Income inequality, the 'death' of the middle class, and economic illiteracy

[cowboy]

The latest outcry of income inequality is brought to you today by the Washington Post, who declares the middle class to be lost (maybe we should look for it under the couch cushions). This is why journalists who report on economic issues should be required to pass basic economic exams before publishing articles. There is a lot of nonsense in this particular article, like the author conveniently overlooking the fact that the median income puts most Americans well within the range of middle class, but the winner of the most ridiculous paragraph award goes to this gem:

It used to be that when the U.S. economy grew, workers up and down the economic ladder saw their incomes increase, too. But over the past 25 years, the economy has grown 83 percent, after adjusting for inflation — and the typical family’s income hasn’t budged. In that time, corporate profits doubled as a share of the economy. Workers today produce nearly twice as many goods and services per hour on the job as they did in 1989, but as a group, they get less of the nation’s economic pie.

I bolded the last sentence because it highlights the author's ignorance. The economy has grown because productivity has grown, and productivity has grown because of technology. The author implies that workers are responsible for their increased output, and are not being compensated for the value they add. This is an argument analogous to me investing in a harvester that harvests twice as many bushels per hour as my old harvester, and then being expected to pay my harvester operator more because he is getting more wheat harvested in a day.

If there is anything wrong with the middle class it is the government. The middle class has historically been comprised of workers and small business owners. Small business owners are subject to increasingly onerous regulations and laws that make it more difficult to compete, and they are being squeezed out. Further, the same regulatory environment creates huge barriers to entry for small guys with an idea or just skills and a good work ethic. Try to start a business doing some plumbing on the side in Massachusetts and you'll see exactly what I mean.

Ultimately, this article isn't about the middle class, which comprises the vast majority of this country by world standards. Instead the middle class argument is being used to complain about income inequality. We've talked about this before, but haven't dedicated a thread to it. If we are employed, housed, fed, and have luxuries that most of the rest of the world does not, why does it matter that a segment of our society is phenomenally more wealthy than us? The answer: it doesn't. Show me all the income inequality studies you want, and I'll tell you they do not apply to our situation, because the fact is that income inequality only leads to political instability when the people on the low income end are in poverty and desperate. This article and the entire income inequality argument is nothing but class warfare rooted in envy.

[Goatnapper'96]

The latest outcry of income inequality is brought to you today by the Washington Post, who declares the middle class to be lost (maybe we should look for it under the couch cushions). This is whey journalists who report on economic issues should be required to pass basic economic exams before publishing articles. There is a lot of nonsense in this particular article, like the author conveniently overlooking th fact that the median income puts most Americans well within the range of middle class, but the winner of the most ridiculous paragraph award goes to this gem:



I bolded the last sentence because it highlights the author's ignorance. The economy has grown because productivity has grown, and productivity has grown because of technology. The author implies that workers are responsible for their increased output, and are not being compensated for the value they add. This is an argument analogous to me investing in a harvester that harvests twice as many bushels per hour as my old harvester, and then being expected to pay my harvester operator more because he is getting more wheat harvested in a day.

If there is anything wrong with the middle class it is the government. The middle class has historically been comprised of workers and small business owners. Small business owners are subject to increasingly onerous regulations and laws that make it more difficult to compete, and they are being squeezed out. Further, the same regulatory environment creates huge barriers to entry for small guys with an idea or just skills and a good work ethic. Try to start a business doing some plumbing on the side in Massachusetts and you'll see exactly what I mean.

Ultimately, this article isn't about the middle class, which comprises the vast majority of this country by world standards. Instead the middle class argument is being used to complain about income inequality. We've talked about this before, but haven't dedicated a thread to it. If we are employed, housed, fed, and have luxuries that most of the rest of the world does not, why does it matter that a segment of our society is phenomenally more wealthy than us? The answer: it doesn't. Show me all the income inequality studies you want, and I'll tell you they do not apply to our situation, because the fact is that income inequality only leads to political instability when the people on the low income end are in poverty and desperate. This article and the entire income inequality argument is nothing but class warfare rooted in envy.

I think the political winds are changing, which will change the winds of the journalism. Chuckie Schumer finally asked a staffer how much of the middle class used to be uninsured and how much of it is only earning minimum wages. The answer came back "not very many." Chuckie decided that perhaps the middle class is not the poor and perhaps the middle class is sick and tired of Chuckie and Nancy telling them how much they care only to return to attempting to take from the middle class to give to the poor.

However, the changing winds won't make journalists any more informed about economics. They will just be ignorant of some other subject!

[byu71]

The latest outcry of income inequality is brought to you today by the Washington Post, who declares the middle class to be lost (maybe we should look for it under the couch cushions). This is whey journalists who report on economic issues should be required to pass basic economic exams before publishing articles. There is a lot of nonsense in this particular article, like the author conveniently overlooking th fact that the median income puts most Americans well within the range of middle class, but the winner of the most ridiculous paragraph award goes to this gem:



I bolded the last sentence because it highlights the author's ignorance. The economy has grown because productivity has grown, and productivity has grown because of technology. The author implies that workers are responsible for their increased output, and are not being compensated for the value they add. This is an argument analogous to me investing in a harvester that harvests twice as many bushels per hour as my old harvester, and then being expected to pay my harvester operator more because he is getting more wheat harvested in a day.

If there is anything wrong with the middle class it is the government. The middle class has historically been comprised of workers and small business owners. Small business owners are subject to increasingly onerous regulations and laws that make it more difficult to compete, and they are being squeezed out. Further, the same regulatory environment creates huge barriers to entry for small guys with an idea or just skills and a good work ethic. Try to start a business doing some plumbing on the side in Massachusetts and you'll see exactly what I mean.

Ultimately, this article isn't about the middle class, which comprises the vast majority of this country by world standards. Instead the middle class argument is being used to complain about income inequality. We've talked about this before, but haven't dedicated a thread to it. If we are employed, housed, fed, and have luxuries that most of the rest of the world does not, why does it matter that a segment of our society is phenomenally more wealthy than us? The answer: it doesn't. Show me all the income inequality studies you want, and I'll tell you they do not apply to our situation, because the fact is that income inequality only leads to political instability when the people on the low income end are in poverty and desperate. This article and the entire income inequality argument is nothing but class warfare rooted in envy.

There is absolutely no doubt in my mind that the so called "educated elite" look to the general populous as ignorant and thus need to be taken care of. Professor Guber (or whatever his name was) was honest in his expression and feelings about the American public. The public is too stupid to see what is good for them.

I see it in my business all the time and I can make a strong argument it hurts the consumer rather than helps the consumer. People are too stupid to know when someone is screwing them and taking advantage of them.

WE need to be told what and how much to eat. We need to be told how to teach our kids about sex. WE need to be protected from all the boogie men out there waiting screw them on some kind of fee.

I can point to many a success story achieved by people who never finished college. College is great and I think should be pursued by most people, but because that is the case it doesn't mean only those who get a college education can have good common sense.

[Lost Student]

This is whey journalists who report on economic issues should be required to pass basic economic exams before publishing articles.

I would agree with your post, except I believe in the First Amendment.

But I like this clip:

[New Mexican Disaster]

Screw Margaret Thatcher.

[Uncle Ted]

I bolded the last sentence because it highlights the author's ignorance. The economy has grown because productivity has grown, and productivity has grown because of technology. The author implies that workers are responsible for their increased output, and are not being compensated for the value they add. This is an argument analogous to me investing in a harvester that harvests twice as many bushels per hour as my old harvester, and then being expected to pay my harvester operator more because he is getting more wheat harvested in a day.

Just wait a few more or so years before buying that new harvester and get the one with the robot option that displaces your harvester operator from the driver's seat. Then you can be expected to pay your (former) harvester operator more in the form of higher unemployment taxes.

[Topper]

I agree about economic illiteracy.

[frank ryan]

Screw Margaret Thatcher.

No shit! I've never figured out why people fawn over a woman he seriously proposed forcably removing all Catholics from Northern Ireland.

[frank ryan]

The latest outcry of income inequality is brought to you today by the Washington Post, who declares the middle class to be lost (maybe we should look for it under the couch cushions). This is why journalists who report on economic issues should be required to pass basic economic exams before publishing articles. There is a lot of nonsense in this particular article, like the author conveniently overlooking the fact that the median income puts most Americans well within the range of middle class, but the winner of the most ridiculous paragraph award goes to this gem:



I bolded the last sentence because it highlights the author's ignorance. The economy has grown because productivity has grown, and productivity has grown because of technology. The author implies that workers are responsible for their increased output, and are not being compensated for the value they add. This is an argument analogous to me investing in a harvester that harvests twice as many bushels per hour as my old harvester, and then being expected to pay my harvester operator more because he is getting more wheat harvested in a day.

If there is anything wrong with the middle class it is the government. The middle class has historically been comprised of workers and small business owners. Small business owners are subject to increasingly onerous regulations and laws that make it more difficult to compete, and they are being squeezed out. Further, the same regulatory environment creates huge barriers to entry for small guys with an idea or just skills and a good work ethic. Try to start a business doing some plumbing on the side in Massachusetts and you'll see exactly what I mean.

Ultimately, this article isn't about the middle class, which comprises the vast majority of this country by world standards. Instead the middle class argument is being used to complain about income inequality. We've talked about this before, but haven't dedicated a thread to it. If we are employed, housed, fed, and have luxuries that most of the rest of the world does not, why does it matter that a segment of our society is phenomenally more wealthy than us? The answer: it doesn't. Show me all the income inequality studies you want, and I'll tell you they do not apply to our situation, because the fact is that income inequality only leads to political instability when the people on the low income end are in poverty and desperate. This article and the entire income inequality argument is nothing but class warfare rooted in envy.

Forgive me because I am of those stupid liberals who is motivated only by envy but this question is sincere. Do you ever find any amount of luxury or decadence obscene? I'm not asking if you can understand socialists or anything but when you bring up envy I'm just curious.
btw I agree with you that reporters are woefully about many topics they report on and that will only get worse with the decline of the newspaper industry as reporters are asked to know and do more with less time, for less money and with less resources.

[byu71]

Forgive me because I am of those stupid liberals who is motivated only by envy but this question is sincere. Do you ever find any amount of luxury or decadence obscene? I'm not asking if you can understand socialists or anything but when you bring up envy I'm just curious.
btw I agree with you that reporters are woefully about many topics they report on and that will only get worse with the decline of the newspaper industry as reporters are asked to know and do more with less time, for less money and with less resources.

I too would have to disagree with Cowboy, doing so at maybe my own peril, that the root of the argument is envy.

I think it is a matter of how one interprets fairness. Is it fair for the Corporate CEO to get paid hundreds of times some employee's? Is it fair someone inherits millions and a school teacher or policeman, fireman, etc. won't make it to be a millionaire on their salaries? Of course I could go on and on about fairness, but those who try to make the world fair are really helping the middle class or the poor in the long run.

Many different philosophies have tried to creat fairness and they just don't work as well as good old capitalism. Even the early church with God directing the program couldn't make a fairness system work.

We, rich, poor, middle class need to stop valuing people on $$$. That would help a lot. My kids just aren't as aggressive or money hungry if you want to call it that, as I am. They do have good lives though and sometimes I envy them for their lifestyle vs the one I had. A good person with a good lifestyle has to be looked up to as much as the person with the $$$. That could help.

[Pelado]

A good person with a good lifestyle has to be looked up to as much as the person with the $$$. That could help.

For some reason, I was reminded of these lyrics:

And it won't make one bit of difference if I answer right or wrong.
When you're rich, they think you really know!

[byu71]

For some reason, I was reminded of these lyrics:

Some also think you are lucky or had to screw someone. Are there lyrics with those words?

[Topper]

Forgive me because I am of those stupid liberals who is motivated only by envy but this question is sincere. Do you ever find any amount of luxury or decadence obscene? I'm not asking if you can understand socialists or anything but when you bring up envy I'm just curious.
btw I agree with you that reporters are woefully about many topics they report on and that will only get worse with the decline of the newspaper industry as reporters are asked to know and do more with less time, for less money and with less resources.

This is an interesting value judgment question. It is usually used to justify an extremely progressive income tax scale, via the argument that nobody "needs" five million tvs, hence government should be able to rob somebody of them for the good of the greater number. Naturally, it assumes lots of facts which aren't usually provable or shown by the facts involving a socialistic government.

Whether somebody should acquire a bunch of expensive stuff is certainly a personal decision, not one that I am faced with. However, the prospects for the potential for wealth is a great incentive for many people. Eliminate that prospect and you harm society and the economy, IMHO. I will never be worth a Billion Dollars and I don't want expensive stuff most of the time, perhaps an expensive bike or a nice smoker. But, I want the possibility unhindered by government intrusion to go after that, if I were so inclined. I have not, nor will I ever be the net recipient of the welfare or socialist state. The prospects of a safety net neither comfort me nor motivate me. In most respects, I argue it is but an illusion and acts as a glass ceiling.

[cowboy]

Forgive me because I am of those stupid liberals who is motivated only by envy but this question is sincere. Do you ever find any amount of luxury or decadence obscene? I'm not asking if you can understand socialists or anything but when you bring up envy I'm just curious.
btw I agree with you that reporters are woefully about many topics they report on and that will only get worse with the decline of the newspaper industry as reporters are asked to know and do more with less time, for less money and with less resources.

First, let's separate the argument from the person. I don't think you're stupid or motivated by envy. The inequality argument is a populist argument used by politicians to get the poor and lower middle class on their side at the expense of alienating a much smaller uber-rich population. People buy into it because they don't think it's fair that they work hard and aren't wealthy like those they consider to be more fortunate. However, the argument ignores a key factor that makes capitalism work, and that is motivation. The potential to profit is what motivates people to innovate and be productive. When profit potential is capped or curbed substantially, so is motivation. That's why I believe the argument has an unsound economic foundation and would in fact be counterproductive, which is the reason I call it ignorant. Good fortune often plays a part in wealth, there is no doubt, but so does willingness to work hard, bear risk, and spend time and money turning creativity into useful ideas. It is counterproductive to take away incentive to work, bear risk, and create, just because it's not fair that some people are luckier than others.

As to your question, I find decadence obscene, but I have no problem with luxury. We prosper as a nation when we are productive, and decadent people are not productive. I believe you will find that people who create phenomenal wealth are rarely decadent, though, because they tend to be innately hard workers. Trust fund babies are a different story, but again, if someone cannot spend their wealth the way they want and give it to their kids if that is their wish, then they have less motivation to create wealth in the first place. Luxury is a different story. Part of my position on luxury goes back to motivation, but luxury is also part of the economy. If some Kennedy kid wants to build a mansion in Aspen and fly there on a private jet once a week, he's paying a pilot and a caretaker, property taxes to the state, and has paid someone to build his plane and his house. A dog can live much better on the table scraps of a big eater than those of a little eater. In the end, the bigger question is why does anyone care if someone else is rich? Wealth isn't a zero sum game, so others' wealth does not keep me from becoming wealthy, and in fact it may help me become better off if I'm the one that benefits from their consumption.

I too would have to disagree with Cowboy, doing so at maybe my own peril, that the root of the argument is envy.

I think it is a matter of how one interprets fairness. Is it fair for the Corporate CEO to get paid hundreds of times some employee's? Is it fair someone inherits millions and a school teacher or policeman, fireman, etc. won't make it to be a millionaire on their salaries? Of course I could go on and on about fairness, but those who try to make the world fair are really helping the middle class or the poor in the long run.

Many different philosophies have tried to creat fairness and they just don't work as well as good old capitalism. Even the early church with God directing the program couldn't make a fairness system work.

This may be a semantics argument. There are very few who truly seek fairness. As defined by me, these are people who want fairness for others regardless of how it affects them personally. On the other hand, there are a lot of people who say it isn't fair that a Rockefeller will never have to work, but only complain about the unfairness because they wish they didn't have to work either, or believe they would benefit somehow if the Rockefeller had to give his trust to the government. Either way, their motivation for fairness is self-serving. Envy may not be the right word, but calling it a quest for fairness is misleading.

Life isn't fair, and it shouldn't be the government's responsibility to make it so. This is the greatest economy in the world not because it's fair, but because we have historically offered more opportunity than any other. As a result, we attract people with work ethics and ideas that make our economy grow even more. I believe the best way to ensure economic prosperity is to encourage education and protect the opportunity to become phenomenally wealthy, because that combination gives people the skills and motivation to innovate, create, and produce.

[Katy Lied]

Why do we equate lots of money with luxury or decadence? I think this is the first misstep. Warren Buffet has a ton of money but lives neither a luxurious nor a decadent lifestyle. There are a lot of pro sports players or rap artists who live a luxury filled and a decadent lifestyle but have very little money. Con artists can have a decadent lifestyle-- until they get caught and then they go to prison, or not. There are families who own thousands of acres from long ago generations but barely have two nickels to rub together to pay their property taxes today. People who live beyond their means on credit can be decadent for short periods of time.

You can't really define decadence on an objective scale other than with income or assets. Are you willing to paint everyone in the same income bracket with the same decadence brush?

What if you define decadence as someone who lives off the fruits of another's labor? That could mean trust fund babies, but it could also mean welfare recipients. What if you marry Theresa Heinz who then leaves you all her money, is that obscene.

Oops gotta run.