The Top Fifth

[RedDenver]

 

 

 

 

I think entitled is the perfect word to use for people who get benefits based solely on their circumstance. Not sure what else to call it when they do nothing in return for receiving it. It is simply handed over because of their situation.

I like this quote because, while it's intended to describe the poor on welfare, it exactly states why I have issues with inherited wealth.

 

Somewhat tangential question:

 

For those who advocate for "less income inequality", what would be the "ideal" discrepancy between, say, those in the 80th percentile and those in the 20th?

I don't think it's about the distribution of the wealth, but rather the effects of that distribution. For example, if all children had equal opportunities growing up (food, shelter, education, healthcare), then I don't think the distribution matters. The problem IMO is when those who have the money can create a system in order to keep their money (e.g. pay less taxes) at the expense of the opportunities of others.

 

"Pay less taxes" than what?

 

The amount necessary to accomplish the things I listed.

 

Argued perfectly in the abstract. As expected.

 

You understand the point I'm making, and the numbers won't change that. If you want exact numbers, then by all means go crunch them yourself.

[knapplc]

You're right that people vary in their abilities. I'd argue that the initial dice roll is a more relevant factor. We do not largely happen to be born into "good at life" levels commensurate with income.

Every life is like a bottle rocket. You're born, the fuse is lit. You're dropped in the tube, you're aimed. The aim is imperfect, but it's something. Some folks, they don't get dropped in the tube - they get laid on the ground, or tossed in the air. No aim, they just go every which way. Chaotic. Maybe they produce something noteworthy, often they don't. It sucks. It happens.

 

The aiming isn't perfect, but it's better than nothing. And you're right, it's an advantage. Sometimes there's an elaborate aiming mechanism and the rocket goes exactly where you want it to go. Sometimes, even if you get it there, it's a dud and it fails to go off.

 

That's life. It isn't fair, but we can strive to make it as guided as possible. That's where (I think) you're going with this. It's noble. It's (sometimes) fruitless. So it goes.

 

What's "cap it off and move on" mean?

You can't have kept up with everyone in your life. You're what? 25, minimum? You've met thousands of people. Some are your family, some are close friends, some are acquaintances.

 

Everyone you know provides some kind of input for you. Good, bad, necessary, obligatory, whatever. They all have their place.

 

Over the course of your years, you've moved on from some people. They don't provide input that, on balance, compels your further attention. This is a truism for everyone more than six months old. You know what I'm talking about.

 

You're not good or bad for moving on from those people. You're making necessary life decisions. You simply don't have the bandwidth to continue a relationship with everyone.

 

Society is the same way. We move on from those who don't give us the necessary input to compel further interaction.

 

Hillary Clinton is an example. Mitt Romney. George HW Bush. Jimmy Carter. These are people we, as a society, decided to move on from.

 

Everyone, no matter their social strata, falls into this category. You, me, your aunt, your friend from high school. It's not animosity, it's life. Those people are an oil well created to get you something. Like any oil field, if that well isn't producing, you cap it and move on.

 

That's not good or bad, evil or noble. It's just life.

 

Some people, no matter what you do, will not produce. It happens. You move on. You cannot save everyone.

[zoogs]

I think we’re conflating rise in healthcare expenditures generally, which we’ll both agree is a problem. Additionally, it’s plain that US policy from the 1970s to present — which cannot be characterized as uniformly redistribution-friendly — has fared poorly in combating the explosion of inequality that occurred in this time. Indeed, redistribution has been a poor bulwark against policy. Note that the CBO states that as market income shifts towards higher-income households, transfers and taxes became less redistributive from 1979 to 2007.

 

I’m puzzled why you exclusively present numbers comparing two of the lower four quintiles when the conversation is explicitly about the separation at the top. Nevertheless…

 

 

From SA (https://www.scientificamerican.com/article/economic-inequality-it-s-far-worse-than-you-think/) in 2015, the top quintile owned 84% of wealth. The next 40%, under 16%. The bottom 40%, only 0.3%. (This article proposes an ideal distribution. Such proposals are, in my opinion, only loosely rigorous and therefore a largely hypothetical exercise). Here’s additional data presented by Pew: http://www.pewresearch.org/fact-tank/2015/09/22/the-many-ways-to-measure-economic-inequality/

 

I think a better solution than redistribution is avoiding the need for it in the first place. You’re right; this doesn’t seem like strictly a tax issue. And knapp’s right: at some point people are beyond cost-effective help. If we can avoid all this and construct an upstream solution, that’d be most efficient. For me, we need to take a close and withering look at the 'elite priorities that have largely prevailed. Of course, there are opposing schools of thought here.

[zoogs]

Is anyone actually calling for evisceration?

Do you follow the GOP?

[Mavric]

I think we’re conflating rise in healthcare expenditures generally, which we’ll both agree is a problem. Additionally, it’s plain that US policy from the 1970s to present — which cannot be characterized as uniformly redistribution-friendly — has fared poorly in combating the explosion of inequality that occurred in this time. Indeed, redistribution has been a poor bulwark against policy. Note that the CBO states that as market income shifts towards higher-income households, transfers and taxes became less redistributive from 1979 to 2007.

 

I’m puzzled why you exclusively present numbers comparing two of the lower four quintiles when the conversation is explicitly about the separation at the top. Nevertheless…

 

 

From SA (https://www.scientificamerican.com/article/economic-inequality-it-s-far-worse-than-you-think/) in 2015, the top quintile owned 84% of wealth. The next 40%, under 16%. The bottom 40%, only 0.3%. (This article proposes an ideal distribution. Such proposals are, in my opinion, only loosely rigorous and therefore a largely hypothetical exercise). Here’s additional data presented by Pew: http://www.pewresearch.org/fact-tank/2015/09/22/the-many-ways-to-measure-economic-inequality/

 

I think a better solution than redistribution is avoiding the need for it in the first place. You’re right; this doesn’t seem like strictly a tax issue. And knapp’s right: at some point people are beyond cost-effective help. If we can avoid all this and construct an upstream solution, that’d be most efficient. For me, we need to take a close and withering look at the 'elite priorities that have largely prevailed. Of course, there are opposing schools of thought here.

 

I chose to use the numbers for the second and fourth quintile because they didn't have the top 1% broken out as your chart does and I think that skews the numbers. The people comprising that group aren't in the working class and thus don't really fit the rest of the comparison. To some significant extent, the rest of us are redistributing our own wealth to them by buying tickets to watch them perform or some other such exercise. If the 81-99 group was available, I would have used that.

 

You see it as an "explosion of inequity." I don't think that's accurate (other than the 1%). As I pointed out earlier, it is simply a function of time. Even in your chart, the difference between blue and brown (-ish?) is 29% over 34 years. That's less than a 1% increase per year which is less inflation on the beginning difference. The only solution to that is to give bigger percentage wage increases to the lower-wage earners. Is that what you think should happen?

 

But I think we're at a stand-still with your last statement. How would you avoid the need for it in the first place? I'm guessing there is really only one answer and I don't think it's really based in reality so that will probably be the end of the discussion.

[Mavric]

 

Is anyone actually calling for evisceration?

Do you follow the GOP?

 

Do you have examples?

[zoogs]

Paul Ryan? If you're happy to stand by his vision, we can agree to disagree. I think we're more or less at this point already.

 

I don't know if avoiding the need for redistribution can be done. Lessening, perhaps -- through policy such as the reversal of union decline. Another prong of this would be reversing the decline in wealth transfer.

[Mavric]

Paul Ryan? If you're happy to stand by his vision, we can agree to disagree. I think we're more or less at this point already.

 

Ah, yes. I forgot I have to speak a different language.

 

The government spent about $335B on Medicaid in FY2015. Over 10 years, that would be $3.35T if spending would have remained constant. Of course, the spending isn't expected to be constant - it's expected to increase 75% over that time. So by an extremely crude calculation, the government would spend $4.505T over that time.

 

Ryan's budget would cut that spending by about $1T over that time period. So it would basically be keeping the spending at the same level it is now instead of it taking a huge increase. But that has to be labeled as "eviscerating" it to promote an agenda.

 

I don't know if that reduction is right or wrong. Obviously reducing spending has consequences. But to argue that that's completely a bad thing you'd have to assert that the program is working perfectly and efficiently now and I'm not sure that's the case.

[zoogs]

On the one hand, you assert that annual increases are normal and appropriate. Now, you propose that flatlining spending over a decade for a program with projected cost increases is not a severe cut. To use the numbers presented, an average of $100bn/yr off a program, somewhere in the range of 20% annually.

 

Can we say we have "no idea" the effect this would have on Medicaid? That's a nice bow, indeed.

[Mavric]

On the one hand, you assert that annual increases are normal and appropriate. Now, you propose that flatlining spending over a decade for a program with projected cost increases is not a severe cut. To use the numbers presented, an average of $100bn/yr off a program, somewhere in the range of 20% annually.

 

Can we say we have "no idea" the effect this would have on Medicaid? That's a nice bow, indeed.

 

No, I think there's a significant difference between cutting back on a program and "effectively ending it" which is what was the direct quote and jist of the articles I found when I googled that word to describe that topic.

[zoogs]

I got curious about how that annual breakdown would work over the next ten years. Is this an accurate or misleading chart?

 

 

Effectively ending the program as we know it today doesn't seem too far off the mark.

[Moiraine]

I think this could be simplified.

 

1. Would you help someone who's starving/dying/destitute if you walked by them and had the means to help them? (let's not get into a discussion about people holding pieces of cardboard please). That's kind of like what BRB mentioned several posts ago in his town.

 

2. Do you trust that there are enough people in the rest of the population who are willing to do it?

 

 

If the answer to the first sentence is no, then the 2nd question doesn't matter. In that category belong people like Paul Ryan and other Ayn Rand enthusiasts. Lots of Republicans in congress.

 

If the answer to the first question is yes, and the answer to the 2nd question is yes, you are probably a Republican and could have good intentions. I know several Republicans like this. They give to charity and help people, so they think everything is fine. They believe in people. Glass half full, etc.

 

If the answer to the first question is yes, and the answer to the 2nd question is no, you think there should be a safety net for those people. Kind of a way to force the people who would say no to #1, to help by paying taxes. A society that helps people who are in the worst situations is a better society. That's where the evil phrase "wealth re-distribution" come into play. Even if it's just to cover basic things like health care.

[BigRedBuster]

 

You're talking one politician there. What about all the times Democrats had control of congress? There was a period like that actually not that long ago.

 

My point isn't that a politician is or isn't fighting for the poor. It's more of....if the rich are pumping all this money into the system and getting their politicians elected, how do the Dems go through periods of power? Remember, in this discussion, we are only talking about the top 20% of the population....thus....20% of the vote.

Well, again, you're falling into stereotypes that aren't realities. Democrats don't represent the poor, historically, any more than Republicans represent the rich. And people are herd animals, meaning they'll vote for their team once that team is established. Look at how few people here are willing to abandon the Republican party despite the blatant evidence that under Trump it's unrecognizable from the party Reagan ran, yet most Republicans (Boomers, especially) identify with Reagan more than anyone.

 

Democrats have, as recently as a generation ago, represented wealthy Southerners as much as poverty-stricken inner-city denizens.

 

No, I'm not and your post states the point I'm making. There are people who believe Republicans are nothing but all for the rich and believe Democrats are these sensitive, caring people who are fighting for the poor and working class.

 

Both of those have been proven wrong.

[BigRedBuster]

Here are some numbers involving income inequality and help given to "disadvantaged":

 

In 1967 (oldest data available here), the mean household income for the second fifth of the US population (20th to 40th percentile) was $27,513 (adjusted to 2015 dollars). The mean income for the fourth fifth (60th to 80th) was $61,461. Thus the fourth made 223.3% as much as the second (adjusted for inflation). In 2015 (newest data available), the mean for the second was $32,631 while the mean for the fourth was $92,031 - 282.0% as much. So there was an increase of income inequality by about 60% or about 1.2% per year. The reason I bring up the per year number is because a lot of that is simply a function of math. If you start with two different numbers and increase both by the same percentage, the difference gets bigger. So, since the numbers are already adjusted for inflation, the increased difference would be the same as both parties getting a 1.2% wage increase above inflation for all those years. So would that be treating both fairly if they both got the same raise? Or do you have to give the lower earner a bigger raise to keep from exaggerating the income inequality?

 

Now, as far as helping the disadvantaged, let's look at US expenditures Medicare and Income Security (other than Social Security) over the same time period. I'm sure that's not a perfect set to look at but those were two major categories that would seem to be mostly a redistribution from the top half to the bottom half. In 1967, those categories totaled $13,009M dollars which, using the same inflation factor as above, would adjust to $80,739M in 2015 dollars. In 2015, those same categories totaled $1,055,045 in spending. That is an inflation-adjusted 1,306.7% increase or 27.2% per year.

 

So the increase in those programs to help the disadvantaged increased 21 TIMES AS MUCH as the income inequality increased. Now that would be somewhat skewed by the population increase which is 61.5% but even then, it the spending increase would be an 803.6% increase in per capita spending over that time frame.

 

So the questions should be:

Is looking at income inequality really telling the whole story?

Has increasing the redistribution by that amount got us closer to the goal?

Is simply looking to increase the redistribution going about it the right way?

This is a very good post.

 

So much of the political discussion is in such generalities that people's views get skewed. Democrats talk about needing to raise taxes. Republicans talk about needing to lower taxes. It wouldn't matter if the tax rate for any class of people were 5% or 95%. These two groups would be yelling the same things. Why??? Because it works and it's easy then for Democrats to claim Republicans don't care about taking care of people and all they want to do is keep a hold of their money. It's easy for Republicans to claim Democrats don't care about how expensive anything is as long as it's paid for by other people's money.

[knapplc]

It's more of....if the rich are pumping all this money into the system and getting their politicians elected, how do the Dems go through periods of power?

 

 

So this question wasn't your point of view, it was asked in irony to show the fallacy of such thinking. I missed that.