The myth about income inequality

[Bob Of Burleson]

Not your grandpa’s inequality

Robert J. Samuelson
The Washington Post

It’s not the 1920s. One common line in the debate over economic inequality is that the income gaps between the rich and everyone else have reverted to levels not seen since the ’20s or earlier. The conclusion is damning. It implies that we’ve lost nearly a century of social progress. But as economist Gary Burtless of the Brookings Institution shows, it’s “flatly untrue”: Inequality isn’t as great now as in the ’20s. This is history’s real lesson. Although the debate over inequality is legitimate and important, we shouldn’t distort it with misleading and overwrought rhetoric.

Start with a thumbnail portrait of the 1920s economy. It may be that, by some statistical indicators, inequality was great. But at the time, what most Americans experienced was sweet prosperity. Recessions, after the severe 1920-21 slump, were mild. Unemployment was low. New technologies spawned mass markets. From 1919 to 1929, car ownership rose from 6.8 million to 23.1 million. Annual radio sales jumped 1,300 percent from 1922 to 1929.

“The boom was built around the automobile, not only the manufacture of vehicles, but tires and other components, roads, gasoline stations, oil refineries, garages, and suburbs,” wrote the late economic historian Charles Kindleberger. “Electrical appliances — radios, refrigerators, vacuum cleaners — unknown at the start of the decade, were commonplace by 1929. Another innovation was in motion pictures, with talkies introduced in 1926. . . . While impressive, the boom was not frenzied, except perhaps in stock market speculation.”

The figures that have invited comparisons between now and then come from economists Thomas Piketty, author of the controversial book “Capital in the Twenty-First Century,” and Emmanuel Saez of the University of California at Berkeley. Using tax records, they have estimated that today the richest 1 percent of Americans receive roughly 20 percent of the nation’s pretax “market income,” mainly wages, salaries, dividends, interest and other business income. The richest 10 percent account for about 45 percent of “market income.” These shares mirror those of the 1920s.

From this and other studies, two tenets of conventional wisdom have emerged. First, today’s income distribution is as lopsided as it was in the 1920s. Second, most income gains in recent decades have gone to the people at the top; incomes for most middle-class and poor Americans have stagnated.

Not so, argues Burtless in a recent essay.

The trouble with “market income,” he notes, is that it ignores taxes, most fringe benefits (mainly employer-paid health insurance and pensions) and government transfers (Social Security, Medicare, food stamps and the like). All these affect inequality and living standards. So does the slowly shrinking size of U.S. households. Smaller households mean that a given amount of income is spread over fewer people. Per capita incomes rise. Two people with $75,000 are better off than four people with $75,000.

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[planosteve]

Samuelson vs. Brookings is a Keynsian Kat fight.

Income inequality is horrible. Whether it's worse than the 20's, who knows? Or cares. It's enough that it's bad. It used to be that you never heard the word billions unless it was something about the govt. Now, you heard of individual people buying something that costs billions, like the Clippers. I think intellectual property rights needs a serious overhaul.

[Bob Of Burleson]

What disturbs me about individuals having billions and billions of dollars is what happens in the next generations. The old man or old lady worked to make his billions, but when they die they leave a pot of money to their children and grandchildren, who may or may not be productive. I don't want to be a part of sluggards' support systems, and that's exactly what happens. Society as a whole contributes when people are ne'er-do-wells, just as it does when people are bums on the street.

[GFB]

What disturbs me about individuals having billions and billions of dollars is what happens in the next generations. The old man or old lady worked to make his billions, but when they die they leave a pot of money to their children and grandchildren, who may or may not be productive. I don't want to be a part of sluggards' support systems, and that's exactly what happens. Society as a whole contributes when people are ne'er-do-wells, just as it does when people are bums on the street.

Who cares?

If they fritter the money away..fine.

If they become slothful, drunkards..also fine. Those don't live off of society..poor people do.

[John in Plano]

What disturbs me about individuals earning a lot of money and amazing a lot of wealth is Uncle Sam takes a lot while they are earning/amazing that wealth.

And then Uncle Sam wants more when they die.


yea, there are ways to limit the taxman, Sam Walton and his wife did an amazing job of creating billions of equity for themselves and their children and limiting the amount Uncle Sam could take when he died. Not all wealthy individuals have the foresight they did.

[planosteve]

The govt. sets up a legal monopoly that makes these huge fortunes possible. If somebody invents something new and successful they may make a million dollars. Or they may make a billion or more. It's basicly a crapshoot.

[John in Plano]

If you can write and people want to buy your writing, the laws protecting your creation are a good thing.
If you can conceptualize a product, create it and trademark it the laws protecting your creation are a good thing.
If you got the gumption to start a retail establishment, the laws protecting your companies name are a good thing.

thinking Uncle Sam is responsible for the above ( and not limited to the above ) is silly


throwing dice is a gamble

having the guts to work for yourself, or create something isn't for everyone

[planosteve]

If you can write and people want to buy your writing, the laws protecting your creation are a good thing.
If you can conceptualize a product, create it and trademark it the laws protecting your creation are a good thing.
If you got the gumption to start a retail establishment, the laws protecting your companies name are a good thing.

thinking Uncle Sam is responsible for the above ( and not limited to the above ) is silly


throwing dice is a gamble

having the guts to work for yourself, or create something isn't for everyone

Not to the Chinese. They don't believe in intellectual property. And they are kicking our ass.

[John in Plano]

Thieves aren't only located in China. Knock offs have been a round for years, some made here some elsewhere.

China probably will become the dominate country in this century, should be a surprise to anyone.

[FlashM]

What disturbs me about individuals having billions and billions of dollars is what happens in the next generations. The old man or old lady worked to make his billions, but when they die they leave a pot of money to their children and grandchildren, who may or may not be productive. I don't want to be a part of sluggards' support systems, and that's exactly what happens. Society as a whole contributes when people are ne'er-do-wells, just as it does when people are bums on the street.

What would you suggest? That inheritance be forcefully taken away? That's so much worse!
At least the inheritor is a consumer.

[PlanoSooner]

The govt. sets up a legal monopoly that makes these huge fortunes possible. If somebody invents something new and successful they may make a million dollars. Or they may make a billion or more. It's basicly a crapshoot.

or they can go broke trying....

[PlanoSooner]

If you can write and people want to buy your writing, the laws protecting your creation are a good thing.
If you can conceptualize a product, create it and trademark it the laws protecting your creation are a good thing.
If you got the gumption to start a retail establishment, the laws protecting your companies name are a good thing.

thinking Uncle Sam is responsible for the above ( and not limited to the above ) is silly


throwing dice is a gamble

having the guts to work for yourself, or create something isn't for everyone

Not to the Chinese. They don't believe in intellectual property. And they are kicking our ass.

ask their slave laborers if they are kicking ass