, my bad.

However, your chart really demonstrates absolutely nothing. No conclusions can be drawn from that chart alone. All it shows is that 2 high points preceded rough economies, but it doesn't show anything whatsoever which can be considered a correlation between the numbers on that chart and the economy. You need a bit more than simply isolating 2 individual data points.

PatsFanInVa

what you'll see is that a peak is reached approaching 24% of wealth concentrated in the hands of 1% of the population.

After that point, the collapse comes.

With the collapse - historically - came a decrease in income inequality.

The mid-1970s indeed had very low income inequality, and also what you and I remember as "stagflation." That condition is not a depression/collapse. We have two examples of the later, in 1929 and in 2008.

I would not be surprised if income and wealth inequality actually climbed after the 2008 collapse, but it did decline after the 1929 collapse -- likely because recovery efforts, and finally the war effort, were bottom-up efforts. Our responses thus far to the 2008 collapse have been primarily ways to prop up an ailing financial sector, with enormous resistance to any efforts to intervene at the mass level (and we have actually removed jobs from the public sector, the opposite of the response under FDR, and certainly the opposite of the full employment resulting from World War II.)

If I read you correctly, you are complaining that we do not target more recovery efforts toward the middle and the poor, as in the case after the 1929 collapse. I think I agree with that. The way to address huge downturns is to raise the condition of the masses, not the so-called "job creators."

Actually, that's the extremist's caricature of a socialist definition. I'm neither, so it's not terribly important -- since it is a snappy little phrase that may have economic impact to whoever prints it on a bumper sticker but nobody else.

I share that sentiment. But as you point out, that's not the case.

Then stop waging it.

They're not.

Were we to do so, we'd find -- ta daaaaa! -- greater income inequality, this time specifically within the public sector.

The public sector notoriously underpays higher-demand positions (ranging from editorial to lawyers, engineers, scientists, actuaries, and the like,) and over-pays lower-demand positions (graphic artists, lower level acquisition types [the guys that mind the supplies,] etc.)

Were we to aspire to mirror private-sector pay throughout the government, matching experience levels and occupations, the net result would be a rise in federal wages; I do not know the likely outcomes for state and local employees, taken as a group.

I am not in a bargaining unit position, personally. I have "buddies" who are in the union, "buddies" who are not, and plenty of "buddies" who have never so much as smelled a union, since they have been decimated over the years.

In any event, I am not sure why you bring up unions, unless you are specifying that they are a feature that bolsters and maintains a sustainable level of income inequality (i.e., below the crisis level under discussion here.)

Thanks for playing, 13.