In times of economic turmoil, nothing has a calming effect like a few colorful charts. Here are a couple of thought-provoking ones via E.D. Kain at Balloon Juice.
First, originally by Alex Knapp, we have the distribution of wealth in the U.S.:
If it looks like a more dramatic amount of inequality than you are used to seeing, it may be because this is plotting total wealth rather than yearly income. Knapp also points out that the tax system doesn’t really redistribute wealth very much; the top one percent pulls in 19% of the pre-tax income, which after taxes is whittle away to … 17%.
Of course their share is growing with time, courtesy of Mother Jones:
We can compare that reality to what people think it is, and what it should be:
What does it imply that most Americans think the distribution of wealth is much more even than it really is, and would like it to be more even still? By itself, nothing at all. These are just data — descriptions of the world — and science doesn’t imply morality. The data are just useful to keep in mind when we do think about how a just society should be ordered, and what strategies (“share the pain!”) might be most appropriate when thinking about how to recover from our recent economic pratfall.
How many comments do you think we’ll get before someone claims that taxation = slavery? I’m guessing five.
so the total wealth of the bottom 20% is actually positive? i am pleasantly surprised.
Not to put too fine a point on it, income gains have been even greater among those at the highest of the income scale.
The incomes of the top one-tenth of 1 percent (0.1 percent) of U.S. households have grown more rapidly than the incomes of the top 1 percent of households as a whole, rising by 94 percent — or $3.5 million per household — since 2002.
The share of the nation’s income flowing to the top one-tenth of 1 percent of households increased from 7.3 percent of the total income in the nation in 2002 to 12.3 percent in 2007.
This is the highest level in the Piketty-Saez data going back to 1913, surpassing even the previous peak in 1928.
The uneven distribution of economic gains in recent years continues a longer-term trend that began in the late 1970s. In the three decades following World War II (1946-1976), robust economic gains were shared widely, with the incomes of the bottom 90 percent actually increasing more rapidly in percentage terms, on average, than the incomes of the top 1 percent.
But in the three decades since 1976, the incomes of the bottom 90 percent of households have risen only slightly, on average, while the incomes of the top 1 percent have soared.
What could be more arbitrary or independent of merit than inheritance?
There is a companion stat that tells what is the minuscule probability that one would break into the next higher quintile in their lifetime. Some small fraction of 1 percent, I remember.
So please keep up the hard work. You can be a millionaire like everybody else. May be you can even catch up to god, he is in the top 0.001 percent.
Interesting graphics…odd that liberals’ takeaway is “the system needs to change!” instead of “what can poor people learn from the wealthy?”
#55 m –
“Interesting graphics…odd that liberals’ takeaway is “the system needs to change!” instead of “what can poor people learn from the wealthy?””
Why odd? Liberals don’t want the system to change, they just want to tweak it. And what can “poor” people learn from the “wealthy”? What does a slave learn from his or her master or mistress? I’m pretty sure the slave knows the master very well. Maybe how to aim a gun? Not much to learn there, especially if you have no gun. As for ‘learning’ in any more general sense, would it be in the interest of the master to encourage ‘learning’ among the slaves? It only leads to trouble. Hence the collective American stupor, promoted and marketed among the slaves: bread and circuses – that’s the ticket!
I don’t think taxation = slavery. I think welfare = slavery, and taxation = forced charity
http://www.globalrichlist.com/
This site is a hoax. No matter what amount you type in, it tells you “You are the 107,565richest person in the world!” They just want you to give money.
57: Frankly I think that’s just as insane.
The Dickensian workhouse is far closer to actual slavery by every measure than subsidized housing and food stamps. In fact, since welfare allows the poor to survive without resorting to starvation wages, brutal working conditions or unsafe practices, it helps form a foundation on which they can negotiate for their time in a market system. Welfare promotes individual freedom, slavery eliminates it.
All this ties into the Thomson Reuters/University of Michigan consumer sentiment gauge, which just rose to 77.5 in February, its highest level since January 2008.
That’s up from 74.2 in January and ahead of previous estimates of 75.1-75.4.
Wealthier consumers fueled the beat: Among households with incomes of $75,000 or more, sentiment rose 9.7%, bolstered by more favorable job and income prospects. By contrast, the index fell 1.4% among lower-income households.
See http://blogs.barrons.com/stockstowatchtoday/2011/02/25/wealthy-boost-consumer-sentiment-to-3-year-high/
If it’s in Barrons, you know it must be true 🙂
I think the correct liberal take-away is that the starting about 1980, something changed. A silent class war was begun – against the middle class. It’s just been made politically incorrect to mention its existence. Again, please check the longer time scale plots:
http://worthwhile.typepad.com/worthwhile_canadian_initi/2010/06/the-anglosphere-and-highincome-concentration.html
So the question is, what changed? Why is the top 1%, in fact really the top 0.1%, reaping all the economic rewards since 1980, but not between 1930 and 1980?
I’d also note the last big economic collapse also coincided with a peak in inequality.
Bruce the Canuck @61:
“I’d also note the last big economic collapse also coincided with a peak in inequality.”
To be more precise, perhaps you should say that the last two big economic collapses coincided with the last two peaks in inequality: 1928 and 2008.
But I’m certain there will be those who say that either this is a coincidence, or, as some have said on this thread, that the vast majority of those at the lower end of the scale, the average Americans if you will, deserve this outcome.
Seems to me there are an awful lot of people who are fascinated and envious of people who have money.
Solution: Get a job! Or, invent something to make yourself a chamber pot full of thousand-dollar bills over night!
Taxation is slavery when the tax money is used to fund welfare. Welfare makes the recipient the slave of the government who pays it to them and, a taxpayer the slave of the government who demands payment if the form of the tax used to fund the welfare class.
Of course, I don’t expect a liberal to understand this concept.
Interesting chart, Canuck. Somehow it makes one feel better that the U.S.A. Is not alone in this. Misery loves company. I think the reasons are many for the change but a lot of the reason is that the planet is much more of a global village than it was. Good trends spread, but bad ones spread also. I think the main point is that things can get terrifically unequal and out of whack due to the human characteristic of rationalizing things away.
From the long view the charts make everything look like they are continuous and slowly changing. This lulls people into viewing it as a background environment that does not effect them much. However, at the micro level this trend is digital in nature. It does not effect you until your company finds a way to outsource your job to someone in China. For the individual affected it is not a slow decrease in income, but possibly a sudden semi-permanent decrease in lifestyle and persistent unemployment. The slow curves only show the statitstical average of these discrete digital changes for individuals affected.
The really sad part is that right up until they are affected by this trend people by and large identify with the people that are doing well, because they themselves are doing well. Right up until they aren’t. The tax laws in all these countries have made a Faustian bargain to allow companies to outsource labor to other countries with no tax consequences to the company. People agree to it because in return they get cheap consumer items, like large screen TVs. No one tells these people that the big screen TV isn’t going to be much use when they are living in their car. And even if they could get it to work in their car it would definitely be bad for their eyes watching from so close.
#20: “Actually, it does clearly imply that most Americans are deeply innumerate, assuming that most of them honestly believe that a superflat wealth distribution where the top 20% owns only three times as much wealth as the bottom 20% could be even mathematically feasible in any society short of draconian taxation and equalization programs that would make even North Korea shudder.”
Denmark does exactly that. The top 20% have about 3.5 times the wealth of the bottom 20%. Data is from 1992 (sorry, it was the latest I could find in a hurry).
Wealth distribution Denmark, percent of population and percent of total wealth:
Lowest 10% 3.6
Lowest 20% 9.6
Second 20% 14.9
Third 20% 18.3
Fourth 20% 22.7
Highest 20% 34.5
Highest 10% 20.5
SOURCE: 2000 World Development Indicators
In my view Denmark is very different from North Korea. Of course I may be biased, given I’m lucky enough to live there. 😉
The distribution of wealth in the US is pretty awful; however, it is important to remember that even in a society with lots of equality there will be wealth inequality because individuals need savings to retire on. c.f. http://www.daemonology.net/blog/2011-01-10-inequality-in-equalland.html
Wealth inequality ( or some other inequality) is, I suspect, always necessary in a society which wishes to foster inovation and hard work (and which society doesn’t?). The degree of inequality necessary, however, is not that great (see Denmark as example above).
Jens, thank you for shining the light of reality into the darkness of fear
# 65 Jen,
How much of denmark’s ratio is because the rich are less rich rather than the poor being better off. also, denmark has less immigration so people start off w/ slighly more. In addition, 1992 data is very old. I wonder what the US looked like in 1992; The wealthy certainly have a bigger portion now.
#69: “How much of denmark’s ratio is because the rich are less rich rather than the poor being better off. also, denmark has less immigration so people start off w/ slighly more. In addition, 1992 data is very old. I wonder what the US looked like in 1992; The wealthy certainly have a bigger portion now.”
Not sure what your question is.
Biggest question is why do you think someone needs to be in charge of redistributing the wealth? If there are 10 A’s earned in a class, should we deduct some of their points to raise the 2 F’s at the bottom? WTF?? I guess that’s what good socialists do, spread the misery.
This is a big deal, why exactly? Income is a poor measure of quality of living, which has increased for everyone, rich and poor, over the years. Even poor people today have access to technology and other amazing things that weren’t available 10, 20, 30 years ago. Which is due more to capitalism than to government.
And taxation really is theft.
#71: Biggest question is why do you think someone needs to be in charge of redistributing the wealth? If there are 10 A’s earned in a class, should we deduct some of their points to raise the 2 F’s at the bottom? WTF?? I guess that’s what good socialists do, spread the misery.”
Biggest question is what sort of society would you like to be born into. Apparently one with lots of serfs and a few Masters.
Keith, jebus murphy on a stick, read the damn graphs, I’m starting to think libertarians are innumerate.
We’re talking about the top 1% vs everyone else. The system is being rigged towards the very wealthy. It is not a free market system. They’re paying more taxes because they’re taking all the winnings by tilting the table (I’d *love* to pay more taxes due to earning more).
Do you really believe the top 1%, or top 0.1%, of the population is composed of innovators, or entrepreneurs, or people who otherwise earned their wealth? The data on class mobility doesn’t support that.
People very rarely admit that they inherited their position in life, even to themselves. The top 1% by and large are not wealth creators or innovators. Even just looking around me, most inherited indirectly, are shysters flipping real estate, selling mortgages, running multi-level marketing scams or selling snake oil. A whole lot of success is about starting position, family connections, family boosts via education and seed capital, luck, and “shortcuts”.
Hell, even economic models based on totally random gas theory produce inequality! IE models with no merit involved whatsoever, pure luck!
And don’t assume “liberals” aren’t entrepreneurs. Quite a lot of us are. But having that kind of success while your society slowly transforms into an ugly, classist nightmare is a hollow victory unless you’re a complete asshole. Other people are, you know, people. Unless of course you’re a sub-criminal sociopath, which I’ve always assumed at least half of libertarians would test as.
Things are changing. The field is not level, and the market is corrupt. And not in the direction of “socialist”. In the direction of crony capitalist.
And re “taxation is theft”, please board your life-raft and await deposit in the middle of the pacific ocean, alone. And no, there will be no rescue.
Mike #48, Nice link, (1% income percentage since 1923). I think the very high number now (comparable to 1929) is not an indication of where we’re going, but instead is an indication that the number has gone as high as possible. And, judging from what happened soon after that 1929 peak, perhaps the effect of the current economic instability is nowhere near complete.
There are very long tides in the affairs of man that are difficult to ascertain until after you’ve lived long enough to see most of a complete cycle. And that’s exactly why the cycles are that long.