Speaking of things I’m not interested in, I wanted to make an observation on Nikolai G. Wenzel’s review of Batya Ungar-Sargon’s book, Second Class, at the American Institute for Economic Research. I have no interest in Ms. Ungar-Sargon’s book and will never read it. Life is only so long. However, there’s something I think that Dr. Wenzel dismisses too quickly. Consider this passage, which in many ways is the meat of his review:
Finally, the US does not have the socioeconomic mobility it could have. But the country is not as static as Ungar-Sargon paints it: over the past 50 years, the share of national income earned by the lowest four quartiles has fallen slightly (by .7 percent to 2.6 percent) – but national income has tripled. This means that the bottom 80 percent now earn a slightly smaller piece of a significantly larger pie. The increased income – from innovation, trade, immigration, globalization – hides another key phenomenon: the drop in the consumption gap. The late great economist Steve Horwitz explained that “poor Americans today live better, by…measures [of consumption] than did their middle-class counterparts in the 1970s.” Ungar-Sargon flippantly swats away the fact of lower prices.
I think that Dr. Wenzel is doing some flippant swatting of his own here. I’ll just accept his numbers at face value. .7 percentage points of 2.6% is more than a quarter. That’s not falling slightly. That’s a significant drop.
Furthermore, the average Congressional district held 470,000 people in 1970 but 761,000 now. So what? (I hear someone ask.) The significance is that a Congressional campaign is much more expensive than it used to be in real terms which in turn means that major political contributors are more important than they used to be. That in turn makes it only natural that they are more likely to have the Congressman’s ear.
Finally, there is a yawning abyss between a typical person’s income and that of the ultra-rich. As F. Scott Fitzgerald put it so well a century ago, the rich are different from you and me. Bill Gates, Elon Musk, and Jeff Bezos live in a world completely different from mine and have different priorities than I do just as I live in a different world with different priorities than the typical person living at 70th and Stony Island does but Bill Gates, Elon Musk, and Jeff Bezos have the ears of presidents, House members and senators so their interests and priorities have more weight than mine do.
I think there is a mis-interpreting a key sentence.
The author wrote “the share of national income earned by the lowest four quartiles has fallen slightly (by .7 percent to 2.6 percent ).” You are interpreting it as saying “.7 percent of 2.6 percent.” So Mr Wenzel is saying a range of 0.7 to 2.6% per quintile; not 0.7% / 2.6%.
Through looking at the base research, Mr Wenzel is misinterpreting the data as well. The cumulative loss of income share by the bottom 4 quintiles is 6.4%, and the loss for bottom 2 quintile is severe.
Find more statistics at Statista
I wish statista used constant time scale on the x-axis (i.e. used 5 year increments throughout).
Doing it by quintiles obscures the fact that it is really the top1% (top 0.1% is even worse) that has seen such a large increase. Older paper and starts in 1980 but income among the top quintile excluding the top 1% grew at 79%, not that far off than the other quintiles while the top 1% grew 226%. While our primary goal should be equality of opportunity it’s pretty clear that when inequality in outcomes is as severe as we see it now it disproportionately affects our politics. Individual ultra wealthy people can and have essentially financed the campaigns of individual politicians.
Steve
https://www.cbpp.org/research/poverty-and-inequality/a-guide-to-statistics-on-historical-trends-in-income-inequality
Steve
To some extent both steve’s link and mine conceal what has actually transpired. What has actually happened is that the share of income realized by the top .1% of income earners has increased enormously while those of the rest of us have increased only slightly. There’s a hint of that in one of the graphs in steve’s link, showing both the top 1% of income earners and the top .5% of income earners. It should show the top .1% of income earners.
My position is two-fold. First, the measures to which Dr. Wenzel attributes the income growth should never have been allowed to happen for reasons of national security. Even if it means marginally slower growth.
Second, the wild growth in income by the ultra-rich puts them in a different world than the rest of us with the influence to motivate elected officials to follow their (the ultra-rich’s preferences). That’s incompatible with anything resembling a democracy.
I’m now employed at $20/hr in an agricultural co-op. The men I work with are largely the sons and grandsons of farmers who are landless due to constant consolidation. The difference between them and the wealthy men they serve is financially extreme but socially small.
We’ll all vote Trump, because we all want to continue raising our children in families, not Hillary’s government villages.
All of them would volunteer for whatever war that the MIC is selling because they feel the call of duty.
These men simply have to learn to work longer for less. Live happily in older rural homes. Complaining draws scorn.
The biggest difference between them and their bosses the land owners is the age of the pickups and the size of the house.
It may be feudalism but the serfs are well fed and relatively healthy and happy.
Farm Report.?