Why Do Americans Work So Much?

HughPickens.com writes Rebecca Rosen has an interesting essay at The Atlantic on economist John Maynard Keynes' prediction in 1930 that with increased productivity, over the next 100 years the economy would become so productive that people would barely need to work at all. For a while, it looked like Keynes was right: In 1930 the average workweek was 47 hours. By 1970 it had fallen to slightly less than 39. But then something changed. Instead of continuing to decline, the duration of the workweek stayed put; it's hovered just below 40 hours for nearly five decades. According to Rosen there would be no mystery in this if Keynes had been wrong about the economy's increasing productivity, which he thought would lead to a standard of living "between four and eight times as high as it is today." Keynes got that right: Technology has made the economy massively more productive. Now a new paper Benjamin Friedman says that "the U.S. economy is right on track to reach Keynes's eight-fold multiple" by 2029—100 years after the last data Keynes would have had. But according to Friedman, the key reason that Keynes prediction failed to come true is that Keynes failed to allow for the changing distribution of wealth.

Comments

distribution of wealth and

[ILongForDarkness]

Greed. Family's in my experience at least have gone from being happy with 1 TV and one stereo in the "family" room to wanting fridges with TVs on them, each person having a cellphone and a tablet etc, each "adult" > 16 wanting their own car etc. We have more stuff. If we lived with the stuff you had in 1930's yeah we could work a lot less.

Re:distribution of wealth and

[Opportunist]

If we lived with the stuff we had in the 1930s you would not have had the economy boom you experienced in the second half of the 20th century. The economy was soaring and people had good jobs exactly because we started to become consumers. Because we wanted that second car and that third TV, because we wanted leisure air travel and electronic gadgets.

Without that demand, nobody would have had a job and no economic growth would have happened. Look around you, this is what you would have had for half a century now if people did not only develop the desire to consume but also have the money to do so. Today the desire remains, what's lacking is the money to actually do it, and as soon as the money for consumption was gone the economy plummeted.

Re:distribution of wealth and

[nukenerd]

in my experience at least have gone from being happy with 1 TV and one stereo in the "family" .... If we lived with the stuff you had in 1930's yeah we could work a lot less.

But a pre-1980's TV was built by hand while today robots do most of the work. The effort that went into that 1950's TV or 1930's car would make a dozen today.

The real reason for more work today is that most of it is non-productive. As automation has replaced much real work, new non-jobs have been created. It is doing stuff like safety inspections, progress chasing, advertising (half the cost of some stuff today goes to its advertising), making financial cases (that can cost more than the work) and so on ad nauseum. In the book "How to be a Wally" it gives a "Wally's" job description : - "To liaise with other Wallys". That's it, in in a nutshell.

I am a power station engineer and I spend hours sitting in meetings with a dozen other qualified engineers discussing eg whether to replace a slightly leaking seal on a large valve, whether it is cost-effective, whether we have a safety case, whether we can spare a fitter to do it. I generally take the line "Just give me a fucking spanner and I'll go down and do it this morning"; but I am treated as if that would be spoil the meeting.

Re:distribution of wealth and

[ILongForDarkness]

But the demand for more stuff is what consumed the extra labor made available by productivity improvements. Yeah wanting more stuff is what kept enough work for 40+ hours a person while women entered the work force. There would be less work if people wanted less stuff but they also would need to work less since they need less stuff. The problem IMO is the assumption that growth in sales, GDP etc is inherently good. Society needs to work enough to provide for the needs and desires of their members. So at some point you only get growth by convincing people they need more stuff. They then have to work more and have less happiness till they get their new "thing". This is psychotic. We're programmed (using that loosely since I'm from Canuckistan but close enough culturally) to be like Tazmanian devils and keep eating till we can't walk anymore rather than just say enough.

Re:distribution of wealth and

[JoeMerchant]

Military spending, infrastructure, the economic competition-wars, "medical miracle" spending, rather than kicking back with a baguette and a glass of Bordeaux, Americans are inventing new ways to keep busy, "stay on top", keep up with the Joneses, satisfy their ancestor's work-ethics, and exploit what's left of the third world.

What will be interesting is when we run out of third world labor pools to exploit - if minimum wage keeps getting kicked up it may not happen, but if conservative forces hold it down for a couple more decades, Asia and Africa's standard of living will catch up with "the West," and we won't have any substance to support our superiority complex anymore.

Re:distribution of wealth and

[drewsup]

yup, but because things are damn cheap now, it doesnt matter, TV's were a high dollar item up until 1980's, computers.. forget about it, cars have remained pretty much the same accounting for inflation, but insuranse is outarageous, now housing..... THATS where the big jump has been, we are looking at generations that will never own a house now.

Re:distribution of wealth and

[l0n3s0m3phr34k]

Modern Consumerism is an invention of Edward Bernays, the cousin of Sigmund Freud. Go watch "Century of the Self"; it also details the Clinton "focus group" idea, how advertisers convinced women to smoke, the invention of modern PR and marketing...which has basically a weapon of mass destruction for corps to "convince" everyone to keep buying products via a whole slew of psychological tricks.

Re:distribution of wealth and

[l0n3s0m3phr34k]

These Numbers lol.

Re:distribution of wealth and

[Daemonik]

I live in a house built by my own hands on land I claimed after killing the Indians living here. I'm typing this on a telegraph because I'm not the kind of greedy bastard that has to have a newfangled computer. I'm only using the telegraph until I figure out how to make the internet work with an abacus. I keep my food in the root cellar instead of wasting money on one of those refrigerators and keep the house lit by candles made with fat rendered from the animals I raise. TV is shadow puppets on the wall and I ride a horse buggy into town.

YOU sound like the greediest asshole ever with all your modern conveniences! How dare you buy things??

Re:distribution of wealth and

[AthanasiusKircher]

If we lived with the stuff we had in the 1930s you would not have had the economy boom you experienced in the second half of the 20th century.

There's certainly some truth to this, but it oversimplifies things.

Without that demand, nobody would have had a job and no economic growth would have happened.

But take the premise in TFA seriously for a second. Keynes's prediction should have the average work-week around 20 hours by now. To have our current productivity, we would therefore need twice as many jobs as we currently have. But we were reach full employment long before that, so we would have to have significantly lower productivity and consumption while still having enough jobs to go around.

And of course the objection is -- "But don't people who work 20-hour weeks get paid less?" And the point of TFA is that NO -- they still get paid a living wage. The difference in the Keynes future prediction and what we actually got is that that extra money has been siphoned off to the richest folks, rather than rewarding average workers, who might then have to work less hours to still live comfortably.

(Of course, whether that could actually happen given human nature is a separate issue...)

Today the desire remains, what's lacking is the money to actually do it, and as soon as the money for consumption was gone the economy plummeted.

This is also far too oversimplified. Our economy doesn't just depend on consumption -- it depends on irrational assumptions of continuous and perpetual GROWTH of consumption.

You can't have a large corporation today and just continue making the same stuff every year and getting moderate profits that keep up with inflation. Well, you can, but nobody's going to invest in you, because Wall Street has taught us that speculation in growth is normal. Thus, if you're going to attract investors, you need to promise them an irrational and illogical perpetual growth machine that will always beat inflation in its returns.

The consequences of this logic are profound, because it's simply impossible for businesses to sustain such growth over any extended period. Once market saturation occurs, where else do you go? Well, you start doing what we see big corporations in America doing for the past few decades -- you need to keep up the illusion that profits are going up, but you can't get more revenue due to market saturation, so how do you keep up the GROWTH demand of investors?

First, you have the cost of employees. Those darn Americans and their unions cost too much. So, you send manufacturing jobs offshore. Nowadays with the lower cost of global communication, you send service jobs offshore too. And those effects continue to trickle up the offshore game -- to save money, to make greater profits, to satisfy the investment illusion that perpetual growth is possible.

But then you need more money, 'cause you've already sent all your manufacturing (and JOBS! don't forget that's what we were trying to keep in the US!) to China or whatever. But you've exhausted the revenue increases from offshoring, so you make cheaper products, which will break. You make them in such a way that they can't be repaired. Repair shops (which used to be a significant service elements in most American cities) also go out of business... more jobs lost.

You create "planned obsolescence." You spend more and more money on marketing to convince people that they need the newest gadget every year. That marketing money doesn't go to support middle or lower class workers (JOBS!) -- instead it goes to white-collar advertising agencies and such.

Eventually, you need to start tricking people into spending huge amounts of money on your products -- so, you expand the "razor/razorblades" model to products that cost hundreds of dollars. Yeah, you get a "free" iPhone every few years, but it comes with a commitment to a $100+/month phone plan. People wou

Re:distribution of wealth and

[tverbeek]

The medical profession has a term for something that doesn't simply maintain itself but instead keeps on growing: cancer. They don't consider it healthy.

Re:distribution of wealth and

[ILongForDarkness]

But I ask: why do we want economic growth? It is the demand for more stuff that demands economic growth. Or do you/we have some sort of fetish for larger numbers?

If consumers stopped demanding more/newer and better toys sure the GDP wouldn't grow but it wouldn't need to because no ones asking for more junk.

Re:distribution of wealth and

[Opportunist]

This economy model we're using demands economic growth. The value of companies is tied to whether or not they manage to grow. The problem is that today we have reached the limit of what's sensibly possible without cannibalism.

So we're devouring what drives the economy in our quest for growth. Yes, that's eventually going to be suicidal, but don't look at me for a solution. I don't mind the collapse.

Re:distribution of wealth and

[Xyrus]

And of course the objection is -- "But don't people who work 20-hour weeks get paid less?" And the point of TFA is that NO -- they still get paid a living wage. The difference in the Keynes future prediction and what we actually got is that that extra money has been siphoned off to the richest folks, rather than rewarding average workers, who might then have to work less hours to still live comfortably.

(Of course, whether that could actually happen given human nature is a separate issue...)

This is key. Keynes thought that as things improved, everyone would get a share. Not in some socialist/communist way, but as in a "rising tide lifts all boats" kind of way. The problem is, this didn't happen.

Instead, corporate execs siphoned all those gains into their own wallets while shafting the average worker in as many ways as they can get away with. Average wages have remained mostly flat (or dropped) when accounting for inflation while Mr./Mrs. CEO's bank account keeps getting fatter. It's not really sustainable, and people are going to find that out the hard way when the GCEE (Great Consumer Economic Engine) suddenly runs out of fuel.

But Mr./Mrs. CEO doesn't really care. They don't have to. They're million and billionaires EVEN IF THEY FAIL. Once there's nothing left to siphon off, they'll just move on.

Re:distribution of wealth and

[Catmeat]

The real reason for more work today is that most of it is non-productive. As automation has replaced much real work, new non-jobs have been created. It is doing stuff like safety inspections, progress chasing, advertising (half the cost of some stuff today goes to its advertising), making financial cases (that can cost more than the work) and so on ad nauseum.

While you have a point about advertising and so on, don't write off safety inspections as "non productive".

Compare the rate of industrial accidents 70 years ago with the current rate, per person-year in a given industry. Calculate the cost of a person who was formerly a productive part of the economy becoming a lifetime drain on it if, through no fault of their own, they're unable to work thanks to a work-related injury.

Even if a particular safety inspection only reduces the chances of an accident by a trivial amount, it still represents an overall economic gain, given the costs of an accident.

You now why he failed to account for that.

[Anonymous Coward]

Because no one would have believed anyone would believe it will trickle down just give it all to the rich.
People did not use to be that fucking stupid.

Re:Income inequality has *RISEN* under Obama?!?!?

[Opportunist]

Income inequality has risen since at least Reagan, don't act like it's something new.

We COULD get by working 10-20 hours a week

[Opportunist]

If we could survive on what we earn in that time, that is.

There certainly isn't enough work for everyone. Well, not quite right, there COULD be enough work for everyone if, and only if, we could sell it. That's the main problem our economy has today, not enough money on the demand side. What drives our economy is consumption, and for consumption you need surplus money to use for it. And that's what's lacking.

Consumption is a self powering cycle. I consume, hence the person whose services I use gets money, who in turn gets to spend that money on consumption. It's amplifying itself. Unfortunately that also works in the opposite direction. If I don't have money, I won't get a haircut. So my hairdresser has to close his business. And can't get his plumbing fixed. Which in turn means the plumber won't get to go on vacation. Which shuts another hotel down. Which leaves that cook without the money to get his car checked. And so on.

We need money in the demand side of our economy. But for that we need people to actually get money for working. Unfortunately we have more and more people working 40+ hours a week and only get enough money to make ends meet with zero surplus at the end of the month. That's not going to work. We have to stop the money accumulation, the only thing this accomplishes is more money on the supply side. There's plenty already, we have more people who would love to invest in something sensible than there are sensible investments.

But for an investment to be sensible, there has to be a market for it. And a market will only exist if you have a demand side with the money to play its part!

Re:We COULD get by working 10-20 hours a week

[mellon]

(a) there isn't enough work for everyone because the people who have work are doing too much of it.
(b) work isn't some virtuous act that we should all do as much of as possible.

The problem we have is that work is the only metric we have for determining how to share wealth. Think about it.

Re:We COULD get by working 10-20 hours a week

[Hognoxious]

The problem we have is that work is the only metric we have for determining how to share wealth.

It is? I thought it was based on how much you already have.

Re:We COULD get by working 10-20 hours a week

[l0n3s0m3phr34k]

There WAS enough money, but most of it has been transferred to .01 of the US population, and they have transferred it into various financial vehicles were it will never get "back" into the actual economy.

Re:We COULD get by working 10-20 hours a week

[tverbeek]

I remember watching this contraction begin after the stock market bubble popped in 2008. The company I worked for took big cost-cutting measures in anticipation of an economic downturn, reassuring us that these would protect our jobs. Of course most of them meant more work for employees to pick up. And nearly all of them were clearly going to cost people outside the company their jobs: the people who used to take care of the office plants, the housekeepers who were coming in only half as often, the snow-plow drivers who were told to only clear the parking lot when there was X inches of snow, people at the media outlets where we suspended advertising, the big landscaping project that was cancelled, etc. It was a methodical undertaking whose obvious effect was to help create the economic downturn they were predicting.

Now, I'm no economist, so maybe this is impossible for some reason, but I can't help wondering what would happen if, when the stock market fell everyone just ignored it and carried on with what they were doing. Instead it took the federal government to step in and compensate for everyone going into financial lockdown, spending money which started putting people back to work, allowing them to spend money again, and so on. Maybe if the market wasn't so prone to mood swings of "irrational exuberance" and "financial panic", the government wouldn't have to get involved.

Re:We COULD get by working 10-20 hours a week

[Opportunist]

Work is the metric for determining how to share wealth? Really? Wow. No wonder top managers are falling from one burnout into the next. After all they're working an average of 800 hours a day. Right? I mean, they get about 100 times what the janitor gets, and he work about 8 hours, so they must work 800 hours. Right?

In other words: I call bullshit.

On almost everything you said.

a) People don't work so much because they are Spongebob and love flipping burgers. They do it because it's the only way they can make ends meet. When you make like 800 bucks a month from a job and your rent is about 600, overtime is what feeds you.

b) That's the one thing you're actually right about, but again, people don't toil because they hate sitting in front of the TV and loathe sleep. It's something they do because they need money. I even dare say that at the very least 9 out of 10 people, if offered the choice, would toss in their burger flipper, spit in their boss' face and tell him where to stick that damn job if they didn't have to do it because they need to pay bills.

And there are many other ways to determine how to share wealth. Some even less unfair, biased and self serving as the one we use now.

Re:We COULD get by working 10-20 hours a week

[Wycliffe]

If you base it on what people already have, you essentially give them and incentive to spend everything they get to keep their wealth low so they get more basic income. If you base it on what people earn, you given them incentive to keep work less so they get more basic income. Even raising it to support children doesn't make sense because some people will exploit it by having a lot of children for the wrong reasons.
I like the idea of basic income but I think it has to be a flat amount regardless of other factors. It's already a hard sell, particularly among the right and among the libertarians and even among moderates, so it has to be well thought-out in order to prevent abuse or it will never gain traction. IMO we're a long way off from being able to do something like that in the US.

The only way to do a basic income would be to give everyone a basic income of let's say $200/week then say the next $200/week is completely untaxed. If you did this then you might see a large number of people making minimum wage ($290/week) quit immediately but not all of them because although some people might be happy with $200/week without working, many more would also jump at the opportunity to double their income. Most people, even teenagers, like to work. They get bored sitting at home all day every day doing nothing especially if they are too broke to go do fun stuff. That's usually why most teenagers get their first job so they can pay for entertainment. What having a basic income would do though is make it so that workers now had more say. As they don't need a job, if the conditions get too horrible, they are able to quit and look for a better job without starving during the gap in employment.

A basic income would not really help the 40 hour / week problem though as most people make considerably more than $200 per week and still work 40 hours per week. The 40 hour per week problem is caused by the fact that it's easier to train one person to work 40 hours per week than it is to train 4 people to work 10 hours per week and as, again, most people don't mind working and have no problem exchanging time for money so they can buy more stuff, you are always going to find people willing to work 40 hours per week. The only way to reduce the 40 hours / week would be to mandate it. If the government required overtime at 35 hours then you would see hours/week drop. As a side effect, this could be used to easily manipulate unemployment. Reducing the work week by 5 hours per week would increase the number of available jobs as many jobs that require X number of hours to complete would all of a sudden need more employees to get the job done.

Re:We COULD get by working 10-20 hours a week

[captjc]

I don't think it works that way. I get paid a salary for a work week. That salary assumes I only work 40 hours a week, but because it is salary, It doesn't change If I work less than 40 (which I would just be strait-up fired) nor do I get extra money for working more than 40 (no overtime pay for salary workers). Here is how it works. I want to go home at 5, but the boss comes in at 4:50 and says "don't leave until this is done." I tell him "it will probably take another day or two." He says "well, better get working then". I then stay there working until 5 AM where in I go to McDonalds get breakfast and a few cups of coffee, make a quick stop at home to get a shower, change my clothes, and return to work to start another day, thus pulling 12 extra hours which I don't get paid for.

Now assume that this isn't just a one-off thing and happens frequently. You can see how people can work 60+ hours a week and not get paid for it. Not because they love their job but because it's expected. This is how it is, pretty much everywhere in America. The only major difference is usually that some places the boss will order dinner on the companies dime instead of me going hungry because I only brought lunch and I can't leave because my card only gives me access until 6 PM.

Re:We COULD get by working 10-20 hours a week

[Solandri]

No, the problem is loans. The top 1% aren't amassing wealth by stealing it from the other 99%. The 99% are willfully agreeing to hand it over to them in the form of interest on all sorts of loans.

Productivity gains haven't translated into increased real income for two main reasons: Increased cost of housing, and increased cost of education. The market price for homes is determined almost entirely by how much people are willing to pay, not by how much it costs to build. If cost were the predominant factor, homes would depreciate as they got older, like cars. Instead they appreciate because of widespread availability of credit (loans) and increased demand (population is increasing, land area is not).

Look at the long-term inflation-adjusted home prices. From the 1890s to 1930s the average real home price decreased as you'd expect from technological progress making them cheaper to construct. But in 1934 the National Housing Act was passed, then Fannie Mae was created in 1938, then the GI Bill after WWII. Real home prices began climbing until they stabilized at nearly double what they were pre-1930 (the graph is a log scale). All of these programs allowed people to cheaply borrow money. If you double the amount of money people are able to use to bid on a home, of course the price of a home is going to double. It happened again during the housing bubble of the 2000s. Extremely low interest rates and relaxed lending standards meant a lot of money was borrowed cheaply, and when lots of people can borrow lots of money, they bid up the price of large purchases like houses.

The same thing has been going on with college education. People wring their hands over the increasing cost of college tuitions which have been vastly outpacing the rate of inflation, asking why is this happening? It's damn obvious why it's happening - the widespread availability of college loans. We've got a perverse positive feedback loop where college gets expensive, people argue that students need assistance to pay for it so we make programs to provide them low-interest loans. That borrowed money allows students to bid up the price of tuition (the school raises the price beyond a point where the student would normally decline to attend because of the high tuition, but instead they get a student loan and pay the higher tuition). That allows tuition to increase even more, leading to people arguing for more student assistance.

So it's the loans which are causing the rise in price of these non-commodity big-ticket items, which are eating up a huge portion of our productivity gains since the early 1900s. The next question is, who is the beneficiary of all these loans? Well to loan someone money, you have to have money. In other words, the 1%. You get a 30-year mortgage whose amortization means half of your total payments will go to principal, half to interest. Basically you're buying a house, and agreeing to pay for an identical house for a 1%er. (Slightly less due to inflation, but we're in a low-interest rate period. At an 8% interest rate, it's 62% interest, 38% principal. At the 16% interest rate of the early 1980s, its 79% interest, 21% principal.)

You want to stop the transfer of wealth to the 1%? Get rid of the loans. Ratchet back the maximum duration of a loan to 15, then 7 years, and make it harder to roll over balances from end of one loan to the start of another. Cap the interest rate so the percentage that's paid to interest over the life of the loan can't exceed 25% or 33%. Yes this will make it harder to buy a house or get an education - that has to happen if you want the price of those things to drop. People will have to learn to save first, buy later; instead of buy now, pay for it later. If you want to assist low-income people trying to buy a home or go to college, do it with supply-side subsidies. Build more government-funded or government-sponsored housing to increase the supply of housing. Create more public universities with capped tuitions to increase the supply of education. Don't do it with things like loans which create more demand.

Re:We COULD get by working 10-20 hours a week

[l0n3s0m3phr34k]

Your taxes actually do go to the 1% via mass, multi-billion dollar tax breaks, refunds, pre-tax exemptions, etc. JPMorgan, 1.3 billion tax refund in 2013, American Airlines, $22 million refund, Boeing $82 million tax refund in 2013. These numbers took 10 seconds on a Google search of "tax breaks and refunds for corporations". My stats come from The Nation, and in general these "tax breaks" cost the US economy over $150 billion last year. Corporate inversions are transferring money out of the US into foreign firms.

Do not worry...

[martiniturbide]

....now we have social networks to avoid the danger of being productive :)

Re:distribution of wealth and_______

[rmdingler]

the influx of low income workers who keep the whole ball of capitalism rolling.

Without population increase by birth and immigration, the system begins to stagnate, especially with the large percentage of wealth in the hands of the .1%.

Re: Income inequality has *RISEN* under Obama?!?!?

[Anonymous Coward]

Everything is new under Obama. Before Obama there was no terrorism, no debt, no healthcare premium increases, no illegal immigration, no deadlock in government, no economic downturn, no corporate welfare, no cronyism and more.

Truly we lived in Paradise until Obama made us eat that apple. Which stands for abortion, which Obama also invented.

Transfer of wealth from the middle class

[Ozoner]

I'm surprised at the comments so far.

Surely the thrust of the article is that the benefits of the increase in productivity have not gone to the workers and the middle class, but to the super rich.

Re:Transfer of wealth from the middle class

[mellon]

The problem is that this is ideologically unappetizing for people who have been buying in to the trickle-down model for the past thirty years, and it is really hard to let go of a strongly-held opinion, so there must be some other reason. This is a serious problem, for which the cure is not criticism of those who are stuck in this particular rut. They are suffering from being stuck there as much as we are, but getting them out will take more than just pointing out to them that they are mistaken.

Re:Transfer of wealth from the middle class

[turbidostato]

"Surely the thrust of the article is that the benefits of the increase in productivity have not gone to the workers and the middle class, but to the super rich."

This. And even the basic premise is wrong: "over the next 100 years the economy would become so productive that people would barely need to work at all." and that's exactly right, not wrong as the summary states. The productivity increase certainly allows for most people to barely need to work at all; the socio-political system, not the productivity, is what impedes it.

Re:Transfer of wealth from the middle class

[Anonymous Coward]

Insurance money doesn't go to the employee: insurance companies stay in business precisely because they take in more through premia than they pay out in claims, so insurance money is essentially a transfer of wealth to insurance providers. The employees aren't seeing any benefit out of that money (unless they're in the rare tail end of the distribution that actually needs more health care than it could pay for with the same money that goes to insurance premia).

When you talk about "total compensation," you're talking about so-called "benefits" that don't actually accrue to the worker but that serve to keep wealth in corporate hands.

Re:Transfer of wealth from the middle class

[rocker_wannabe]

(sarcastic)Unfortunately, the trickle-down model is correct. The rich let enough money trickle down so people don't get desperate enough to kill the rich.( end sarcastic)

Re:Income inequality has *RISEN* under Obama?!?!?

[bluegutang]

It's really simple. Reagan entered office in 1981. China opened its economy to the West starting in 1978. Ever since then, the Chinese economy has grown at about 10% per year, and inequality has increased in the US as lower-wage jobs go to China. Any questions?

Re:Because people want the lastest iPhone!

[mellon]

No, the average Joe today cannot afford better health service than the richest people of 100 years ago. He can _get_ it, but he can't _afford_ it. Wages have fallen in the past thirty years. That is why people are working more. It's cruel to paint this as people being greedy. What is happening is just the opposite.

My grandfather worked as a mechanic at an orchid farm and was able to buy a nice new car every two years and retire in relative luxury to Florida. Nothing fancy, but a really nice retirement, which he and his wife enjoyed until he passed from a burst aneurysm in his eighties, for which the treatment is the same today as it was then: hope you get lucky and notice it before it goes, and watch it like a hawk until the risk of it going is worse than the risk of dying from trying to fix it.

People doing the same thing my grandfather did for a living today are barely getting by, and are not saving for retirement. Why is that, do you think?

Easy

[DaMattster]

Wages have declined over the past two decadea meaning people have to work longer hours to make ends meet. Keynesian economics has nothing to di with it. Quite simple it's grees from the wealthy.

Re:distribution of wealth and_______

[rmdingler]

Guess what... if we distributed all that concentrated wealth, we'd still need to work.

Sure we would, and I'm not implying that it is a bad thing to have an obligation to fulfill that separates a person's free time from *his labors.

Look, redistributing wealth entirely and evenly is a dream that spawns in pipes. Economically, someone will always climb to the top of the food chain, but we've let it get way out of hand.

The present concentration of wealth is so dire that we run the risk of consolidating the World's power into a few hundred families.

Re:Income inequality has *RISEN* under Obama?!?!?

[Ol Olsoc]

So a very small percentage of people owning almost all America's wealth is the fault of the Chinese?

Re:70s

[Sique]

The Gold standard wouldn't help very much, actually it would have made things worse.

Since at least for 100 years, the amount of gold added each year to the available gold reserves doesn't keep pace with the productivity increases, which means that there is less and less gold available to distribute between the creators of wealth. With the Gold standard, there wouldn't be any incentive to increase productivity at all, as the available wealth increase is limited by the amount of gold mined, not by the available productivity.

Until the First World War, there was an accepted way to get out of the Gold trap: War against someone who has gold and get hold of his gold to distribute between your local creators of productivity. Since then, conquering other countries and robbing their gold has been frowned upon. Thus there is simply not enough gold available to pay for the possible productivity increases, and keeping the gold standard would just strangle any economy.

Re:Income inequality has *RISEN* under Obama?!?!?

[Anonymous Coward]

Yes, the Chinese and a few wealthy Americans are colluding to fuck over all other Americans.

Re:Work and Gravity . . .

[PopeRatzo]

My late father used to say something like, "Work is like gravity . . . it tends to be attracted towards people capable of doing the work."

That's actually quite a radical and left-leaning concept. If you want to move the heaviest loads, hook up the biggest horses.

Did you know your father had Marxist tendencies (though he probably didn't realize it)?

Women+Boomers+Immigrants = "Labor Shortage"

[Baldrson]

The baby boom started increasing the supply of entry level labor about 1970.

Women's liberation started increasing the supply of entry level labor about 1970.

The Immigration and Nationality Act of 1965 started increasing the supply of labor (not just entry level) about 1970.

The Donor Party liked this because it lowered labor costs. Oh, did I say "Donor"? I meant "Republican".

The Elect A New People Party liked this because 2 of the 3 sources of new labor would vote to Elect A New People. Oh, did I say "Elect A New People"? I meant "Democratic".

So you have a huge influx of labor and this is interpreted as a "labor shortage" by both parties.

Combined with the fact that FDR's "New Deal", in effect, nationalized many of the functions previously performed by the labor unions -- turning the national border into a de facto picket line that, for example, that neoNazi Eisenhower enforced with "Operation Wetback" (deporting most of the illegal immigrants) -- and the labor movement effectively collapsed.

Elizabeth Warren, before she got conned into becoming a politician, was the only mainstream academic to come close to documenting even part of this. See her Jefferson Lecture titled "The Coming Collapse of the Middle Class.

Since 1992, I've been advocating replacing taxes on economic activity with what amounts to an insurance premium for the protection of property rights, and distributing the revenue in a citizen's dividend. In that white paper I predicted a lot of what has now come to pass as a result of centralization of wealth and burgeoning welfare state rent seeking.

Here is a link to a recent synopsis of that proposal.

Happiness is relative

[Aviation Pete]

Psychology studies show it's not the absolute material wealth that makes you happy and content but the relative, in comparison to others in your social group. That's why top executives have spiraled up their pay packages, and why the middle class never lowered their work time below what is filling your day.

When Volkswagen experimented with 4-workday weeks 20 years ago, local plumbers and carpenters fell on hard times because everyone now used the extra day to fix things themselves, or even work on the side on that extra day. While the unions keep telling you that workers would relax during the extra time resulting from reduced work, in reality everyone tries to make a little extra on the side.

Also, having a job gives meaning to your life. Being told that you will be needed less is like telling you that you are a burden - nobody wants to hear that. That is also why today both parents work, even though they could enjoy the standard of living of a single-earner household of 50 years ago. But to keep up with the Joneses and to feel better for themselves both are now working, and the downside of less parenting seems to be generally accepted.

Re:Happiness is relative

[phantomfive]

While the unions keep telling you that workers would relax during the extra time resulting from reduced work, in reality everyone tries to make a little extra on the side.

Yeah. It turns out people would rather work harder than get paid less. And if you do work 32 hours a week (purposely, for less pay, because you'd rather have time than money), your relatives and friends will think something is wrong with you and give you peer pressure to work harder.

Re:Happiness is relative

[Wycliffe]

"That is also why today both parents work, even though they could enjoy the standard of living of a single-earner household of 50 years ago."

You are delusional if you really think so.

I think it depends on how you define "standard of living". If you don't pay for any technology invented in the past 50 years (drugs, cat scans, cable tv, cell phones, internet) and reduce your house to the square footage they had back 50 years ago, move to someplace semi-rural where you chopped your own wood and had a garden, then yes, you could approximate the standard of living 50 years ago on a single income. That doesn't mean the second person is not "working" though as now that second person is tending a garden, chopping wood, etc... but the idea that 50 years ago only one person "worked" is also simply not true. Sure, only one person worked outside the home but the other person still very much worked.

Re:Happiness is relative

[turbidostato]

"I think it depends on how you define "standard of living"."

Of course yes, but I find the most reasonable way to approach it is a mix of "standard" with, maybe, a bit of adjustment in the low side, just to give the advantage to the caller.

So, it must be based on current and past status of "Average Joe": that means an average home, and average job and an average standard of living. I think you are undervaluing the standard you pose for 50 years back: it is 1965, not 1945.

Now: "Average Joe" income is 39,150$/year, since that's the median income for a 25+ male with high school/some college which, in turn, is the median education in USA (well, it's a bit above median, but I'll give that advantage to the parent post).

So, can 39,150$/year support a 4-5 members family (wife, husband and two-three children) for an average home (I'll take 1965 median: 1600sq ft, again for parent post's advantage), an average and a half car, current standards-of-living healthcare, fairly good education prospects for his children (the ability to go to Uni without bankrupt, out of savings), decent retirement and standard entertaiment (decent TV, Internet, mobile phone, going outside from time to time, etc.)? That is: the basics of today without falling into consumerism (no debt for luxuries, no "I need a bigger car than my neighbor and change it every two years", no 60" flat TV, etc).

I don't think so.

Re:Income inequality has *RISEN* under Obama?!?!?

[Anonymous Coward]

You're mistaking fault with reason, as many people do. There's inherent barriers to entry--capitalism is about capital used to make further capital which is inherently a self-enriching system for the rich. Further, the overall standard of the living of the world has vastly increased if you include all the Chinese who now have (relatively) good paying jobs along with all the (relatively) cheap goods produced as a by-product of a lot of manufacturing being done in China--the last part materially helps everyone.

The real issue with wealth inequality isn't the inequality per se. At some level, it functionally is equivalent to just a number in a bank or a portfolio with a set number of stock. There's still plenty of opportunity to functionally advance into the very-well-off business owner, even if very few can enter the realm of the super rich; the argument that such has to be a real possibility is absurd for the same reason it'd be absurd to think that every musician must have the opportunity to be a mega star or there won't be enough music made.

No, the real issue is how money in politics has a corrupting influence over the process and the mega rich are quite capable of altering the laws so that, oh, we see workers in the US who are compoundedly hurt by the influx of investments from factories (and the like) from China. It's cheaper to buy a smear campaign against raising minimum wage or raising taxes, even by 1%, on the top 1% of earners to offset the massive budget deficits that the 1% so heavily, indirectly, benefit from. Personal dogma of the 1% is enshrined in law above the will of the people. And while all of this will in the long-term being corrected as China's economy moves much closer to a developed state, that still means potentially decades of an oppressive "elite" who have undue influence over the system.

But, again, in the long-term, it doesn't (mostly) amount to a lot. The drug war isn't a by product of this. General "tough on crime" over-sentencing isn't a by product of this. The US won't default on its debts, even if it finally comes to raising taxes on the top 1%, because the 1% doesn't want to move from the tax/regulation paradise it bought. In general, so long as the 1% continue to be focused on numbers in a bank as more of a game, the actual real harm is mostly minimized and doesn't matter a lot*.

* One could argue about the cutting of social services, but I think that's a broader egotistical issue of Americans who subscribe to Social Darwinism and has been, sadly, a cornerstone of the US for a long, long time. The same with racism, issues of gun violence, etc. Cultural issues like that are mostly unrelated to the China/US trade relation.

Re: Income inequality has *RISEN* under Obama?!?!?

[JohnNemesh]

15% of the US trade deficit with China is dur to WalMart ALONE! So yes.

Re: Because people want the lastest iPhone!

[Xicor]

for sure, hourly wages adjusted for inflation have stayed flat for 20 years, but the cost of living has been increasing over that same period, so essentially it is the same as saying hourly wages (in percentage of cost of living) have been decreasing.

They actually do not work so much

[Anonymous Coward]

Unemployment is high in the US.

Re:70s

[allcoolnameswheretak]

It has nothing to do with the gold standard. Corporations move their HQ to tax havens like Ireland and pay next to nothing on their profits. Executives collect obscene amounts of bonuses in addition to their ever increasing salaries, and then shove their billions into "charities" that are of course under their control but it makes them look great in the public eye. Meanwhile most of the tax burden has been shoved on to the middle class. All of this thanks to bullshit conservative policy making that protects the wealthy, and thanks to an elitist lock-out culture of Harvards and Yale's only the wealthy can afford, it stays that way. But this is not just a U.S. problem. Every year it gets harder and harder for the middle class to maintain the standard of living, despite the increase in productivity. In Europe it used to be you could use your hard earned, taxed income as an employee to buy a house, or company shares, or other investments as provision and to start building a fortune. Today more and more rocks are placed in your path and when you perform these investments you are taxed again and again, every time money exchanges hands. Meanwhile the super rich have their financial advisor in Monaco handle their financial transactions and don't leave a penny in taxes.
If you are down you are supposed to stay down, and politicians are not interested in changing that as they are eager to curry favor with their rich audience, for when their time in politics is over.

Re:Income inequality has *RISEN* under Obama?!?!?

[tverbeek]

The increase in the income gap began around the same time that trickle-down supply-side economics became national policy in the 1980s. Having one president or another in office doesn't magically change the course of the economy. That's driven largely by tax policy, which (last time I checked the Constitution) is controlled by Congress. Which is controlled by wealthy campaign donors who benefit from income inequality.

Because they are stupid.

[Lumpy]

No really, Not trolling.

If you work more than 40 hours, and you dont own the business you are trying to build, then it's because you are accepting the bullshit your employer feeds you.
if you have so much work you cant get it done in 8 hours a day 5 days a week, then they need to hire more people. You instead by working all kinds of free overtime tell your boss, "i am your slave, please abuse me".

Way too many workers are too stupid or lack the backbone to tell their boss, "no, I will not give up my life because you are an asshole and refuse to hire the workers needed"

When more do this, the problem of companies and bosses abusing the workers will go away.

Re:Because they are stupid.

[Anonymous Coward]

Way too many workers are too stupid or lack the backbone to tell their boss, "no, I will not give up my life because you are an asshole and refuse to hire the workers needed"

Boss, "Ok, fuck you then. I'll hire someone else. I have 30 resumes on my desk with people desperate to work here. Bye bye!"

Re:Because they are stupid.

[Kjella]

Way too many workers are too stupid or lack the backbone to tell their boss, "no, I will not give up my life because you are an asshole and refuse to hire the workers needed"

It's rational under US labor laws where you'll get laid off at the next opportunity, if they don't fire you on the spot for calling your boss an asshole. They'll hire the next guy, the "good" company you find that gets 40 hours/week is out-competed by the "bad" company that gets 60 hours/week and they either change their tune or go bankrupt. As long as it's one worker against the company, the blackmail is going to work. That is why most European countries have mandatory overtime pay where few are exempted.

I don't think I could work at any place without overtime pay, unless it's genuinely management which is exempted here too. It's not about the total compensation, it's about the incentive. One hour isn't free for me, so it shouldn't be free for my manager to ask for another hour. All businesses have something they want to do worth more than $0, so that just mean pile on the tasks until I am working overtime no matter how efficient I am. Sure that means that short term I could stretch my hours and bill overtime. Or more correctly, I have to say to my boss this can't get done in normal time, do you approve use of overtime. Maybe he feels he must approve to reach the deadline, even though he feels I shouldn't have needed it.

But that is not something that should be compensated with free hours, if my boss is not happy with the work/$ he's getting from me the correct time to deal with that is performance reviews and raises. If my work was poor, regular hours or not I should get laid off anyway. So we're talking about the cases where the work is good, but the boss just wants it cheaper. It's like a constant "renegotiation" of your hourly wage, doesn't matter if it's creative work one hour of "software development" is an hour. You get what you get inside that time slot.

Or the tl;dr version:
If you have 120 hours of work that needs doing, hiring 3 people costs 300%.
In the US, hire two and hound them to work 150% and it costs 200% + whatever compensation you manage to get.
In Europe, hire two and pay 150% for the last 20 hours and it costs 200% + 150% = 350%.

That makes it pretty obvious why Americans work so much and Europeans so little. We get more expensive the more you work us, you get cheaper.

Re:Because they are stupid.

[StormReaver]

When more do this, the problem of companies and bosses abusing the workers will go away.

My work week is 40 hours. In order to have a less stressful commute, and to get a little more done in a day, I would come in about an hour and a half early every day for about five years. One day, when my boss was asking me to to calculate my unpaid overtime compensation hours, he got irritated when I asked if I could include my five years of uncompensated overtime. He said, "No, because we didn't ask you to do it."

At that point, I started working exactly 40 hours a week. If something wasn't done, I started telling him I would get back to it first thing in the morning, but that I was going home at exactly 5pm every day. If he wanted me to work extra hours, he would have to ask me to do it, and it was going to be part of any unpaid overtime that he asked me to calculate.

I have never since been asked to stay late or to come in early without just compensation. The one time since then that I had to come in on one of my vacation days, I was at work for about an hour. I added 4 hours to my vacation time. When I came back from vacation, my boss said that he "granted" me that same four hours of vacation. I responded with a simple, "Yes."

So yes, don't let your bosses take advantage of you. I always thought my bosses were better than the others I had read about, and I was wrong. Most bosses are ego-maniacal pricks.

Re:Because they are stupid.

[readin]

I guess I missed the part where you're boss was an "ego-maniacal prick". He asked you to calculate the uncompensated overtime. You wanted to include a lot of time that you had done without being asked for. That was going to be a huge chunk of time and would likely make him look bad somehow - and why should he get that blame when he never asked you to do it? And when you started working the 40 hour week you had agreed to when you were hired, he didn't complain and he gave you compensation (4 vacation hours in exchange for one worked hour) when you had to work on a day you had wanted to take as vacation.

Yeah, I got one

[rsilvergun]

what about the productivity gains? It's not just outsourcing (not that it helps). They're still been massive productivity gains, which is covered in TFA. In fact, it's exactly the gains Keynes predicted. Computers and Robots are taking our jerbs. Go look up how the Steam Controller is made. Instead of working less we work more because in our dog eat dog economy instead of lowering the work week to 30, raising minimum wage and enacting tariffs to protect workers we just let everyone's pay go down due to over supply.

An oversupply of labor lowers it's value like anything else. It's one of the funny things in American capitalism: We just can't imagine a downside to supply and demand. I think it's because when we were kids we were taught it like it was religion...

Re:Yeah, I got one

[Greystripe]

Nah, it would all be "its".

Playing with numbers

[Karmashock]

People keep thinking they can outsmart reality with mathematical masturbation. The only one that gets fooled by that sort of thing is ourselves. Reality is never fooled because it doesn't calculate things in terms of our philosophies and theories and spreadsheets... it rather calculates things in terms of "is" and "is not". You can't trick that.

Print all the money you want. Its just zeros in a computer at this point. When push comes to shove... the question will be "how much of X do you have NOW". The numbers in our model rarely describe that. They talk about how much we "should" have or how much we "might" have or how much we "will" have... assuming everything goes one way or another.

If our models were so f'ing perfect we wouldn't have these collapses. We wouldn't go from bull to bear and then back to bull and then back to bear.

The truth of the economy lies somewhere between bull and bear. It is the empirical reality. Denial in that case is just self delusion. Accept that and grow wiser.

You can pretend Keynes is the end all be all... but were that the case more of his theories would not be a shit show.
https://www.youtube.com/watch?...

Re: Income inequality has *RISEN* under Obama?!?!?

[Opportunist]

Hey, that gives me an idea. Think we can somehow tack global warming onto Obama?

Less work, less workers

[tflf]

As far as I know, Keynes never predicted two contributing factors which are probably keeping hours worked inflated. One: while the amount of "work" to do has been reduced, the number of people doing the work is also reduced. Technological, organizational or operational changes usually mean job reductions in most organizations, but, the projected reductions are almost always wildly optimistic. No organization will admit the new technology/software/process/outsourcing/whatever failed to deliver the promised reduction in required bodies, as this is seen as a failure in leadership. Reality is denied so the delusion can appear to remain validated and the stock price kept inflated. Meanwhile, the survivors are doing more, including more overtime. Two: the sharp rise of part-time work as the employment norm, along with reduction in service, number of employee hours, and rates of pay. Started with retail and the service industries and is creeping into other areas of work. As late as the early 1970's, working full-time retail could pay enough to support a family. Today, many people are working 50 or 60 (or more) hours a week, spread across two or three part-time jobs.

Re: Income inequality has *RISEN* under Obama?!?!

[Anonymous Coward]

No, because global warming doesn't exist. I know this because the weather outside is cold, thus proving once again that Obama lied to us.

Re:Income inequality has *RISEN* under Obama?!?!?

[ArmoredDragon]

So a very small percentage of people owning almost all America's wealth is the fault of the Chinese?

I know this is going to be an unpopular opinion, but in my opinion it's the fault of those who routinely carry debt. Most people in America don't know shit about finances. They borrow heavily, and wonder why they never have any money. You know who profits? People who don't borrow. Not necessarily even the lenders, rather, just people who don't borrow.

And no, no amount of usury laws will change that. Usury laws create loan sharks, and unlike legitimate lenders, loan sharks don't answer to the law. Most people are just plain stupid and will borrow money at insanely dumb interest rates, even from dangerous people if they have to, just because they have no idea how to manage their own finances.

Borrowing also includes renting, by the way. Part of this comes from people who insist upon living in upscale expensive areas (i.e. New York, San Francisco) when it's clearly beyond their means, have a super high rent, and then wonder why they live paycheck to paycheck.

I personally have never made a whole lot (my current income at my IT job is just under $50k) but am already taking advantage of the situation. That is, I just paid cash on a shitty house, fixed it up, and now have renters in it paying me every month. (And no, I am not a slumlord, the last owner was, hence it was shitty, however unlike him I'm still in the process of bringing improvements to the property even while tenants are in it.)

Re: Income inequality has *RISEN* under Obama?!?!?

[Anonymous Coward]

"Deadlock" in government is needed and necessary to stop shit from happening.
The ultra-wealthy are in minority, yet their interest are being served at the expense of the majority, thus a "democracy" cannot be a reality.
Charitable institutions is a scam, to lighten the consciences of thieves. Tax the fuck out of the wealthy so they can't afford to be charitable and it won't even be needed.

Re: Actual Reason

[VernonNemitz]

While the article is correct in pointing out the problem caused by unfair wealth distribution, the cause of the unfair wealth distribution is not China per se. It is the Law of Supply and Demand in action, whenever population grows faster than resource-production. Folks who say the world is not overpopulated tend to focus only on food production, but people need rather more things than just food, and all of them need to be produced at the rate population grows, for wealth distribution to stay fair. I've presented more details about that (and the reverse, that when resource production increases faster than population, wealth distribution goes the other way), here.

Re:Income inequality has *RISEN* under Obama?!?!?

[ArmoredDragon]

In my area, renting tends to cost about 30% more than a mortgage. I'm not sure why, or even where else this applies, but it just is.

I think the economics of it is that a lot of people either lack the credit or the down payment (both of which come from a lack of managing one's own finances) hence the demand for rent would increase.

Re: Actual Reason

[mjm1231]

A rather compelling argument has been made that widening income inequality is an inherent result of capitalism. The topic is covered in some depth in this book. Borrowing a brief summary from here:

...as long as the rate of return on capital (r) is greater than the rate of economic growth (g), wealth will tend to concentrate in a minority, and that the inequality r > g always holds over the long term...

To what extent this is a problem and what solutions there are can be debated. As long as you avoid debating with those who hold the insane position that all inherent effects of capitalism are good by definition.

Re: Income inequality has *RISEN* under Obama?!?!

[khallow]

If you're renting, you're borrowing a property. It's basically the same as paying interest.

I read your earlier post on the matter to determine what you mean by "same". The answer is no, renting is not the same as borrowing. A loan means you borrow money now in exchange for creating an obligation to pay in the future. Renting usually does not. For example, I might be renting a very expensive apartment in Manhattan today, but I can move out. I can't decide that I want a smaller loan and just move out of my old big one.

Re:Income inequality has *RISEN* under Obama?!?!?

[captjc]

One big reason renting is so popular is not being tied down to a single area. Maybe I can afford to settle down when I'm 70 but right now I need to stay flexible. Every 6 months to a year I need to evaluate my options to where the salary hotspots are go there. In the last 5 years, I have lived in Boston, Seattle, 'Frisco, Austin, Portland, Denver, and am soon moving to Manhattan. These are where the high-paying jobs are and I need to be there. Houses and family just make me less flexible thus less employable.

Money never sleeps and neither can I. This is the way of the new economy. The way of our grandparents starting with a company, staying 25-40 years and retiring are dead. Company loyalty is for the stupid. If you can't update your resume every year, you might as well just jump in front of a bus because you don't matter. The only measure of success these days is the number of figures in your paycheck and the number of prestigious jobs on your CV. A flashy car doesn't hurt either but lease, never ever buy.

Re: Actual Reason

[VernonNemitz]

Since it is well known that capitalists try to put competitors out of business, thus restricting the supply of resources so that it doesn't grow as fast as population, what you say fits as a small part of what I wrote here

Re:Income inequality has *RISEN* under Obama?!?!?

[DoofusOfDeath]

I think debt is slavery.

Somewhat. I'd more say that debt which cannot be discharged via bankruptcy is like slavery.

Renting and borrowing have important differences

[dlenmn]

There are definitely similarities between renting and borrowing money, but there are important differences. Borrowing money means a (often long-term) obligation that you can't simply walk away from; you have to pay off the debt. If you're renting, you can just walk away once your contact is up. In my case, I only need to give 30 days notice if I want to move out.

The analogy between rent and interest also has problems. Rent means constant payments over time with a fixed total price and no long-term ownership; if you have a one year contract at $1k a month, then you know that you will pay $12k over the length of the contact and you don't own anything at the end of the day.

Repeated borrowing (like in credit cards or loans to pay off loans) means the price is not fixed, in part because the duration of the loan(s) is not fixed. If you have $1k in credit card debt, that could mean paying $1k immediately or it could mean paying a lot more over time. The flip side is that you do get long-term ownership of whatever you buy with the borrowed money.

Mortgages (and fixed-term borrowing) are closer to renting, but you own the property once the mortgage is payed off. Given the tax incentives for mortgages in the US, mortgages can be a pretty good deal.

Re:Income inequality has *RISEN* under Obama?!?!?

[Ol Olsoc]

So a very small percentage of people owning almost all America's wealth is the fault of the Chinese?

I know this is going to be an unpopular opinion, but in my opinion it's the fault of those who routinely carry debt. Most people in America don't know shit about finances. They borrow heavily, and wonder why they never have any money.

I cannot disagree with that premise. I can agree it is an unpopular opinion. I've spent a lot of time offering an alternative to living from paycheck to paycheck. Mostly I am told I am full of shit.

You know who profits? People who don't borrow. Not necessarily even the lenders, rather, just people who don't borrow.

Surely - I have and do. A small example of this is the credit card conundrum. I have two credit cards One that I live on, and one for fuel. Cashback cards. I pay off the bill in full every month, then get cash back at the end of the year. I also have a fine itemized expense report courtesy of the credit card company. And as an example of how people don't know what they are talking about, the Credit card companiy loves me. Where Joe Schmo is making those easy payments for the rest of hi life, my average balance of zero, and paying them a few thou every month is cash flow for them.

Part of this comes from people who insist upon living in upscale expensive areas (i.e. New York, San Francisco) when it's clearly beyond their means, have a super high rent, and then wonder why they live paycheck to paycheck.

I think it's a perversion of the American dream. Both the financially challenged, and many of the conservative poor just consider themselves "pre-millionaires". The poor are just poor - the reasonably well off are just incapable of any discipline. In addition, both cannot imagine any other way.

I've had people making twice as much as me tell me it's harder when you make twice as much. Ummm, no you stupid shits, you just put more in the bank and investments. But they are busy "movin' on up", and making suicidal financial decisions. And in the end, they come out the poorer. They lived high off the hog, while I saved and invested, living below my means, and now I'm retired, early, on my own terms, and living just as well as I did before I retired. Which is better than they will.

And I do note that I took a gamble - If I had croaked at say age 50, by comparison, the financially stupid would have won.

Reminds me of the old Cowboy saying "If I'd a-known I would have lived this long, I'd a-taken better care of myself.

Same goes for money.

I personally have never made a whole lot (my current income at my IT job is just under $50k) but am already taking advantage of the situation. That is, I just paid cash on a shitty house, fixed it up, and now have renters in it paying me every month. (And no, I am not a slumlord, the last owner was, hence it was shitty, however unlike him I'm still in the process of bringing improvements to the property even while tenants are in it.)

Sounds like a good plan. You always, and I mean always - should take advantage of whatever financial offerings you can. I had two tax deferred accounts in my early 20's though a quirk of the tax laws and where I was employed. Plus a retirement account. Plus investments and a bank account.

That Escalade my co workers bought when they refinanced their house is in the junkyard now, and they are still paying on it via their mortgage.

But aside from most people's poor financial skills and discipline, there is still a problem now with many people runining the financial ladder in reverse.

But what I find the most distressing is the odd attitude people take. I've been excoriated for how I've saved money, and many people with nary a retirement investment are pissed at people with pension plans, and attempting to eliminate them. Of course with the backing of the

Re:Income inequality has *RISEN* under Obama?!?!?

[tnk1]

The world where you actually allow other states to develop is a safer, more stable place. This is why no one seriously believes that the Chinese will attack the US short of some small land squabbles and trade issues.

The Chinese will eventually have to deal with the same issues we had to, and their standard of living will rise which will bring their benefits (and expenses) in line with US standards.

The major problem with that is the situations where countries like the US were riding high on a temporary inflated standard of living have to deal with a retraction of that. For all those who loved the 1950s, that was a windfall for the US because we were the only big country with any real undamaged industrial capacity left. That wasn't going to last forever. It was certainly not going to turn into some permanent prosperity situation were you could pay UAW union rates to unskilled workers and a pension forever. The enormous balance of human history has not really had any sense of "retirement" where you are somehow able to live off of capital built up in your life in Florida. Your only real retirement option was having some children, particularly daughters, around when you couldn't work anymore to take care of you, and maybe you owned your house and land.

Anyway, while the world will probably never completely equal out, a rising tide can lift all ships. As long as the barriers don't go up, prosperity elsewhere will eventually spread out and actual standards of living will rise over time. This may hurt for the West and the US in particular, but we shouldn't find ourselves relegated to the 19th Century again.

Re:Income inequality has *RISEN* under Obama?!?!?

[roman_mir]

For the people who actually do care to learn something about the Great Depression that they are not generally taught in schools (normally they are taught nonsensical government version of it).

All economics is supply side or more correctly production economics. Consumptions economics is nonsense, everything that is consumed has to be produced first. Those who don't get it need to get a 1,000,000 dollars and a year vacation on a rock in the middle of an ocean somewhere without any productive land, without anything. Then see how you survive with a million bucks and nothing to buy for them.

1911 - Sherman act is applied to Standard Oil, one of the most successful companies on the planet, producing the richest person in history. Rockefeller started with nothing but was worth over 600,000,000,000 inflation adjusted dollars. Private property rights took a gigantic hit.

1913 - IRS is set up. Income taxes are now collected by the government instead of Constitutional capitation, excise, import, duty taxes. Not only private property rights are destroyed but basically self determination and self ownership is destroyed at this moment in time.

1913 - Federal reserve bank is set up. A supposedly private institution to print US dollar but at the time by law the Fed actually would have a higher reserve of gold per dollar printed than other banks.

1917 - Federal reserve bank is allowed by Congress to monetize USA Treasury debt. This begins the inflation that destroyed the USA economy over the next 100 years.

1920 - a depression happens during Harding, the government didn't participate, didn't create any new policies, didn't create new debt, didn't infuse money into the economy. The depression is over in about a year.

1925 - Federal reserve bank starts monetizing UK debt that USA buys from the French. Over the next 4 years this policy inflates a bubble in agricultural stocks that blows up in 1929.

1929 - The bubble inflated by the Federal reserve bank blows up, this restructures the debts, companies fail, stocks go down. (Hayek, Andreson, Harwood predict this depression, Keynes actually loses money in it.)

1929 - 1939 - a series of gigantic interventionist policies is implemented. Billions of dollars are printed and spent into the economy, even on such amazing feats of government nonsensical Keynesian bullshit like buying productive output from farmers and ploughing it into the ground to prevent prices from going down (trying to prevent the deflation during a recession, when deflation and falling prices are actually super helpful for people who lost their jobs). The nonsensical 'New Deal' is introduced. SS is started, minimum wage is introduced, etc.etc., all the things that governments promise to do to provide something for nothing. This something obviously to be paid for by huge taxes, printing, borrowing.

1945 - the end of WWII, USA lowers its taxes by 30%, lowers spending by 60%. This allows very fast transition from war to post war economy. USA economy booms even though it is faced with competition from other markets with much lower labour costs.

1950s through 1970s - hot wars, cold war, space race, 'war on poverty' and all the other unnecessary and expensive crap that could not be paid for lead to 1971, when Nixon defaults on the gold dollar because of all the outstanding debts that cannot be paid for. The French asked for their gold and were denied, the dollar default coupled with all the impossible and unsustainable programs lead to the stagnation of 1970s. Huge inflation and huge unemployment, something that Keynes wouldn't believe to be possible.

1981 - Paul Volcker takes interest rates to about 20% to stop inflation. This succeeds in stopping the inflation, causes a housing market bubble crash. Government started coming up with ideas on how to under report inflation, under report unemployment and over report GDP.

1982-1987 - the Fed starts

Re:Income inequality has *RISEN* under Obama?!?!?

[Micah]

Yep. I know the Bible isn't necessarily the most popular source of wisdom around here, but Proverbs 22:7 nails it:

The rich rule over the poor,
        and the borrower is slave to the lender.

Only 40% in USA work fulltime

[peter303]

131M out of 320M. Another 26M work less than 35 hours a week bringing all workers to 52%. 68M of the 320M are under 16 or over 65. Excluding them would make it 59% workers then. http://www.bls.gov/news.releas...

Actually those are CHEAPER than CPI

[raymorris]

> Does that include rent, fuel, insurance, and mortgages?
> Only those are skyrocketing and not recorded

50 years ago, a gallon of gas cost 33 cents. If gas prices kept up with inflation (CPI), it would cost $2.48 today. I just passed a gas station and the sign says $1.87. So today's pay checks can buy MORE gas than the could 50 years ago.

You asked about mortgage / rent. Fifty years ago, the average home was 1,600 square feet. The average is now 2,600 square feet - people can afford much larger homes than they used to.

What's not represented in CPI is that the 1960s car needed a tuneup every few months (points, plugs, etc) while today's cars go 100,000 miles on a set of plugs. It doesn't represent the fact that 50 years ago, you had three channels in black and white while today you have 300 channels in HD.

I guess it's human nature to complain, but the simple fact is today we're spoiled compared to our parents and grandparents. Try wasting some food at an old person's house and you'll see they didn't grow up having plenty to waste like we do.

Re: Actual Reason

[ebusinessmedia1]

Highly recommended as a supplement to Piketty: http://www.amazon.com/Inequali...

Here's an excerpt from one of the reviews,on Amazon: "The author asserts that it is not morally wrong and that the conversation should be around the concept of - do you have enough (sufficiency) vs do you have the same as someone else (equality)."

This is a short book: highly recommended, along with Piketty.

Perhaps taxes?

[Trachman]

Americans work so much, on average, not because they are greedy or because the want to work.

They work because there is so many who do not work so hard. Those who do not work so hard are, as a rule, fueled by the taxpayer collected money. It has already been proven, without any doubt, that, on average, governmental job pays way way more than private job.

Have you heard about NJ cops making $100K or $150K? Yes, I agree, that $100K is not that much money, however it needs to be taken into account that cops need to work 20 years and then they get taxpayer funded pension and medical benefits. I am not trying to bash cops, or single them out. If US GAAP rules are used (meaning US Generally Accepted Accounting Principles are used), which means that expenses need to be accrued when incurred, such jobs would need to be accounted as costing not $100K, but $200K, for defined benefits (pension, medical) need to accrue at the same time. It is not even the largest issue. The larger issue is entitlement culture and "social" payments to the population which traditionally keeps voting for politicians who keep promising more freebies and benefits only if you vote for them.

One and only one conclusion comes to my mind: The taxation level. Some might say that those socialist Europeans pay more taxes, however there are some very important differences. For example, in Europe, as a rule, schools are funded from federal budget. In US schools are funded from property taxation, except for low income areas which, logically, cannot afford their schools and get funded from the state or federal funds. This leads to de-facto segregation in United States by school districts, that nobody likes to talk, yet everybody knows. Low income areas have few meaningful jobs, which leads to many non-working Americans living here. Higher income areas do have high property taxes which automatically do add additional hours for higher living standards need to be maintained with additional work.

The truth is that current taxation system is the primary driver of the human behavior. Some people will continue working to death and other part of population will keep continuing voting for the status quo that allows more tax benefits, irrespective of the economic class of the voter, be it Dianne Feinstein's husband ingenuity winning profitable real estate business related contracts, whether it will be teacher's, police or FDA "scientist"'s benefits, or generationally unemployed welfare receivers.

That is taxes, baby!

Re:Renting and borrowing have important difference

[ArmoredDragon]

When I say that, I'm speaking in terms of building your own net worth. Renting a house doesn't do that, instead it adds to somebody else's net worth. Borrowing money and paying interest does the same thing.

Which by the way, my savings alone didn't pay cash for the house I just bought, rather it was the result of having a mortgage on a house in 2011, and selling it in 2014. If I had rented in 2011 instead, I'd have nothing. Instead it was sold at $116,000 above what it was purchased for (after realtor fees, closing costs, and whatnot) and added my monthly savings over the course of a few years to pay cash on another house.

This is exactly why I equate renting to borrowing money. It's also why somebody else is building my net worth. I'm sure some random derp is going to call me out for being greedy, but so be it. Unlike most, I save money, and invest wisely. No amount of me telling this to other people is going to make them change their ways, even when I point out how stupid their status quo is, so I may as well take advantage, and I will.

Re:Work and Gravity . . .

[PolygamousRanchKid]

YDid you know your father had Marxist tendencies (though he probably didn't realize it)?

Being that my father grew up in the west of Canada, on a ranch, I find your comments particularly disgusting. If you take a look at the World Trade Center coming down, you can see one of my father's greatest works coming down: the multistage antenna that RCA build. Yeah, it was built in Gibsborro, New Jersey.

Now, Pope Ratzo . . .you can take your Islamic hairy ass where ever you please . . . just not in Europe or North America . . . keep it in some Islamic Hell-Hole where you belong.

Re: Actual Reason

[khallow]

While the article is correct in pointing out the problem caused by unfair wealth distribution, the cause of the unfair wealth distribution is not China per se

"Unfair" is just a subjective connotation and doesn't belong in an article trying to be serious about economics.

It is the Law of Supply and Demand in action, whenever population grows faster than resource-production.

Resource production is increasing faster than population. And we're seeing the anticipated increase in standard of living and global wealth distribution to a so-called "fairer" scheme. Nice, except that wasn't what you thought was going on, was it?

Not a zero sum game

[dlenmn]

When I say that, I'm speaking in terms of building your own net worth. Renting a house doesn't do that, instead it adds to somebody else's net worth. Borrowing money and paying interest does the same thing.

You've clearly been successful, but don't ignore opportunity costs and luck. Your house may well have been a good investment, but on average, homes are poor financial investments (although they can be great lifestyle investments). It looks like the Dow Jones went up about 40% between 2011 and 2014, which is a lot more than average home prices increased over the same period. So paying rent on a cheap apartment and investing in stocks could have been a better investment. You may have been able to do better than stocks by borrowing money (getting a mortgage) and then investing the borrowed money (in a house), but realize that leveraged investments are riskier than regular investments. If you bought stocks in 2007, your money would have gone poof. If you bought a house in 2007, your house's value would have gone poof and you would still have owed money on it.

Your language makes it sound like the economy is a zero sum game: building someone else's net worth means destroying your own. That's simply not true. You know from your mortgage that borrowing can be a good investment. The problem is that many people don't know when an investment is bad.

Re: Actual Reason

[khallow]

A rather compelling argument has been made that widening income inequality is an inherent result of capitalism.

Which is easily defeated by a consideration of history. Wealth inequality has narrowed under capitalism as well (eg, various times during the Industrial Age when advances in technology were met by uses of that technology).

...as long as the rate of return on capital (r) is greater than the rate of economic growth (g), wealth will tend to concentrate in a minority, and that the inequality r > g always holds over the long term...

This a broken model since it doesn't consider the liquidity or utility of wealth. I call wealth which has a high notational value, but isn't even remotely that valuable in reality (especially in terms of conversion to a liquid form of wealth) "fake wealth". For example, I might have trillions of dollars suposedly = in specialized derivatives. But if that can't be converted to real dollars and used for something, then it's not actually worth trillions of dollars.

This leads to the problem that "r" above is an exaggerated number with little relevance to the real world. You won't care if I decree that every hair on your head is worth a million dollars, unless I begin paying you a million dollars apiece for those hairs. Yet I just created meaningless wealth inequality by my meaningless decree.

This is a real thing because we have a number of cases of trillions of dollars in perceived wealth evaporating overnight. It's a common cause of recessions.

Bottom line is that the growth of liquid wealth is going to be fairly close to economic growth and it can go either way and often does. There's no point to measuring wealth inequality when the wealth being measured is mostly useless.

Re:distribution of wealth and_______

[budgenator]

What your referring to is called the Pareto principle or the 80/20 rule, "roughly 80% of the effects come from 20% of the causes", described by Vilfredo Pareto arround 1900.

At the bottom of the Wealth curve, he wrote, Men and Women starve and children die young. In the broad middle of the curve all is turmoil and motion: people rising and falling, climbing by talent or luck and falling by alcoholism, tuberculosis and other kinds of unfitness. At the very top sit the elite of the elite, who control wealth and power for a time – until they are unseated through revolution or upheaval by a new aristocratic class. There is no progress in human history. Democracy is a fraud. Human nature is primitive, emotional, unyielding. The smarter, abler, stronger, and shrewder take the lion's share. The weak starve, lest society become degenerate: One can, Pareto wrote, 'compare the social body to the human body, which will promptly perish if prevented from eliminating toxins.' Inflammatory stuff – and it burned Pareto's reputation. Benoît Mandelbrot

It's pretty much the way the world works, if 20% had 80% of the wealth and power, then 5% has 64% and 1% has 49%; the numbers are fuzzy as well.

Most wealthy 1%er Families tend to crap-out after 3 generations, so who is in the first percentille tends to change; even the Kenedys have a lot of family members in the 20th now.

Re: Income inequality has *RISEN* under Obama?!?!

[mjwx]

If you're renting, you're borrowing a property. It's basically the same as paying interest.

I read your earlier post on the matter to determine what you mean by "same". The answer is no, renting is not the same as borrowing. A loan means you borrow money now in exchange for creating an obligation to pay in the future. Renting usually does not. For example, I might be renting a very expensive apartment in Manhattan today, but I can move out. I can't decide that I want a smaller loan and just move out of my old big one.

This.

I rent because I dont want to live where I am for the rest of my life. This goes double for places where I can work for significantly higher than where I'd like to live such as London. It makes sense to rent in London if you're being paid 4-600 pounds a day and save that money to buy or pay off a house somewhere else.

That being said, paying off a house is not a bad debt as houses typically appreciate. However the GP is right that a lot of people are up to their eyeballs in bad debt. Bad debt are for things that depreciate. In simple terms, debt is acceptable for investments, but unacceptable for consumption. Consumption are things like toys (computers, tablets, jet ski's), cars, groceries and sundries. Generally you're paying interest and fees on things that are losing value or lose all their value when you buy them.

This goes double for people who put everything on their credit cards. Triple for those who think they get anything out of their CC, they dont seem to understand that banks dont do anything for free. Interchange and merchant fees are the things paying for the bonuses, points and cashback schemes and in the end, the merchant passes those fees back to the consumer. It's a negative feedback loop, Derp believes he's winning when he gets 1% "cashback" when the bank is charging the merchant 3% and the merchant raises the prices Derp pays. Even if you pay no interest on a CC, you still have to pay the fees as obscured as they are.

Given how easy it is to rack up massive debt with massive interest and no assets to show for it on credit cards, they are the most dangerous form of credit. I'm continually confounded that people use them so blithely.

I call bullshit

[rsilvergun]

Gas is only cheap because the Saudi's are trying to put Shale oil producers out of business. It was $4/gallon until then and the only reason it stopped there is folks were talking about abandoning gas and they got scared.

Rent is climbing rapidly this year. As for houses, that's the suburb effect. Yeah, I can get a 2600 square foot house. With a 3 hour a day commute. If I want a reasonable 30 minute commute I'm looking at 1000 sq ft if I'm lucky, young and rich.

Tune ups were cheap and you could do them yourself. Cars were a _lot_ simpler back then. They also polluted a lot more.

Cable TV doesn't really make my life any better. Americas watch a lot of TV because at the end of a long, shitty day it's all they've got left in them to do.

It's human nature turn a blind eye to the unpleasant realities of life. You've got to justify all the horrible things we do to maintain our meager quality of life in the face of the 1% constant assault. Walmart says it best. You're not destroying Unions and the American Working Class and turning back the clock on 100 years of human progress. You're saving money, living better.

Re: Income inequality has *RISEN* under Obama?!?!?

[ATMAvatar]

The US also had a heavy-handed progressive tax system from FDR until Reagan (at one point the top bracket was taxed at 91%), and we did pretty well. Over time, however, we have made cut after cut in the upper tax bracket and especially capital gains such that the system is now effectively regressive.

Odd that rather than increasing GDP growth year over year like trickle-down economics might tell us, in fact, our GDP growth in the last few years is lower than it was during the 90+% tax years.

Bingo! Spot on. A superrich on this problem ...

[Qbertino]

Essay/Article

TED Talk: Nich Hanauer - The Pitchforks are coming for us.

Re: Actual Reason

[khallow]

When capitalism is properly regulated.

It's worth noting here that the current primary factor resulting in increased wealth inequality for the US is a purely non-regulatory one, the addition of several billion new laborers over the past half century to the global trade network. That impairs the wealth gain from labor and doesn't impair the wealth gain from capital - which favors relative wealth gain by the wealthy who are more dependent on capital for their wealth. And regulation has tended to make wealth inequality worse by impairing business from employing US workers.

My view is that the US and the rest of the developed world would be better served by regulation that takes into account the costs on employers.

Re: Actual Reason

[drsmithy]

Businesses are not "impaired" from employing US workers. They *choose* not to so as to achieve greater profits.

(Note that this is common issue across the western world as most barriers in place to protect living standards have been torn down in the name of greater profits.)

Re: Income inequality has *RISEN* under Obama?!?!?

[drsmithy]

The reality is that the percentage of income that Americans pay to the government has never been higher than it is today.

False.

Re: Actual Reason

[khallow]

Businesses are not "impaired" from employing US workers. They *choose* not to so as to achieve greater profits.

You ought to think about what you just said. Reducing profits is the chief form of impairment that a business can experience. And if you reduce profits to the red, then you've destroyed the case for the business.

(Note that this is common issue across the western world as most barriers in place to protect living standards have been torn down in the name of greater profits.)

I'm not saying that all such barriers should be torn down, but severely reducing profits is a very good reason to consider tearing these barriers down.

The thing that is missed here is that reducing profits also reduces living standards. And we can see that living standards are declining despite all the regulation to the contrary. I think it's time to look at what's working and what isn't. My view is that a lot of that regulation is actually very counterproductive, making the situation worse.

Re:Income inequality has *RISEN* under Obama?!?!?

[Cro Magnon]

When somebody takes out a loan, they aren't offered death as an alternative.

Depends on the reason for the loan. Maybe they need it for one of life's necessities, like food, medicine, or the newest iPhone.

Working harder, not smarter.

[Hoxolotl]

From a short analysis over christmas dinner (and drinks) we found out there's a reason United States of America citizens have so few days off and seem to work so many hours: they're actually not working very hard, and when they work very hard they don't seem to go about it in a smart or caring way.

Now before you tear into me let me explain what we found: we were dsicussing design and noticed how American cars were "way too big" as in: who needs 4 tons of steel to lug around a lil' old lady to go to the malll. And we went back and found out that car design in the USA is done by separate, non-communicating teams. the team working on the car-body design has absolutedly no clue how big the engine bay needs to be, the engine team has no clue how well it will be ventilated, and so on and so forth. Basically in the USA, you have one job, you do THAT job, and if you see a colleague about to mess up you either throw them under the bus, or see it as "Not my problem". In Europe teams are ofthen made to work together, this means designs can be optimized and leads to a better overal quality ( ask the Germans). This also means issues get resolved together instead of throwing them over the fence and hoping for "the other guy" to fix it.

This results in meetings where playing the blame game is frowned upon as we don't care whose fault it is as long as the problem gets fixed.

P.S.: if anybody has access to "the red book*" from Shell he'll understand what I mean. *it's a book that refers how many man-hours is needed to do a job for each country, for laying down an airstrip you might need 6 Tanzanians or 3 Senegaleze, or 1 European. Yes the book is kept secret because it's a bit of a hot topic.

P.P.S.: and if you want to know why Americans work so much it's because the work ethos is to work hard, not smart. Just check your own organisation, do they give bonuses for overtime or for meeting targets? Are those targets achievable without overtime? Does loosing your job scare you more than dying 20 years early because of work induced stress? Do you care your female coworkers do not get payed maternity-leave?

The Dutch have an expression for discussions like these, we call it "throwing a single bone into the dog pen". Woof.

Re: Actual Reason

[khallow]

OK. So once we follow your idea and successfully drive wages - ie: costs - down to slightly-more-than zero, who is going to buy the stuff business produces ?

Why would that happen? Is regulation the magic sauce for making sure you don't starve because you forget to ask for a paycheck? This sentiment reminds me of The Incoherence of the Philosophers, a work which among other things proposes that reality itself goes on as it does only because Allah wills it so. So do we have an economy and people getting paid for their work only because the regulators will it so? I'm not feeling it.

You need to consider that there's a revenues side of the ledger as well as an expenses one.

Somewhat lower wages is still better than no wages when it comes to generating revenue, wouldn't you think?

The thing that is missed here is that reducing profits also reduces living standards.

No it doesn't. An economy running on a razor-thin profit but still producing excess of everything it needed would have high living standards.

Here's what's missing: leisure time and spending, risk taking, insurance, research and development, and business expansion. But I'm sure that government will continue to take and squander much more than that razor thin profit margin as is their due.

Er, no. Living standards are declining because all the regulations that protected normal people's incomes have been systemically destroyed. That's why real incomes for almost everyone in the US have gone nowhere for thirty-odd years.

It's a nice story except that it isn't true. The labor regulations haven't changed much; benefits and unemployment regulations haven't changed much; minimum wage is still around; and health care has actually been expanded. What has changed? Well, nothing really. It's just part of the ongoing half century of economic shift to the developing world and growing wage parity between developed and developing worlds.

Everyone knows what works. Post-WW2 USA (until the neoliberals took over in the '70s, brought in the morally bankrupt NAIRU, deregulated everything, started selling off public assets and disassembling the public services - again, a common problem throughout the western world, though some countries had their Reagans and Thatchers much later - here in Australia, for example, we didn't go full retard until the mid-90s) was the quickest and most widespread increase in wealth and living standards in human history. It was a time of increasing real wages, a large and financially secure middle class, relatively high social mobility, large-scale public investment and full employment as a policy goal rather than a bete noir.

In other words, those darn Reagans and Thatchers didn't ban the billions of people who are eating your lunch, labor competition-wise.

And the great incongruity of your post is that the actual quickest and most widespread increase in wealth and living standards in human history happened after the period of time you mention. It is happening now, not in the 1950s. Now is the time of increasing real wages, creation of a global large and financially secure middle, relatively high social mobility, etc. What happened in the developed world then is now happening everywhere. But I guess all those people are kind of hard to see from whatever podunk country you're from.

10% increase since 1984. 1984: $49K. 2014: $54K.

[raymorris]

> Indeed. But don't forget that increase stopped sometime in the '70s.

Actually almost half of that 23% increase is after 1984.

Here's a chart from the St Louis Federal Reserve for you:
https://research.stlouisfed.or...

Don't hate the player, hate the game!

[DarthVain]

I've always said, fix the system of political financial contributions, and the rest will probably just work itself out.

Make corporate donations illegal. Limit personal donations to some reasonable index. Make politically lobbying (at least in its current form) illegal. Prevent or provide serious limitations for compensation and positional appointment between politics and corporations (i.e. you don't get a sweetheart job the moment you retire from politics, don't appoint industry shills for government positions).

Do all that, and I would bet a great deal of our current social ills would be solved with in a few years. Though that is a tall order, as the system is already compromised.

Re: Income inequality has *RISEN* under Obama?!?!?

[FlyHelicopters]

Ah, I see the problem. You have no idea what taxes are for or how they work.

No, you don't understand at all...

The post I was responding to said "tax the fuck out of the wealthy so they can't afford to be charitable".

In reply to that post, I was 100% correct. If you take all the money from the wealthy, then you only have poor people left. Government doesn't create an economy or jobs, it just spends other people's money to the poor house.

Looking around the world, every nation that thinks they can take the wealthy's money and hand it out is poor.

Re: Actual Reason

[david_thornley]

In the US, real wages have been flat, as has social mobility. US social mobility is well below the mobility in some European countries. It's all well and good that developing countries are getting better standards of living, but the fact that all US productivity gains have gone to the wealthy is still a problem, and the US is seeing a smaller and less secure middle class.