Eat the Rich

By Sean Carroll | February 24, 2011 8:54 am

In times of economic turmoil, nothing has a calming effect like a few colorful charts. Here are a couple of thought-provoking ones via E.D. Kain at Balloon Juice.

First, originally by Alex Knapp, we have the distribution of wealth in the U.S.:

If it looks like a more dramatic amount of inequality than you are used to seeing, it may be because this is plotting total wealth rather than yearly income. Knapp also points out that the tax system doesn’t really redistribute wealth very much; the top one percent pulls in 19% of the pre-tax income, which after taxes is whittle away to … 17%.

Of course their share is growing with time, courtesy of Mother Jones:

We can compare that reality to what people think it is, and what it should be:

What does it imply that most Americans think the distribution of wealth is much more even than it really is, and would like it to be more even still? By itself, nothing at all. These are just data — descriptions of the world — and science doesn’t imply morality. The data are just useful to keep in mind when we do think about how a just society should be ordered, and what strategies (“share the pain!”) might be most appropriate when thinking about how to recover from our recent economic pratfall.

How many comments do you think we’ll get before someone claims that taxation = slavery? I’m guessing five.

CATEGORIZED UNDER: Politics
  • max

    Taxation = slavery! Poor rich people, working so hard just so that the government can take it all away. That, and so that they can buy really big yachts. Just like the slaves.

  • http://blogs.discovermagazine.com/cosmicvariance/sean/ Sean

    I always underestimate.

  • JMW

    Is it too much to apply the term “fat, dumb, happy” to most Americans?

    I think, Sean, that max’s comment is tongue in cheek – you set yourself up for that with your final paragraph. Does it count if one of the 5 comments is your own?

  • http://blogs.discovermagazine.com/cosmicvariance/sean/ Sean

    I am certain that max’s comment is tongue-in-cheek. Just like an observer affects what is being observed, the converse is also true.

  • AJKamper

    I’m struck that the distribution of wealth almost perfectly corresponds with the Pareto Principle:
    http://en.wikipedia.org/wiki/Pareto_principle

    If that’s a useful principle to apply, then the problem (as the above wiki cites Paul Krugman as saying) if there’s a problem not with the top 20% but the top 1%. (And even if that IS the case, that merely implies that the top 1% is stealing from the next 19%, right?)

  • Fill

    Since most americans are still able to afford new luxuries (TVs, cars, phones, etc.) despite their shrinking incomes thanks to (formerly?) cheap and abundant credit as well as Moore’s Law, they will continue to ignore the problem.

  • Unclellama

    The other one to watch out for is something along the lines of “You can’t deny the existence of the Laffer curve!”, in extreme cases followed by ” /thread”.

    I’ve noticed this being thrown into many, many tax discussions on the Internets recently. It can be read as a (possibly quite profound) comment on the existiential status of theories and models, or a hopelessly hollow argument for cutting taxes.

  • http://radical-moderation.blogspot.com/ TheRadicalModerate

    How many comments do you think we’ll get before someone claims that taxation = slavery? I’m guessing five.

    Isn’t this really just a corollary to Godwin’s law? To cover all your bases, you really have to have “taxation = nazi slavery”.

  • http://radical-moderation.blogspot.com/ TheRadicalModerate

    On a slightly more serious note, why wouldn’t one expect to see net worth statistics follow a power law distribution? Has anybody done this analysis?

  • Maldoror

    On a slightly more serious note, why wouldn’t one expect to see net worth statistics follow a power law distribution?

    Sure, but what power?

  • Cathy

    Taxation only equates slavery if the taxers take away 100% of income from the taxees, and then gives them a shanty on federal land for a house in exchange.

  • anoNY

    So the point of worrying about how much wealth other people have is…what exactly? What are they doing to harm the bottom 80%, being wealthy?

    My point is that even “total wealth” is a bad proxy of inequality when everyone’s quality of life is improving. Yes, millionaires can afford to drive Bentleys, while we proles are stuck with Kias; overall, life’s necessities are less expensive now than in the past.

  • Xerxes

    The problem that these statistics try to probe in a pretty blunt way is that we do not believe that the top 1% are adding over 80% of the VALUE to America. Since we want money to be a reward metric for adding value to society (this is the theory behind why capitalism is good, right?), the fact that non-value-adders are somehow siphoning off all the rewards is disturbing. Taxation is a blunt instrument for correcting the real problem: that people who have access to large amounts (and flows) of money are shaving off small percentages of it without doing much of value to society.

    A CEO has access to the budget of a multi-billion-dollar company. It’s trivial for him to give himself 0.1% of it to do what is maybe a 200k$/yr job. An investment bank has access to billions of dollars in other people’s pension funds. It’s trivial for them to give themselves 0.1% of it to shuffle money around with the acumen of somebody making 100k$/yr. Now, maybe you can say “nobody’s job is worth more than 500k$/yr” and then tax the hell out of anybody making more than that, but I think there must be a better way to target the problem.

  • Bruce the Canuck

    >So the point of worrying about how much wealth other people have is…what exactly? What are they doing to harm the bottom 80%, being wealthy?

    Because social and political power is roughly proportional to wealth. That has bad effects on its own, through loss of personal liberty, power over your own life, and privacy. Not in the imagination of libertarians, in the real world. That part is bad enough.

    But it also creates a feedback loop, where as the wealthy gain more power, they can rig the system more in their favor. Eventually you get an economic-political singularity effect, and you live in a society that works along the lines of Russian gangster-capitalism.

  • http://math-frolic.blogspot.com Shecky R.

    “I am certain that max’s comment is tongue-in-cheek. Just like an observer affects what is being observed, the converse is also true.”

    hmmm… an inverse Heisenberg Principle!? …has someone sent that in to arXiv???

  • chemicalscum

    @Bruce the Canuck

    You are so right my fellow Canadian.

  • Mike

    I wanted to upload a graph that shows the nation’s income gains going to the top one percent at the highest level since 1923 – 1929 (but I don’t know how to drop in here). The data is from CBPP calculations based on data from Piketty and Saez. It shows that from 2002 to 2007 the share going to the top one percent was virtually the same as in the 1923 – 1929 period. It was always less previously, and between 1960 and 1969 it was almost reversed. If anyone can tell me how to drop the graph in, I would appreciate it. Thanks.

  • Garry A.

    A discussion that threatens to take money out of anyone’s pocket will always be controversial, but the growing gap between the rich and poor is an issue of patriotism. Yes, stratification is necessary to reward citizens who study and work harder than others. However, unchecked capitalism is accelerating a polarization of wealth that is unsustainable for any society. To keep the streets from evolving into a chaotic, dangerous commute each day it may be necessary to use tax incentives that keep the highest income brackets under control while propping up those who want an opportunity for the American dream, and are willing to work hard for it. Unfortunately many of the “haves” justify their excess, seeking everything they can get for themselves now. They do not believe America is sustainable anyway, so they don’t care what happens to this nation when they are gone. Is that a normal level of human greed, or an act of community betrayal that borders on traitorous behavior?

    To keep the American flag waving is a simple solution; raise taxes on the most ridiculous income levels to deter excess, and provide more education opportunities for the poor and middle class. Duh!

  • Jim Johnson

    >So the point of worrying about how much wealth other people have is…what exactly?

    Another problem with disparate wealth distribution, is that it isn’t always earned – in many cases it’s simply inherited. In such a case, the wealth distribution directly conflicts with our nation’s stated goal of “equal opportunity for all”. (And please don’t accuse me of wanting to do away with inherited wealth, or redistributing all wealth – I’m simply pointing out a conflict between two of our value systems.)

    It’s difficult to claim equality when an elite few are born with the resources it would take a thousand lifetimes for the average wage earner to accrue.

  • http://fourthcheckraise.blogspot.com Ilkka Kokkarinen

    “What does it imply that most Americans think the distribution of wealth is much more even than it really is, and would like it to be more even still? By itself, nothing at all.”

    Actually, it does clearly imply that most Americans are deeply innumerate, assuming that most of them honestly believe that a superflat wealth distribution where the top 20% owns only three times as much wealth as the bottom 20% could be even mathematically feasible in any society short of draconian taxation and equalization programs that would make even North Korea shudder.

    For starters, maintaining such distribution logically entails somehow making sure that the retired people (who surely constitute more than 20% of adult population) who have three or four decades of working, paying off their mortgages and making their retirement savings under their belts, would somehow end up with essentially nothing to show for all that work and time.

    Of course, I bet most of the people polled just didn’t think about this question, or misread it to be about income, not wealth. And in any case, the uninformed opinions of people about the way some distribution in a deeply complex feedback system “should be” are as irrelevant as polling them about what the value of some gauge inside a nuclear plant “should be”.

    I would also like to see these same charts drawn for other countries that are supposedly better to America in this sense. After all, in every normally functioning Western society, the average middle class homeowner in his fifties who has simply paid off his mortgage in and made the rudimentary retirement investments pretty much automatically has the net worth of hundreds of young adults fresh out of college and in the start of their careers, many of who even have a negative net worth due to their student and other loans. Oh, the sheer unfairness of one person selfishly hoarding more wealth than a hundred others!

  • Jens

    Wow. That’s pretty disgusting to see. I knew the discrepancy in the US was bad, but that’s pure Third World. It boggles my mind that US citizens continue to put up with this. The mantra “greed is good” seems deeper ingrained in the collective psychy than even the out-of-control religiousity.

    My best wishes to friends across the Atlantic for a speedy recovery.

  • Karaktur

    Perhaps if we reverse the many mergers which have allowed businesses, banks and investment firms to become “too big to fail”, we would no longer have multi-billion dollar a year companys from which one CEO can siphon of 0.1% and earn hundreds of millions of dollars. Wouldn’t that also increase competition, lower prices, decrease the disparity and eliminate any entity that must be saved or we all fail?

  • Sili

    So the point of worrying about how much wealth other people have is…what exactly? What are they doing to harm the bottom 80%, being wealthy?

    Well, for a start a good deal of the wealth was made off the poor. Not in terms of value added to work (or whatever the proper translation is), but by downright cheating and stealing. Is that harm enough?

  • Bruce the Canuck

    @ Ilkka

    Your age explanation doesn’t hold water – it’s not just wealth, it’s also income, and primarily the very tippy-top 1% and above. The change is recent, and stronger in english speaking countries, strongest in the USA. Couldn’t find all the links in the time I have, but these plots show most of the story:

    http://worthwhile.typepad.com/worthwhile_canadian_initi/2010/06/the-anglosphere-and-highincome-concentration.html

    http://www.sott.net/image/image/s1/37494/full/the_gap_is_not_growing_in_othe.jpg

  • Eric Dennis

    I am glad you are bringing attention to this dire issue. These charts represent a tremendous injustice: all these poor people are not producing nearly enough wealth.

    Not only that, but since time immemorial they have been sponging off those at the top of the pyramid of ability, whose ideas and labor-saving devices have lifted them up from caves to ipods, while these same poor add roughly zero to the accumulation of intellectual capital that keeps this progress going. And then they have the nerve to elect politicians whose inflationary monetary policies have the effect of continuously diminishing the real value of whatever meager savings they do contribute to the capital stock.

  • Bruce the Canuck

    Eric, the charts show the *middle class* is losing ground. As in, that includes the scientists, engineers, and creative types that were the actual source of innovation and ability. If this keeps going, innovation will be chocked off.

    The people getting richer now are not the producers of wealth. They are managers of capital, and those that inherited capital. They’re not even entrepreneurs.

    I strongly believe in the liberal market-economy ideal, but the system is broken. And a primary mechanism of wealth concentration in recent decades has been the various bubbles – the bubbles are like a piston, and commissions are the one-way valve, making up a pump to move capital out of the hands of the middle class. How is that related to innovation? It isn’t. It’s corruption on a large scale.

  • Thomas

    If you are ever planning to win a Nobel in physics, please let me get your signature on your books first. Just saw a book signed by Richard Feynman, called “The Concept of Probability in Quantum Mechanics” go for 17,500 US dollars.. Just saying.

  • King Cynic

    You know, I was reading this post in a text browser and actually thought I was reading the blog Marginal Revolution. But the author was making too much sense, so I scrolled up to the top and noticed that I was actually on the wrong blog. ;-)

  • David George

    “What does it imply that most Americans think the distribution of wealth is much more even than it really is, and would like it to be more even still?”

    It might imply that most Americans are in a vaguely uncomfortable stupor.

    “By itself, nothing at all. These are just data — descriptions of the world — and science doesn’t imply morality.”

    Nor do most scientists have any idea how nature could operate by some moral principle such as “a good path to take”. But nature appears to operate by exactly such a moral principle.

    “The data are just useful to keep in mind when we do think about how a just society should be ordered, and what strategies (“share the pain!”) might be most appropriate when thinking about how to recover from our recent economic pratfall.”

    When do Americans think about how a just society should be ordered? For five minutes every four years? And how would an American define a “just society”? As the one in the pledge of allegiance? And how comical is that recent economic pratfall? Just look at those darn economists falling over each other! Not to mention those hilarious people overseas rioting over the price of food. How do you put a headlock on an Ethiopian? Hold your thumb an inch away from your forefinger.

    Judging by the response so far, the moral aspect of “value” is associated with the heroic efforts of people who add “value” to — what? Not surprisingly, there is no mention of any value other than monetary. No inkling that money is created out of thin air by the Federal Reserve. What “value” does that money represent? Hope for future pie in the sky, maybe?

    “Value”, “a just society” — those concepts seem to require — how should I say it — moral purpose! But among the social Darwinists, there seems to be a selective collective blindness to — purpose. After all, they would say, there is no purpose to be found in evolution — how could there be any purpose to life?

    So what is the purpose of a discussion about potentially chaotic income and wealth inequality? “Democratic capitalism” operates on the principle of lowest common human denominators: hunger, greed, scarcity and waste. Life is tough. So the toughest win. So life is brutal. So the most brutal (mentally and physically) win. That seems to be about it. Purposeless pain and suffering — nothing to do with evolution, right? I suppose pain sense would be just a result of random mutation? No moral lesson to see here, move along! If those pesky poor end up rioting here, there are non-lethal ways of keeping them at bay. But more likely they will just slowly become more stupid while the patriots stand guard over them.

    Sean, you seem interested in the subject of amoral nature (as viewed by “science”) versus some other basis for morality. I have to tell you, there is none. If there is no natural basis for morality, there is no basis for morality, period. Do you have a hard time seeing that? No amount of searching will find a “moral sense” anywhere but in the physical systems of nature. “Religion” as a set of rules for living provides a historical basis for morality. But being a natural phenomenon, it cannot explain itself. You seem determined both to knock down the natural historical phenomenon, and to find morality somewhere else – but not in nature!

    Or is the subject simply grist for the mill?

  • viggen

    I think that there are a couple missing statistics in this story– how do exerted effort and actual productivity in work fit into this mix? I’m not convinced that people should just be entitled to wealth, as in taking wealth by taxation from someone who has worked really hard for it and arbitrarily feeding it as an incentive to some bottom end that is perfectly happy to sit on the couch, spend all their time baked or drunk and collect unemployment for no effort. Perhaps this is a straw man, but from these statistics is there any way to know that? I think not. I’ve read some stuff about Warren Buffet and the work ethic of that man is frightening. How many people in the bottom end would be willing to do what he has done to go where he is and how many are kidding themselves to think they have the ability… “if only…”? Admittedly, there are some ridiculously wealthy people who have surprisingly little worth aside from raking in money, but I feel that this set of spectra do not tell the whole truth.

    It would be nice if the wealth were distributed a little more evenly, but I don’t think it should ever be arbitrary or independent of merit. These studies lack a “people deserving of wealth” plot and offer no means of understanding what “deserving” even is. Are there some people out there who are completely deserving of what they’ve got, but want more anyway? Surely there should be as many of those as there are that “have more than they deserve.”

  • ian

    The truth is that given the bottom 80% only account for 17-20% of the net financial wealth in the US, I can understand why many of them are anti-tax. And they’re right, in a way.

    It’s just that (being generous) due to lack of evidence/knowledge/etc, it’s popular to support making big tax cuts, which ends up just being redirected into tax cuts for the rich. It would almost certainly help them more in the long run to instead increase taxes on the upper bracket to recirculate money into the economy for infrastructure, education, health and other research, and even defense. Maybe someone should play the “tax the rich to pay for the defense budget” angle.

  • AJKamper

    I wish I could find it right now, but the big issue might not be the distribution of wealth, but the fact that while the wealth of the bottom 50% is decreasing w.r.t. inflation, the wealth of the top 1% is increasing.

    This is a problem. The bottom 50% needs that money for survival rather more than the top 1% needs it for… whatever.

  • spyder

    Here is another view to consider, especially when discussing the highly skewed distribution of wealth.
    Just type in your current annual income and examine the data.

    http://www.globalrichlist.com/

  • Paul M.

    That Puritanism is so deeply ingrained it’s difficult to even admit it’s there. “Why should people who sit on the couch get anything from those of us who work hard!?” is the standard response. The implicit assumption is that working “hard” is of higher value than “sitting on the couch.” Is it? Did the investment bankers who worked 100 hour weeks to eviscerate the economy over the last 20 years “deserve” the billions they looted from the rest of us? I would gladly have paid them a stipend to sit quietly on the couch. There are much deeper questions here about what kind of “work” is valuable and what just compensation should be. If working long hours and making difficult sacrifices is what is valued, then the guys who hang out down at Home Depot and work 18 hour days to feed their family should be the ones that get paid billions. Warren Buffett has an intense work ethic!? Right. When was the last time he worked for 15 hours in the hot sun on a little rice and beans?

  • http://fourthcheckraise.blogspot.com Ilkka Kokkarinen

    Bruce, I was mainly objecting to the chart that showed how Americans supposedly would like the wealth distribution to be, and the utter absurdity of even trying to create a society where the average person in the top 20% would have only three times as much wealth as the average person in the bottom 20%.

    An even more curious feature of the same chart is that at least to my eye, its second and third quintiles are pretty near the exact same size. So I guess Americans would like to have a society where all these people to have exactly the same amount of wealth. Somehow, I doubt this.

    Also, I would be curious to see these charts for the population of the entire world. I suspect that they would be even more drastically unbalanced as those for the United States. If the forced equalization of wealth is so very important, why should this need to stop at the national border, that anachronistic and artificial construct that reeks of belligerent nationalism? Since even the poorest Americans are in the top quintile of the entire world, how would they feel about the efforts to bring them closer to the true world average?

    Speaking of which, one last note: if the bottom 20% losing ground is such a serious problem, maybe it would then be a good idea to stop exacerbating this process by importing millions of even poorer people to depress their wages and increase the geographical stratification and competition for decent real estate, jobs, schools etc. This especially for the SWPL liberals who think that their right to have a $5/hr servant who takes two buses to come scrub their toilets somehow trumps the right of the poor working class families to have a better shot to a decent life.

  • Bruce the Canuck

    Ilkka, I agree the “what people think it should be” bar chart is crazy.

    However, the crucial issue to be is the relationship of the top 1% to not just but bottom 20%, but the middle class. Even the upper middle class, the top 10%, is getting the short straw!

    People can bleat about innovation all they like, but the real source of new wealth, innovators in science & technology, are by and large not in the top 1%. What is happening is pretty close to being a forced transfer of wealth to the top 1%, via gerrymandering the system via political influence, and financial and real-estate fraud on a massive scale.

    For one example of how this has happened: local to me, Vancouver is still at the height of a RE bubble where speculation has been heavily promoted for a decade. Carnage is close at hand, and the middle class here is going to be underwater on a large scale. The stock market corrections did similar damage. Yet our less-than-independent media promoted the RE and stock bubbles relentlessly, even displaying Remax and mortage broker logos on their weather maps! Interviews include boosters, but never realists or independent analysts. Nary a negative word may be said to the rubes. You can blame individuals for being taken in – but the entire middle class here? At that statistical level, it’s corruption and manipulation on a mass scale. Should the perps involved in such a large transfer of wealth be called innovators?

    In the states many seem to like to blame minorities, or fannie mae – but these trends are there in every english speaking country, yet not every EU country. Why? Why is germany different? Why is it possible to compete without outsourcing there, and not here? Why is it possible to have growth without CEO and fund managers being paid billions there, and not here?

  • Brian Too

    I like how many who defend the existing wealth distribution, always frame their words so carefully. “It’s their money. We should not take it.” “We must not start class warfare.” “We must not redistribute wealth.” “We must reward industry.”

    OK, but how is the status quo not a system of wealth redistribution? How is it not a form of undeclared class warfare? Are we sure that we are rewarding hard work and industry?

    The bottom line, it seems to me, is whether our societies are working. Is there enough money going into infrastructure? Does the education system have adequate funding? Are there significant numbers of the poor who will never be recognized for their talents and industry, simply because of their poverty?

    Your assessment of the health of society, it seems to me, should be your guide for adjustments to tax policy. And you must factor in whether those adjustments will help society (will you achieve value for the money).

    The recent financial meltdown was instructive. Many of the worst actors in that were richly rewarded for the grossest misbehaviour, incompetence and destruction.

  • Eric Dennis

    Bruce,

    We have some common ground. I also take the liberal market economy as an ideal. And I also recognize the economic destruction wrought by the boom-bust cycle (on each man who earns his living, not just on the poor). But it’s not the market — the bankers, the derivative traders, the mortgage companies — that created this cycle. When the Federal Reserve printed money with abandon in the early/mid 2000s, driving real interest rates negative, it became profitable to buy up mortgages and finance it by rolling short-term loans. Smart guys knew how to make a lot of money doing this while watching for signals that the mortgage pyramid would collapse. Were they wrong for having done so? Or is it the money-printers — the guys who made this whole enterprise profitable by enacting laws to seize control of the currnecy, decouple it from gold, and debase it — who are culpable?

    You claim to support the ideal of a free market, but then why do you package it up into a “system” with its antithesis — the populist, progressive holy grail of free money for all — when you look for culprits? This mangled system is the result of that whining 99% seduced by intellectual con-artists to first subtley and then egregiously undermine the freedom by which their betters created all that you see around you.

    (If you’re curious what’s different about Germany, you might look into how the Weimar hyperinflation affected their views on money printing.)

  • Anonymous_Snowboarder

    @bruce, eh: last I checked the other 99% (or 80%) make up a far larger share of the voting public. Political power is controlled by those who vote. Politicians are corrupted and copted by those who give them money and favors. Not the same thing.

    So… where are the companion chartrs which show the % of income taxes paid by the public? As well as what they think the distribution is? Or would it be too shocking to see that 50% of the population basically pays 0?

    Finally, redistribution of wealth is just a fancy way of saying stealing.

  • Carl Brannen

    Right now we’re in a period which reminds me of the early 70s, that is, unpopular land war in Asia, huge deficits, low interest rates, but not much inflation.

    What interests me in this is the relatively “low interest rate and low inflation” part. The rich seem to do particularly well in this sort of environment. While the blue-collar classes do relatively well during the rising inflation years. So I’d have preferred you to have run your charts back another 20 years or so, so we’d catch another inflation / unemployment cycle or better, run it back to the post WW1 period.

    I guess what I’m saying is that our culture is a very complicated thingy with a lot of degrees of freedom and it contains very long period components. These components have to do with changing attitudes of the people. For example, stocks were popular in the 1920s, but by the 1930s people swore they’d never invest in them again. This sort of thing impacts the percentage of the wealth owned by various groups. So I’d like to see charts that include more of the long period components; I don’t think we’ve seen the Reagan years since the 1920s, and the current territory (at least with the US off the gold standard) has never been traversed before.

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  • Wetuski

    Love the post Sean, awesomeness (it’s a word!) all round!

  • borborygmus

    SAA -Screwed in America Again

    My most useful acronym.

    In a Wisconsin union? -SAA

    Iowa Leg. seeks to pass an antigay marrigage bill with proviso that the state Sup. Court can’t rule on it’s constitutionality. – SAA

    Fermi Lab closes with out a real follow on. – SAA

    And an oldie but goodie Bush 5 / Gore 4 – SAA

  • David George

    Anonymous_Snowboarder #39 —

    “Finally, redistribution of wealth is just a fancy way of saying stealing.”

    Exactly! The strong steal from the weak. Nowadays they call it “profit”, but it’s stealing the surplus “value” created by labor.

    Maybe you could define wealth. Do you mean money? If so, try to think — where does new money come from? And who gets first crack at it? Maybe initial distribution of money-wealth is stealing, too — from the future.

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  • Eric Habegger

    So many people concentrate on the tax side side of the inequality argument. There are several hidden assumptions in equating taxes with government being overbearing. First, we all actually get things for our tax dollar. Government is a social contract with the people that a certain minimal level of services will be provided for each citizen. It also provides the laws and enforcement of those laws that bind people together in that social contract. Without government we return to the early days of the west where there is a frontier mentality. Outlaws ride in and steal all your horses and there is nothing you can do except go out and get your vengeance yourself. There are actually people now who would like to return to those days in the guise of deregulation of financial laws. I will let you in on a little secret – those are actually the same people who would like to steal your horses in the first place. It’s just that they couldn’t under previous laws.

    Secondly, money equates to power. And not just power in your personal life but power as influence. Rupert Murdoch has it. So do the Koch brothers. With the removal of the progressive taxes for the wealthy the uber wealthy have become like a virus infecting everyone with the idea that taxes are an affront to our liberty. And they have the wealth to make a lot of fools in this country believe it. I would gladly pay a few more percentage points of my income in taxes to see the highest income tax brackets go back to where they were in the Eisenhower administration. That is, about 90% of gross income. It seems to me people were not doing to badly financially back in those days.

    You see, one has to tax the rich more just to stop them from gaming the system by changing the laws for their own benefit. They have brainwashed people through media consolidation to think that deregulation and relaxed taxing policies will benefit everyone. It does not. It benefits the rich.

  • Roman

    I’m curious what the power and wealth elite really thinks about this.

  • Mike

    Here is a link:

    http://www.cbpp.org/files/9-9-09pov.pdf

    to a graph that shows the nation’s income gains going to the top one percent at the highest level since 1923 – 1929.

    As I noted previously, the data is from CBPP calculations. It shows that from 2002 to 2007 the share going to the top one percent was close to the 1923 – 1929 period. Between 1960 and 1969 it was almost reversed.

    It is of course difficult to identify policy prescriptions that are politically possible and that would result in moving our economy in the direction of greater income equality while not creating unintended or collateral negative consequences.

    Nevertheless, it seems plausible, at least to me, that continuing to move in the current direction could well end in even greater social dislocation and perhaps societal upheavals reminiscent of the past.

  • psmith

    #9, Radical says ” why wouldn’t one expect to see net worth statistics follow a power law distribution?”
    Indeed it does, but not in the way you intend. Power enables the powerful to concentrate wealth in their hands. This is a self-sustaining system that increasingly aggregates wealth.

  • jim

    50% estate tax on all estates worth more than 5 million dollars; adjusted every 5 years for inflation. 75% on estates worth more than 100 million. 90% on estates worth more than 1 billion. That money goes to public schools, public universities and prisons. Exclusively.

    Problem solved.

  • chris

    so the total wealth of the bottom 20% is actually positive? i am pleasantly surprised.

  • Mike

    Not to put too fine a point on it, income gains have been even greater among those at the highest of the income scale.

    The incomes of the top one-tenth of 1 percent (0.1 percent) of U.S. households have grown more rapidly than the incomes of the top 1 percent of households as a whole, rising by 94 percent — or $3.5 million per household — since 2002.

    The share of the nation’s income flowing to the top one-tenth of 1 percent of households increased from 7.3 percent of the total income in the nation in 2002 to 12.3 percent in 2007.

    This is the highest level in the Piketty-Saez data going back to 1913, surpassing even the previous peak in 1928.

    The uneven distribution of economic gains in recent years continues a longer-term trend that began in the late 1970s. In the three decades following World War II (1946-1976), robust economic gains were shared widely, with the incomes of the bottom 90 percent actually increasing more rapidly in percentage terms, on average, than the incomes of the top 1 percent.

    But in the three decades since 1976, the incomes of the bottom 90 percent of households have risen only slightly, on average, while the incomes of the top 1 percent have soared.

  • Dunc

    It would be nice if the wealth were distributed a little more evenly, but I don’t think it should ever be arbitrary or independent of merit

    What could be more arbitrary or independent of merit than inheritance?

  • http://peakempire.wordpress.com/ mat noir

    There is a companion stat that tells what is the minuscule probability that one would break into the next higher quintile in their lifetime. Some small fraction of 1 percent, I remember.

    So please keep up the hard work. You can be a millionaire like everybody else. May be you can even catch up to god, he is in the top 0.001 percent.

  • http://mjb.biglaughs.org m

    Interesting graphics…odd that liberals’ takeaway is “the system needs to change!” instead of “what can poor people learn from the wealthy?”

  • David George

    #55 m –

    “Interesting graphics…odd that liberals’ takeaway is “the system needs to change!” instead of “what can poor people learn from the wealthy?””

    Why odd? Liberals don’t want the system to change, they just want to tweak it. And what can “poor” people learn from the “wealthy”? What does a slave learn from his or her master or mistress? I’m pretty sure the slave knows the master very well. Maybe how to aim a gun? Not much to learn there, especially if you have no gun. As for ‘learning’ in any more general sense, would it be in the interest of the master to encourage ‘learning’ among the slaves? It only leads to trouble. Hence the collective American stupor, promoted and marketed among the slaves: bread and circuses – that’s the ticket!

  • Deb

    I don’t think taxation = slavery. I think welfare = slavery, and taxation = forced charity

  • Deb

    http://www.globalrichlist.com/

    This site is a hoax. No matter what amount you type in, it tells you “You are the 107,565richest person in the world!” They just want you to give money.

  • Left_Wing_Fox

    57: Frankly I think that’s just as insane.

    The Dickensian workhouse is far closer to actual slavery by every measure than subsidized housing and food stamps. In fact, since welfare allows the poor to survive without resorting to starvation wages, brutal working conditions or unsafe practices, it helps form a foundation on which they can negotiate for their time in a market system. Welfare promotes individual freedom, slavery eliminates it.

  • Mike

    All this ties into the Thomson Reuters/University of Michigan consumer sentiment gauge, which just rose to 77.5 in February, its highest level since January 2008.

    That’s up from 74.2 in January and ahead of previous estimates of 75.1-75.4.

    Wealthier consumers fueled the beat: Among households with incomes of $75,000 or more, sentiment rose 9.7%, bolstered by more favorable job and income prospects. By contrast, the index fell 1.4% among lower-income households.

    See http://blogs.barrons.com/stockstowatchtoday/2011/02/25/wealthy-boost-consumer-sentiment-to-3-year-high/

    If it’s in Barrons, you know it must be true :)

  • Bruce the Canuck

    I think the correct liberal take-away is that the starting about 1980, something changed. A silent class war was begun – against the middle class. It’s just been made politically incorrect to mention its existence. Again, please check the longer time scale plots:

    http://worthwhile.typepad.com/worthwhile_canadian_initi/2010/06/the-anglosphere-and-highincome-concentration.html

    So the question is, what changed? Why is the top 1%, in fact really the top 0.1%, reaping all the economic rewards since 1980, but not between 1930 and 1980?

    I’d also note the last big economic collapse also coincided with a peak in inequality.

  • Mike

    Bruce the Canuck @61:

    “I’d also note the last big economic collapse also coincided with a peak in inequality.”

    To be more precise, perhaps you should say that the last two big economic collapses coincided with the last two peaks in inequality: 1928 and 2008.

    But I’m certain there will be those who say that either this is a coincidence, or, as some have said on this thread, that the vast majority of those at the lower end of the scale, the average Americans if you will, deserve this outcome.

  • Joe Blow

    Seems to me there are an awful lot of people who are fascinated and envious of people who have money.

    Solution: Get a job! Or, invent something to make yourself a chamber pot full of thousand-dollar bills over night!

    Taxation is slavery when the tax money is used to fund welfare. Welfare makes the recipient the slave of the government who pays it to them and, a taxpayer the slave of the government who demands payment if the form of the tax used to fund the welfare class.

    Of course, I don’t expect a liberal to understand this concept.

  • Eric Habegger

    Interesting chart, Canuck. Somehow it makes one feel better that the U.S.A. Is not alone in this. Misery loves company. I think the reasons are many for the change but a lot of the reason is that the planet is much more of a global village than it was. Good trends spread, but bad ones spread also. I think the main point is that things can get terrifically unequal and out of whack due to the human characteristic of rationalizing things away.

    From the long view the charts make everything look like they are continuous and slowly changing. This lulls people into viewing it as a background environment that does not effect them much. However, at the micro level this trend is digital in nature. It does not effect you until your company finds a way to outsource your job to someone in China. For the individual affected it is not a slow decrease in income, but possibly a sudden semi-permanent decrease in lifestyle and persistent unemployment. The slow curves only show the statitstical average of these discrete digital changes for individuals affected.

    The really sad part is that right up until they are affected by this trend people by and large identify with the people that are doing well, because they themselves are doing well. Right up until they aren’t. The tax laws in all these countries have made a Faustian bargain to allow companies to outsource labor to other countries with no tax consequences to the company. People agree to it because in return they get cheap consumer items, like large screen TVs. No one tells these people that the big screen TV isn’t going to be much use when they are living in their car. And even if they could get it to work in their car it would definitely be bad for their eyes watching from so close.

  • Jens

    #20: “Actually, it does clearly imply that most Americans are deeply innumerate, assuming that most of them honestly believe that a superflat wealth distribution where the top 20% owns only three times as much wealth as the bottom 20% could be even mathematically feasible in any society short of draconian taxation and equalization programs that would make even North Korea shudder.”

    Denmark does exactly that. The top 20% have about 3.5 times the wealth of the bottom 20%. Data is from 1992 (sorry, it was the latest I could find in a hurry).
    Wealth distribution Denmark, percent of population and percent of total wealth:

    Lowest 10% 3.6
    Lowest 20% 9.6
    Second 20% 14.9
    Third 20% 18.3
    Fourth 20% 22.7
    Highest 20% 34.5
    Highest 10% 20.5

    SOURCE: 2000 World Development Indicators

    In my view Denmark is very different from North Korea. Of course I may be biased, given I’m lucky enough to live there. ;-)

  • http://twitter.com/rodguze rz

    The distribution of wealth in the US is pretty awful; however, it is important to remember that even in a society with lots of equality there will be wealth inequality because individuals need savings to retire on. c.f. http://www.daemonology.net/blog/2011-01-10-inequality-in-equalland.html

  • Jens

    Wealth inequality ( or some other inequality) is, I suspect, always necessary in a society which wishes to foster inovation and hard work (and which society doesn’t?). The degree of inequality necessary, however, is not that great (see Denmark as example above).

  • Christian Ready

    Jens, thank you for shining the light of reality into the darkness of fear

  • Michael

    # 65 Jen,

    How much of denmark’s ratio is because the rich are less rich rather than the poor being better off. also, denmark has less immigration so people start off w/ slighly more. In addition, 1992 data is very old. I wonder what the US looked like in 1992; The wealthy certainly have a bigger portion now.

  • Jens

    #69: “How much of denmark’s ratio is because the rich are less rich rather than the poor being better off. also, denmark has less immigration so people start off w/ slighly more. In addition, 1992 data is very old. I wonder what the US looked like in 1992; The wealthy certainly have a bigger portion now.”

    Not sure what your question is.

  • Keith

    Biggest question is why do you think someone needs to be in charge of redistributing the wealth? If there are 10 A’s earned in a class, should we deduct some of their points to raise the 2 F’s at the bottom? WTF?? I guess that’s what good socialists do, spread the misery.

  • Neo Charles Barkley X

    This is a big deal, why exactly? Income is a poor measure of quality of living, which has increased for everyone, rich and poor, over the years. Even poor people today have access to technology and other amazing things that weren’t available 10, 20, 30 years ago. Which is due more to capitalism than to government.

    And taxation really is theft.

  • Jens

    #71: Biggest question is why do you think someone needs to be in charge of redistributing the wealth? If there are 10 A’s earned in a class, should we deduct some of their points to raise the 2 F’s at the bottom? WTF?? I guess that’s what good socialists do, spread the misery.”

    Biggest question is what sort of society would you like to be born into. Apparently one with lots of serfs and a few Masters.

  • Bruce the Canuck

    Keith, jebus murphy on a stick, read the damn graphs, I’m starting to think libertarians are innumerate.

    We’re talking about the top 1% vs everyone else. The system is being rigged towards the very wealthy. It is not a free market system. They’re paying more taxes because they’re taking all the winnings by tilting the table (I’d *love* to pay more taxes due to earning more).

    Do you really believe the top 1%, or top 0.1%, of the population is composed of innovators, or entrepreneurs, or people who otherwise earned their wealth? The data on class mobility doesn’t support that.

    People very rarely admit that they inherited their position in life, even to themselves. The top 1% by and large are not wealth creators or innovators. Even just looking around me, most inherited indirectly, are shysters flipping real estate, selling mortgages, running multi-level marketing scams or selling snake oil. A whole lot of success is about starting position, family connections, family boosts via education and seed capital, luck, and “shortcuts”.

    Hell, even economic models based on totally random gas theory produce inequality! IE models with no merit involved whatsoever, pure luck!

    And don’t assume “liberals” aren’t entrepreneurs. Quite a lot of us are. But having that kind of success while your society slowly transforms into an ugly, classist nightmare is a hollow victory unless you’re a complete asshole. Other people are, you know, people. Unless of course you’re a sub-criminal sociopath, which I’ve always assumed at least half of libertarians would test as.

    Things are changing. The field is not level, and the market is corrupt. And not in the direction of “socialist”. In the direction of crony capitalist.

    And re “taxation is theft”, please board your life-raft and await deposit in the middle of the pacific ocean, alone. And no, there will be no rescue.

  • Carl Brannen

    Mike #48, Nice link, (1% income percentage since 1923). I think the very high number now (comparable to 1929) is not an indication of where we’re going, but instead is an indication that the number has gone as high as possible. And, judging from what happened soon after that 1929 peak, perhaps the effect of the current economic instability is nowhere near complete.

    There are very long tides in the affairs of man that are difficult to ascertain until after you’ve lived long enough to see most of a complete cycle. And that’s exactly why the cycles are that long.

  • Brian Too

    @71. Keith,

    Your example reeks of bias. To cast the income distribution into letter grades as you did, there would not be “10 A’s and 2 F’s”. You’ve completely missed the point.

    The distribution would be more like there is 1 A, 2 B’s, 27 C’s, 40 D’s, and 30 F’s. And the curve is steadily moving towards the low end of the grade scale, indicating ever higher concentrations of wealth into ever fewer hands.

    The correlation is not to Socialism. The correlation is to the growth of the middle class in America itself, except in reverse. It’s the opposite of the American Dream. It’s the American Nightmare. You too can exit the middle class, watching your standard of living disintegrate as your real wage fails to keep up with inflation. Suddenly you lose your job, or have a health crisis, and you go directly to financial ruin.

  • jonw

    That bottom 80% of Americans? Still in the top 1% of the world. No tears shed here.

    Taxation==Slavery is not so ridiculous. Our taxation system funnels income to the government who then redistributes it to cronies. Many of the unproductive rich are rich BECAUSE of this system, not in spite of it.

  • Mike

    Carl Brannen@75,

    “I think the very high number now (comparable to 1929) is not an indication of where we’re going, but instead is an indication that the number has gone as high as possible. ”

    Perhaps you’re right, but according to the Thomson Reuters/University of Michigan consumer sentiment gauge, which just rose to 77.5 in February, its highest level since January 2008. Among households with incomes of $75,000 or more, sentiment rose 9.7%, bolstered by more favorable job and income prospects. By contrast, the index fell 1.4% among lower-income households. See http://blogs.barrons.com/stockstowatchtoday/2011/02/25/wealthy-boost-consumer-sentiment-to-3-year-high/

    From the looks of these numbers people at the upper end of the scale (noting this scale starts lower at 75K per year) think they’re going to be doing better while those at the lower end think the opposite.

    People usually have a good idea of what’s going on around them — until they don’t — so perhaps the gap will continue to widen.

  • Carl Brannen

    @Mike 78, I think the systemic problem in the near future is inflation from quantitative easing (which I was very much in favor of). When interest rates and inflation rises, people holding bonds get creamed while the middle class (who hold mortgage debt) get a gift as they end up with houses much cheaper than the real dollars paid for them.

  • Mike

    CarlBrannen@79,

    “. . . I think the systemic problem in the near future is inflation from quantitative easing . . . When interest rates and inflation rises . . .”

    Won’t this, at least in the short run (however long), simply exacerbated the income discrepancies?

  • Lord

    When comparing income and wealth one should bear in mind it takes 20 to 25 times as much wealth to generate a comparable amount of income so even those outside the top 5% of wealth generate less than the median income from it, while those at the top do very well indeed, so if anything the skewness is understated.

  • http://twitter.com/brooksbayne Brooks Bayne

    the top 10% pay 71% of the taxes: http://www.heritage.org/budgetchartbook/top10-percent-income-earners in a recent article in the economist, they’ve also pointed out that the world’s poor have all had their quality of life improve drastically in the last decade.

    it’s a fallacy to think that there’s a requirement to redistribute wealth. you have a right in america to earn what you can, not have someone else’s money redistributed to you. don’t parrot marxist ideology unless you know what you’re actually talking about.

    some of you folks would benefit from reading adam smith’s “wealth of nations”: http://www.econlib.org/library/Smith/smWNCover.html

  • tim rowledge

    “And taxation really is theft.”

    Really? So you expect to be allowed to live in a country without paying your share? Filthy freeloading pirate! Taxes are rent on your space in the civilisation you live in.

  • Michael Sutcliffe

    If the wealth of that top 1% was taken off them, would the world be a better place? If you say yes, would it still be a better place five or ten years later?

    What’s the bet that the graph would look exactly the same in a generation?

    What’s the bet that it’s even more polarised somewhere like North Korea?

  • http://www.tevong.com/adlib.php Tevong

    @Ikka:

    “Actually, it does clearly imply that most Americans are deeply innumerate, assuming that most of them honestly believe that a superflat wealth distribution where the top 20% owns only three times as much wealth as the bottom 20% could be even mathematically feasible in any society short of draconian taxation and equalization programs that would make even North Korea shudder.”

    Actually YOU clearly show most americans are deeply innumerate, by assuming that such a wealth distribution isn’t “mathematically” feasible (whatever that means) in any sort of society that would make north korea shudder. As Jens mentioned Denmark does just that, and you can compare Sweden’s top quintile of the population possessing only 18% of the total wealth with respect to the second quintile’s 35%, compared to the US’s 84% for the top quintile and 11% for the second. Only the most small-town american who’s never seen a passport in his life would claim sweden’s high standards of living and equality in a democratic society is comparable in any way to a communist state.

    See here for more:

    http://backreaction.blogspot.com/2010/11/americans-prefer-swedish-wealth.html

  • Bill

    I scour the US Constitution looking for the authority to tax for the purpose of redistributing wealth. it is not there. What IS there is the power to tax in order to fund those powers specifically given to the federal government in Article 1 section 8.

    Ah yes, I know. It is that little “general welfare” wording in the taxation clause. But is it REALLY in the interest of our general welfare to take money from those who have earned it and give it to those who didn’t?

    The difference between the conservative and the liberal these days seems to be in the composition of the economic pie. The liberal sees it as a fixed size, thus the rich become so at the expense of the poor. The conservative sees it as limited in size only by the ingenuity and industry of those who work on it!

    The rich are rich not because the poor are poor! They are rich because they worked harder than the poor.

  • Spoon

    @85. Tevong

    I’m having a hard time finding how they measure wealth in Sweden, and I’m having an even harder time figuring out how they could possibly arrange society so that a sixty year old who owns their home, a nice car, a boat (he enjoys fishing), and has been putting 10% of their income for the last thirty years into a mattress doesn’t have more then three times what an 18 year old attending university has. I’m only 29 and would love to have 1/3rd of what my father has, and he has four kids, how do they set it up in Sweden so that between the four of us having cumulatively worked fewer years then our father would somehow have more then he does? Should he not own his home? Should we own it instead? Should I own his car and my brother his boat? And how do we cope with the fact that my brother would sell the boat so he could go out to dinner or clubbing every night until the money was gone?

    Please let me know how they arrange society, I’ve seen the posts bragging about their land of milk and honey but have seen absolutely nothing explaining it and I’m worrying that it’s all based on something ridiculous like “well as a country we’re worth $x trillion, and we all own a part of that wealth! :D”

  • Thomas Larsson

    One explanation for that lack of superrich Swedes is that they have left, or at least don’t pay taxes. The Rausings (TetraPak) moved to Britain, Ingvar Kamprad (IKEA) put his money into inpenetrable Dutch foundations, and Stefan Persson (HM) struck a deal with the then-socialist government about tax exemption (for his OTC shares).

  • Margo

    No one is talking about the Scandinavian’s character and values here: they are frugal, responsible with their money, and prefer to save for a rainy day than squander it on something they don’t need. And here are the myths about the economic system in Sweden:
    http://www.youtube.com/watch?v=ENDE8ve35f0

    Real growth came from free market ideas of robust secure property rights, privatization, a good justice system,,small gov/t with low taxes.

    (The problem the Swedes and Danes are going to have to face is their growing population of extremist Muslims, who refuse to assimilate into the country they are living in. The Swedes are too nice. This will be the biggest challenge for them.)
    The founding fathers of the US were adherents to the ideas of individual freedom, free markets, and low taxes.
    In terms of the economic pie, if gov/t got out of the way of it’s citizens and stopped taxing people to death, there would be more job opportunities, more productivity, more wealth. Federal and state gov/t policies are sending many businesses out of certain states, and across seas, since the taxes are such a burden here. (Just look at the Gov/t Accounting Standards that allow loopholes for states to misrepresent pension liability figures.)
    The problem with the welfare state is that it eventually goes broke because it runs out of other people’s money. Just look at the economic crisis going on in Europe right now. They have to either raise the retirement age, require citizens to start contributing to benefit plans, or risk going broke.
    I really don’t buy the argument that poor people receiving welfare are going to be motivated to start earning on their own: if they are getting gov/t handouts, unemployement checks that are more than what they could be making to start out with, WHY on earth would they actively look for a job? Fact is, people always do a better job saving and being responsible if the money they have is their own. Just look at expense accounts: are you more careful with your bosses money when you go out to lunch on their dime, or with your own money?
    The problem with the liberal mindset is that you think Gov/t can solve all your problems. That we are a family, not a nation of individuals, and we need Daddy to take care of us. But eventually Daddy will run out of money.
    the gov/t takes some of your money, and gives it to other people. It doesn’t put as much care into how efficiently that money is spent-just look at public housing, public education, medicaid, etc., because it’s NOT THEIR MONEY. If the money was in the people’s hands instead of the gov/t’s, I’d bet we’d see those hospitals that never turned anyone away in the 1950’s, much more charity, incredible amounts of wealth and growth, because people are inherently generous.
    Of course, there is greed. This is human nature, as we saw in the financial crisis. But it was the gov/t that created the problem so people took advantage of it.

  • Karl

    Margo,

    “I’d bet we’d see those hospitals that never turned anyone away in the 1950′s, much more charity, incredible amounts of wealth and growth, because people are inherently generous.”

    The top marginal tax rate in 1950 (when you think everyone was generous and the government stayed out of peoples’ business) was 84%. Today it’s 35%. Government is taking less money than it did in your mythical “leave it to beaver” world.

    Facts are facts. The government is taking less money and the gap between the rich and poor is growing ever wider. I’m not saying the entire answer is “taxing the rich”, but since you tea party folks want to cut the budget back to what it was in past years (which generally is OK with me depending on what’s cut), how about having the same tax rate as in prior years as well? Just asking . . . .

  • Margo

    Karl,
    Only during periods of free market,laissez-faire capitalism did countries experience high levels of growth. Just look at Sweden between 1870-1970. I prefer to leave the money in the people’s hands to decide what they want to do with it, not some enormous bureaucratic goliath like the gov/t.

    It is true that we had higher taxes back then, but the gap between the rich and poor in 1950 was much more severe than now a days. The poor are not as badly off as they were in 1950. And we could afford having exhorbitantly high tax rates back then because of the huge boom in the economy from WWII. Then we really bit the dust as the high tax rates caught up with everyone, and no one could live off the gov/t handouts anymore. Just look at Carter’s disastrous leadership. That’s why we elected Reagan, who promised fiscal conservatism. He lowered income taxes, but unfortunately, because he raised the payroll tax, he didn’t get rid of the entitlement programs that were crippling the economy.
    HEalth care is a limited commodity with a never-ending demand. So you either have health care rationing where people pay a portion of their income to health care, or you have never-ending lines.
    Health care in the supposedly idealic Scandinavian countries is flawed because people have to wait in line for years to get seen for a brain tumor. The swedish health care system gets all their innovation from the US, which has allowed for innovation and new technologies through lower taxes.
    The thing that keeps Swedish health care system able to function is that the Swedes are fairly healthy people who eat well and exercise. Can’t say the same for Americans, and certainly would not want to be responsible for other people’s obesity problems. but that’s what is going to happen with ObamaCare.
    And I am a Libertarian. I am happy to see a grass-roots movement (the tea party) fighting to rein in Big Government. Finally people are saying NO again.

  • Joseph J Veverka

    The creation of wealth started out as a way for any given population to pay for goods and services. The system usually works well untill someone decides they need an egde as a hedge against their possibly loss of their fortune. After that taxation and redistibution of said wealth is reduced to a Penzi scheme. All flow of money is headed to the top of the food chain. The wealth in this country ARE accumulating vast amounts of worthless cash. This is why this cash not being invested in jobs, infastructure, or educational grants, its being invested in liquid asset acquisions. The wealthest 2% is trying to buy themselves a future and screw everyone else. Madoff was using the same system the US Treasury uses, take it from the mid-class and give it to the presious few. The problem with the US Treasury is they know better but its legal for them. Why do you think very frew people have gone to jail for the 800 billion dollar bail out. We are so screwed.

  • Karl

    Margo,

    I agree that a widening gap does not negate the fact of a rising absolute standard of living for the poor. There is less absolute poverty today than there was in 1950 — but it is very clear that the gap between rich and poor is widening now at an increasing pace. The price we pay for “freedom”? Perhaps. The just deserts of the uneducated, lazy and freeloading people of the United States? Some on this thread say so. Having grown up in the lower middle class and having been relatively successful since then — I count myself lucky — and I don’t credit most of my limited success to my own superior personal qualities.

  • Joseph J Veverka

    Where do poor people come from? The banks are still at it. Any one with a dollar is a target.
    Go to the library or, online and get the last issue of AARP. Look for an article titled “The Time Bomb in Your Nest Egg.” The top 2% are not after the poor they’re after YOU ,your mama, and your daddy. That means you get zip as an inheritance. You must be a lazy blogger and don’t need money. The above scamn is still being sold at your local banks by bank brokers and big brother can’t or, wont stop them even when there is a major law suit in progress for 56 billion. To date 164 billion dollars have been lost. These elected officals in DC have you talking about the definition of finanance while they have their hands stuck in your pockets. At the request of the top 2%. We are all going to be poor!!!!!!!

  • http://www.catalysthouse.biz Lynnea | QuickBooks Accounting Bookkeeping

    The disparateness of income and wealth between the so-called haves and have nots has dismissed now any meaningful dialogue between rich and middle class – both communism and capitalism are now obsolete archaic systems.

    MIT economist Ravi Batra has shown that once a society reaches a certain amount of concentrated wealth that a collapse is unavoidable.

  • Andrew

    I think we can all agree that Ronald Reagan was one of the greatest presidents of the modern era.

    That being said, why don’t we return to Reagan’s tax brackets, rather than the current socialist-wannabe Obama tax brackets that we use today? I suspect returning to Reagan’s trickle down economics tax rates will bring the deficit back under control.

  • JT Kirk

    Your taxes / your wage = number of hours you worked for the government.

  • martin g

    Thanks Sean. Sometimes you raise my hackles on the subjects of religion and morality but I don’t doubt you are smart and I like seeing the “scientific brain” examining economic questions. The meaningfulness of statistics can be difficult to pin down and it is easy to confuse people because we are not born with much of an understanding of math. Logically hammering away at the distortions and misunderstanding is the only way the general public will eventually see the truth. This type of information can be presented without any value judgment attached and the different perspectives can be presented side by side allowing people to conclude for themselves what it “means”. Keep it up and we will all have to reach the same conclusion eventually (whatever it may be).

  • Queenjane
  • tim rowledge

    “I think we can all agree that Ronald Reagan was one of the greatest presidents of the modern era.”

    No. No, we can’t. No way.

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Cosmic Variance

Random samplings from a universe of ideas.

About Sean Carroll

Sean Carroll is a Senior Research Associate in the Department of Physics at the California Institute of Technology. His research interests include theoretical aspects of cosmology, field theory, and gravitation. His most recent book is The Particle at the End of the Universe, about the Large Hadron Collider and the search for the Higgs boson. Here are some of his favorite blog posts, home page, and email: carroll [at] cosmicvariance.com .

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