What The One Percent Doesn't Want You To Know

[Texas Contrarian]

Big Louie, I don't disagree with what you wrote in post #41 (except for your statement in the first sentence that "the percentage went from 25% to 50%" -- that simply doesn't make sense). However, please note that it doesn't comport with your earlier post (#36), wherein you stated that the top 400 households account for 50% of the nation's wealth (when, in fact, it is less than 3%). I would only note additionally that you can make the case that wealth disparity in the U.S. has dramatically increased without resorting to wild exaggerations

Further, the following statement is also wildly exaggerated:

Originally Posted by BigLouie

- The 400 richest Americans saw their incomes double between 2001 and 2007 – a period when the incomes of the average American declines. The windfall was so massive, and so hitched to the Bush tax cuts, this group has been dubbed the “Bush 400.” Or as Dubya called them: “my base”…

Although there's little doubt that the fortunes of the Forbes 400 expanded greatly in the 2001-2007 period, that had little to do with tax policy. In fact, numerous tax law changes (including all the "tax cuts for the rich"), implemented at various times over the last 34 years, have very little to do with growing wealth concentration at the top of the distribution.

I suggest that anyone who doubts that try the following simple little thought experiment:

Suppose that the "Bush tax cuts" pushed through about a dozen years ago had never taken place, and that the Clinton-era rate structure had remained operable throughout the last decade. How much do you think that would have been likely to have negatively affected the wealth accumulation capability of Warren Buffett in any significant way during the course of the '00s? If your answer is either "zero," or "pretty close to zero," then you probably understand the issue.

There are myriad reasons for the increasing accumulation of great wealth way out into the right tail of the distribution. Among the most primary causes are free-trade globalization, rapid growth of large swaths of the financial sector, an explosion of crony capitalism of various sorts, and uber-accommodative monetary policy from the Fed and other major central banks (which is, of course, a principal enabling agent for the existence of the previous factors).

[Texas Contrarian]

OK, my previous post hit a couple of key notes on why inequality at the very top of the distribution has greatly increased over the last few decades.

But what about those at the other end? Why have incomes of those in the bottom two or three quintiles of the distribution stagnated or fallen behind?

I'll try to briefly note just a couple of fundamental points.

Those of us who grew up in the 1950s and '60s remember that when we were kids, almost everything we bought was made in the U.S. -- cars, clothes, shoes, radios, television sets, you name it.

All that started rapidly changing in the 1970s. About 1975, as I recall, a number of esteemed professors from elite universities, and later numerous editorial writers and journalists, began to opine that the coming world of globalization was a glorious thing. We needed to share the benefits of democratic capitalism with the developing world! In fact, failing to do so began to be viewed as "unfair," or even xenophobic. A bonanza awaited, and the result was to be a shower of benefits to be savored by the entire world.

Prior to that time, tariffs on imported goods were generally high enough to strongly discourage imports, and the result was that for generations, we exported more than we imported. But then all that began to change when tariff structures and myriad other barriers to trade were torn down one-by-one.

Of course, there's a lot to be said for free trade. Comparative advantage, and all that. But when the workforces of your trading partners do not aspire to anything remotely comparable in terms of wages, health care, and other benefits, it's easy to see what might happen. The problem for low-skilled U.S. workers has also been exacerbated by the fact that the manufacturing capacity of the developing world has mushroomed far beyond what most observers thought possible 35 or 40 years ago.

Yes, many consumers enjoy great benefits offered by the availability of cheap imported goods. But that's of little solace to those whose "breadwinner" jobs have disappeared.

Another factor that has severely damaged income earning prospects for those in the lower-income ranges is the virtual disappearance of private-sector unions. Of course, in today's "globalized" world, there's the obvious fear that unionization might cost many jobs and further incentivize firms to move production offshore. But, whatever your view of organized labor is, there's little doubt that it materially decreased income inequality during much of the 20th century.

One result of all this free-trade globalization is that we have run up about $10 trillion in balance-of-payments deficits over about the last forty years. Another is that the economic benefits therefrom have flowed to equity holders, the financial sector, and C-level executives, not to workers.

We used to be a manufacturing and exporting colossus, and we were the world's greatest creditor nation. Now we borrow, print, and spend like there's no tomorrow, and import vastly more than we export.

In my view, serious imbalances have been papered over and covered up for many years.

The only time the economy has turned in numbers that look remotely "healthy" at any point during about the last dozen years is when the Federal Reserve is stimulating (or mightily trying to stimulate) a credit-fueled consumption boom.

[shanm]

Originally Posted by CaptainMidnight

OK, my previous post hit a couple of key notes on why inequality at the very top of the distribution has greatly increased over the last few decades.

But what about those at the other end? Why have incomes of those in the bottom two or three quintiles of the distribution stagnated or fallen behind?

I'll try to briefly note just a couple of fundamental points.

Those of us who grew up in the 1950s and '60s remember that when we were kids, almost everything we bought was made in the U.S. -- cars, clothes, shoes, radios, television sets, you name it.

All that started rapidly changing in the 1970s. About 1975, as I recall, a number of esteemed professors from elite universities, and later numerous editorial writers and journalists, began to opine that the coming world of globalization was a glorious thing. We needed to share the benefits of democratic capitalism with the developing world! In fact, failing to do so began to be viewed as "unfair," or even xenophobic. A bonanza awaited, and the result was to be a shower of benefits to be savored by the entire world.

Prior to that time, tariffs on imported goods were generally high enough to strongly discourage imports, and the result was that for generations, we exported more than we imported. But then all that began to change when tariff structures and myriad other barriers to trade were torn down one-by-one.

Of course, there's a lot to be said for free trade. Comparative advantage, and all that. But when the workforces of your trading partners do not aspire to anything remotely comparable in terms of wages, health care, and other benefits, it's easy to see what might happen. The problem for low-skilled U.S. workers has also been exacerbated by the fact that the manufacturing capacity of the developing world has mushroomed far beyond what most observers thought possible 35 or 40 years ago.

Yes, many consumers enjoy great benefits offered by the availability of cheap imported goods. But that's of little solace to those whose "breadwinner" jobs have disappeared.

Another factor that has severely damaged income earning prospects for those in the lower-income ranges is the virtual disappearance of private-sector unions. Of course, in today's "globalized" world, there's the obvious fear that unionization might cost many jobs and further incentivize firms to move production offshore. But, whatever your view of organized labor is, there's little doubt that it materially decreased income inequality during much of the 20th century.

One result of all this free-trade globalization is that we have run up about $10 trillion in balance-of-payments deficits over about the last forty years. Another is that the economic benefits therefrom have flowed to equity holders, the financial sector, and C-level executives, not to workers.

We used to be a manufacturing and exporting colossus, and we were the world's greatest creditor nation. Now we borrow, print, and spend like there's no tomorrow, and import vastly more than we export.

In my view, serious imbalances have been papered over and covered up for many years.

The only time the economy has turned in numbers that look remotely "healthy" at any point during about the last dozen years is when the Federal Reserve is stimulating (or mightily trying to stimulate) a credit-fueled consumption boom.

CaptainMidnight, you are, by far, the most interesting person on this thread. And possibly the only one worth listening to.

Even though you are on the other side (politically), every time you post, I learn something new and useful. I probably don't agree with half of what you believe in, but with what you say and the way you say it, my guess is that you'd be in the right far more times than me.

If only all republicans and democrats could be as sensible as you seem to be, the world would be a much happier and better place.

P.S you should post more and enlighten us uneducated bastards!

[Mr MojoRisin]

Originally Posted by WombRaider

Bill Gates was there 20 years ago. And you would like to have people think that liberalism is killing the one percent but people still manage to reach that level.

And more spelling and syntax errors abound. But I'm the one who speaks English as a second language...

I actually agree with JD on this one. You on the other hand are just a critique artist that doesn't know shit.


Jim

[WombRaider]

Originally Posted by Mr MojoRisin

I actually agree with JD on this one. You on the other hand are just a critique artist that doesn't know shit.


Jim

You got a link on that? If I see what I think is bullshit, I'm going to say something. Don't like it? Don't give a fuck. In my short time here, he's shown no proof of anything that he's stated. He just got finished saying that he posted something as fact because a newspaper said it. That's who you want to get behind?

[BigLouie]

Originally Posted by CaptainMidnight

Big Louie, I don't disagree with what you wrote in post #41 (except for your statement in the first sentence that "the percentage went from 25% to 50%" -- that simply doesn't make sense).

That is a fact that is easily found with a Google search. It is well known and no one disputes it, well maybe except for a couple of guys on here. It is a generally accepted fact/

[Mr MojoRisin]

Originally Posted by WombRaider

You got a link on that? If I see what I think is bullshit, I'm going to say something. Don't like it? Don't give a fuck. In my short time here, he's shown no proof of anything that he's stated. He just got finished saying that he posted something as fact because a newspaper said it. That's who you want to get behind?

Where's your link?

Jim

[WombRaider]

Originally Posted by Mr MojoRisin

Where's your link?

Jim

http://eccie.net/showthread.php?t=1357462

You'll want to pay special attention to posts #1 and #38

He states them as facts, because, as he says in post #38, a newspaper printed them. As for his lack of trust in media, that's in just about every post of his so I'm not going to bother linking to each one, but you know him. He even went to the lengths of emailing a reporter who wrote a certain story. Yet, he takes this information in the above links as gospel. It's because he doesn't like Hillary. Which is fine, but at least come with some real shit. This is weak-ass shit that he's coming with. Parking in a handicap spot? And not even any proof that the car stayed parked there. Other photos show it moved forward, evidence that it merely stopped there to let her off before moving out of the spot. It's just a petty thing to go after. Go after the server, the emails, that's fine, but this is just bullshit.

[Mr MojoRisin]

Originally Posted by WombRaider

http://eccie.net/showthread.php?t=1357462

You'll want to pay special attention to posts #1 and #38

He states them as facts, because, as he says in post #38, a newspaper printed them. As for his lack of trust in media, that's in just about every post of his so I'm not going to bother linking to each one, but you know him. He even went to the lengths of emailing a reporter who wrote a certain story. Yet, he takes this information in the above links as gospel. It's because he doesn't like Hillary. Which is fine, but at least come with some real shit. This is weak-ass shit that he's coming with. Parking in a handicap spot? And not even any proof that the car stayed parked there. Other photos show it moved forward, evidence that it merely stopped there to let her off before moving out of the spot. It's just a petty thing to go after. Go after the server, the emails, that's fine, but this is just bullshit.

I am sure he doesn't like Hillary. I can't say I blame him.


Jim

[Texas Contrarian]

In post #46, I wrote this:

Originally Posted by CaptainMidnight

Big Louie, I don't disagree with what you wrote in post #41 (except for your statement in the first sentence that "the percentage went from 25% to 50%" -- that simply doesn't make sense).

To which BigLouie replied in post #51 with this:

Originally Posted by BigLouie

That is a fact that is easily found with a Google search. It is well known and no one disputes it, well maybe except for a couple of guys on here. It is a generally accepted fact/

Really?

Louie, if that's a "generally accepted fact" that can be "easily found" with a Google search, then why don't you take just a moment to provide a link for us? The simple fact is that you can't, because your earlier statement makes absolutely no sense within the context of this discussion. For starters, go back and re-read post number 36, wherein you got the percentage wrong by a factor of approximately 17 (the top 400 hold approximately 3% of the nation's wealth, not 50%).

Then take a look at what I wrote in post #39.

Hopefully, that should clear up any lingering confusion.

[WombRaider]

Originally Posted by Mr MojoRisin

I am sure he doesn't like Hillary. I can't say I blame him.


Jim

I'm sure he doesn't either. I'm simply asking for real arguments. Not the fact that the van she is traveling in may or may not have sat in a handicapped parking space while she had a meeting inside. It just reveals the desperation in his mind when he has to latch on to any little perceived mistake, however contrived or small, to somehow prove his hatred.

[Mr MojoRisin]

Originally Posted by WombRaider

I'm sure he doesn't either. I'm simply asking for real arguments. Not the fact that the van she is traveling in may or may not have sat in a handicapped parking space while she had a meeting inside. It just reveals the desperation in his mind when he has to latch on to any little perceived mistake, however contrived or small, to somehow prove his hatred.

Well it's trivial. The media does this on purpose. Like the Clinton parking mishap. Those pictures were put out there for those who oppose her to gawk at and expose as something of importance. It's not important. Nothing these political people do is really that important. Discussing politics is really nothing but a waste of time anyway. The reason is none of them are working for us anymore. They have us jumping through hoops trying to figure out who the good guy is, the most sincere one, the one who relates to us. The reality is they don't relate. There's is no money in relating to anyone. But there is money in bullshitting the public into thinking they do. That's why they bring up subjects like "Women's Rights, Same Sex Marriage" Increase Minimum Wage" Don't hold your breath for any of these things to manifest, cause you'll pass out first. So JD's take on this thread, he basically nailed it.

Jim

[WombRaider]

Originally Posted by Mr MojoRisin

Well it's trivial. The media does this on purpose. Like the Clinton parking mishap. Those pictures were put out there for those who oppose her to gawk at and expose as something of importance. It's not important. Nothing these political people do is really that important. Discussing politics is really nothing but a waste of time anyway. The reason is none of them are working for us anymore. They have us jumping through hoops trying to figure out who the good guy is, the most sincere one, the one who relates to us. The reality is they don't relate. There's is no money in relating to anyone. But there is money in bullshitting the public into thinking they do. That's why they bring up subjects like "Women's Rights, Same Sex Marriage" Increase Minimum Wage" Don't hold your breath for any of these things to manifest, cause you'll pass out first. So JD's take on this thread, he basically nailed it.

Jim

I was with you, right up until that last sentence. I can't abide that. I agree with you though. They keep us stirred up, going at each other, while they quietly go about the business of screwing us harder. The leaders we actually want are people who would never set foot in DC. If a guy wants to run for office, you probably don't want him in that office.

[lustylad]

Originally Posted by CaptainMidnight

The percentage of WHAT went from 25% to 50%??

I think he means (as you suggested in post #39) the net worth of those at the bottom versus the top 400. In other words, the top 400 used to own as much as the bottom 25%, but now their net worth is as much as the poorest 50%. BigLouie claims this happened under Bush. He should clarify and provide a link.

[Texas Contrarian]

Originally Posted by lustylad

I think he means (as you suggested in post #39) the net worth of those at the bottom versus the top 400. In other words, the top 400 used to own as much as the bottom 25%, but now their net worth is as much as the poorest 50%. BigLouie claims this happened under Bush. He should clarify and provide a link.

I suspect that's exactly right, and that he had no intention of posting anything of a deceptive nature. Most likely, he saw the widely circulated little factoid holding that the net worth of the top 400 is at least equal to that of the bottom 50%, and misremembered or misinterpreted it in such a way that he assumed those 400 households account for 50% of the nation's aggregate wealth. Of course, it means nothing of the sort.

Then, after noting that according to some sources the aggregate net worth of the Forbes 400 increased rapidly during the 2001-2007 period (and may have doubled according to BigLouis), he apparently jumped to another completely illogical and erroneous conclusion. Nothing else he posted suggested a basis upon which to assume that there was any sort of increase, of anything within the context of this discussion, from "25% to 50%," so that's why I said that the referenced posts simply make no sense.

If one were to argue that, for instance, the top 400 held -- at some time in the past -- greater net worth than the bottom 25%, that wouldn't be a very high bar to clear! In fact, I wouldn't be a bit surprised if the wealthiest 400 ECCIE registrants have a higher aggregate net worth than the bottom 25% of the U.S. population (since the net worth of the latter group is probably very close to zero, and since it contains quite a few million households with negative net worth).

As stated earlier, the simple fact is that it isn't necessary to twist numbers around in a confused, incoherent fashion in order to demonstrate that income and wealth inequality have widened considerably in recent decades. No serious observer doubts that.