Inequality much worse than most think

[ProdigyofZen]

Re: Inequality much worse than most think

I'm curious why you think I'm interested in pushing up the threshold to the 1%. I'm not. I do like to understand the compensation of the American workforce and the wealth of American's for very selfish reasons but I'm not interested in distorting the 1%. I haven't read the work you are referring and I'm not about to dig into data sources but the total networth is probably wrong and doesn't the sniff test. A simple search on Glassdoor.com should confirm this.

EDIT - I acdtually read the article (LOL) "A New York Times article (Economix, 1/17/12) agrees that the threshold for being in the top 1 per cent in household income is about $380k but states that, based on Fed data, the 1% threshold for net worth is $8.4M"

As for your allegiance to the poor, prodigal, and alienated that is a very admirable trait but it seems to be clouded by a distorted view of reality. You mention the nurse and school teacher. Here in California most nurses are very highly compensated. Starting is $60k which is above the median income and can reach over $100k based on seniority with nurse practitioners getting paid substantially more. As for school teachers the compensation is less - but throw in benefits and not having to work for 3 months out of the year it is not substantially so. And while the majority work hard to earn their comp there exists a good portion that just coast based on seniority. I would never characterize nurses or school teachers as poor and it's very both interesting and telling that you have done so.

As for "crushing poverty" I just don't see it. If you call what we are experiencing "crushing poverty" then I'm curious how you would describe conditions in the poorer places of the world. I agree that 90% of America is getting poorer due to our government (and QE) but poor is a relative term. The vast majority of Americans are still wealthy by global standards and those that were born into poverty and want to acquire wealth can still do so through hard work and perseverance.

America is not the rest of the world. Sure relatively in America poor people are fat (an actual negative in reality) and have smartphones/cars.

But you forget to mention the means to obtain those smartphones and cars. Debt

The worst four letter word you can use.

They would have none of those things if they couldnt use debt to get them. In these other countries you speak of the middle class and poor have little access to debt to increase their standard of living.

Too many people look at what is right in front of them and make a judgement call, as I feel you have done here. The antecedents to what you see today were created 70 years ago and will only get worse.

“Thomas Hobbes wrote in Leviathan (1651) that “Ignorance of remote causes disposeth men to attribute all events to the causes immediate and instrumental: for these are all the causes they perceive.”

[jr429]

Re: Inequality much worse than most think

That would be Article 1, Section 8 of the U.S. Constitution:

"The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States..."

Yes.

I'm surprised at your response. You are obviously intelligent enough to understand the problems with your position so I'm not going to bother with a response other than to say I was hoping for a bit more.

[jr429]

Re: Inequality much worse than most think

I'm curious, why all the resistance to seeing this as it is? It's a fairly easy question to answer, understanding that there's some play in the number based on how the data is collected. We don't need generalities like "most reports" because we have actual, peer reviewed work to which we can refer. Look to the article I linked and refer to that data. Check out Domhoff's work. He's been publishing these numbers for nearly half a decade; well before the phrase 1% ever entered the popular vocabulary.

It's curious to me why so many of these self-made types keep wanting to push up the threshold of entry to the 1%. And one minute these fellows crow like roosters, other times they seem a bit more hen-like. Now why is that?

I'm not the arbiter of deserving or undeserving and neither are you or anyone else. And as they have shown, the rich can take care of themselves.

But I will admit, my allegiances are with the poor, the prodigal, the alienated and the abandoned. I feel more affinity with the waitress, the bus driver, the nurse and schoolteacher than I do with the wealth manager, the surgeon, and the CEO. I identify more with Archie Bunker than Thurston Howell. I don't think it is a crime to be rich, but I know crushing poverty in the midst of unprecedented wealth is.

I just hope for everyone's sake there is no god and all of creation is an accident. Because if there is a moral intelligence operating in the universe with an interest in our collective choices, we in big trouble eternity-wise.

I'm curious why you think I'm interested in pushing up the threshold to the 1%. I'm not. I do like to understand the compensation of the American workforce and the wealth of American's for very selfish reasons but I'm not interested in distorting the 1%. I haven't read the work you are referring and I'm not about to dig into data sources but the total networth is probably wrong and doesn't the sniff test. A simple search on Glassdoor.com should confirm this.

EDIT - I acdtually read the article (LOL) "A New York Times article (Economix, 1/17/12) agrees that the threshold for being in the top 1 per cent in household income is about $380k but states that, based on Fed data, the 1% threshold for net worth is $8.4M"

As for your allegiance to the poor, prodigal, and alienated that is a very admirable trait but it seems to be clouded by a distorted view of reality. You mention the nurse and school teacher. Here in California most nurses are very highly compensated. Starting is $60k which is above the median income and can reach over $100k based on seniority with nurse practitioners getting paid substantially more. As for school teachers the compensation is less - but throw in benefits and not having to work for 3 months out of the year it is not substantially so. And while the majority work hard to earn their comp there exists a good portion that just coast based on seniority. I would never characterize nurses or school teachers as poor and it's very both interesting and telling that you have done so.

As for "crushing poverty" I just don't see it. If you call what we are experiencing "crushing poverty" then I'm curious how you would describe conditions in the poorer places of the world. I agree that 90% of America is getting poorer due to our government (and QE) but poor is a relative term. The vast majority of Americans are still wealthy by global standards and those that were born into poverty and want to acquire wealth can still do so through hard work and perseverance.

[ProdigyofZen]

Re: Inequality much worse than most think

Thanks for this woodsman.

A friend of mine graduates from Cornell in May. He already accepted a job at a physical commodity firm in Kansas City.

His pay will be 55k starting out but get this, for the first year the company is paying his rent.

Rent being the largest cost to him as a single male starting out in his first job this is a great deal for him until perhaps you consider that the company now not only pays his salary but his living cost as well and virtually owns him.

Another catch is they are forcing him to live with roommates 1 or 2 others to cut down on costs but in an obviously larger apartment.

[ProdigyofZen]

Re: Inequality much worse than most think

Bottom line:



An Investment Manager's View on the Top 1%

I work in the investment management industry. I see it everyday.

These people with multi-million dollar fortunes are complaining about paying an extra 5% on long term capital gains shifting from 15 to 20%.

They cant stand taxes, republican or democrat.

It's obtuse.

You should also see how bad they are at "managing their finances." Most of our clients dont even know how much they spend per month and we have people here who have to calculate that for them using their credit card statements etc.

The 1% who do want to change the rules want to change the rules of taxation on capital. Since they already own or have all the access to the capital (where no one else is allowed to get access to that cheap capital) who cares if they change the long term capital gains tax from 15 to 20 or even 25%? They already own all the capital and means to its production!

I love how that "net worth" number includes the average americans home. An asset that can't be sold in a declining market.

This is why countries like England are said to have a much higher "net worth" than Germany because Germany has some of the lowest home ownership levels in developed markets.

The Germans are so much more wealther than the British because they have actual cash and other assets aside from their "primary residence" increasing their net worth.

[Woodsman]

Re: Inequality much worse than most think

"Why, in the twenty-five years since he and Uncle Billy started this thing, he never once thought of himself. Isn't that right, Uncle Billy?

He didn't save enough money to send Harry to school, let alone me. But he did help a few people get out of your slums, Mr. Potter. And what's wrong with that?

Why...Here, you're all businessmen here. Doesn't it make them better citizens? Doesn't it make them better customers?

You...you said...What'd you say just a minute ago?...They had to wait and save their money before they even ought to think of a decent home. Wait! Wait for what? Until their children grow up and leave them? Until they're so old and broken-down that they...Do you know how long it takes a working man to save five thousand dollars?

Just remember this, Mr. Potter, that this rabble you're talking about...they do most of the working and paying and living and dying in this community. Well, is it too much to have them work and pay and live and die in a couple of decent rooms and a bath?

Anyway, my father didn't think so. People were human beings to him, but to you, a warped frustrated old man, they're cattle. Well, in my book he died a much richer man than you'll ever be!"

[ProdigyofZen]

Re: Inequality much worse than most think

You must live in a major east coast city. Let me break down for you how So Cali would look like for a decently hard-working guy of average intelligence and average education.

Income $44k
After Tax (your tax rate) $2700/month

Rent with spouse or roommate - $800
Car - $250 (why does he get a new car??)
Expenses - $600
Utilities - $100 (split with roommate, why does he get cable TV?)
Cell Phone - $65 (why does he get an Iphone 5s?)

Saves $885/month or $10,620/year. Why is this a problem? This is much more than many people making many multiples of this income save annually. Maybe instead he should pay 0 taxes so he can save $10k/year AND drive a Porsche?

No I live in Dallas, cheaper compared to the east and west coasts.

I was using "Dallas" values in my scenario.

The scenario you provide is one of "partnering" up with someone to pay less.

So everyone who doesnt make at least 100k a year should be forced to have roommates, drive an old car, not buy the goods and services that the P/C economy produces (iphone 5s) and not have cable TV jsut so that he can save an extra 2000 a year which may or may not (depending on the FIRE controlled markets) net him 300k at retirement?

So the most this guy can hope for is a roof over his head, little enjoyment of the richest most productive country in the world could provide and a subsistence living in retirement on 300k?

Jr listen to how you sound/write.

No one said a guy making 50k a year should be driving a Porsche but you seem to be oblivious to the mass psyche of the average person.

Why would they be happy if they saw everyone making 100k plus getting a brand new iphone, ipad, cars and providing private education for their children when they dont have cable tv, just a regular flip phone, forced to drive an old car that may or may not be reliable and cant provide the best education for their offspring?

The America that was sold to the people in the 1950s and 60s was one of ever increasing income, productivity and opportunity. Productivity has increased by leaps and bounds but income is stagnant which has been made up for by going into debt.

If Aristotle were around today he would say the American people were slaves/serfs. Debt is an ingenious substitute for the whip and chain of the slave driver.

And for refernce I am not a Democrat or left wing, I have never voted Democratic in any election ever and as of 2008 don't vote at all because both parties are playing for the same team.

I am sorry but it is not okay that in this nation that has all these resources and is self sufficient in every sector that our people should exist the way they do.

Something is horribly wrong when the nation that is the reserve currency issuer and reserve asset holder that is granted the exorbitant privilege of low interest rates and low costs of goods as a byproduct has a population that is 90% debt serfs. Their only ability to increase their consumption rate or standard of living results in going into debt OR getting a higher paying job.

And as we know, labor gets peanuts compared to capital/rentier class.

The goal of our economy should be to lower the cost of living this means lower home prices, rents and as less economic rents as possible in order to increase the P/C economy and allow the consumers to consume the actual products that the Real economy produces.

Imagine what would happen if we just cut the debt levels down to the ability of the 90% to pay? GDP would skyrocket but it would force the rentier/owners of capital class to take losses which is what was supposed to happen in 2008 that wasnt allowed to happen under our fiat exchange rate system.

Now because of our FIRE economy the general public cannot afford even Renting a place to live.

Via Bloomberg BusinessWeek,

If you can’t afford to own, you can rent. But what if you can’t afford to rent, either? Millions of Americans are in precisely that situation, according to a study released today by the Joint Center for Housing Studies of Harvard University. The availability of apartments, especially cheaper ones, hasn’t nearly kept up with demand, and the problem has worsened since the 2007-09 recession, the study says.




“In 1960, about one in four renters paid more than 30 percent of income for housing. Today, one in two are cost burdened,” according to the study, America’s Rental Housing.

“Cost-burdened” means you’re paying more than 30 percent of income for housing and “severely cost-burdened” means you’re paying more than half. “By 2011, 28 percent of renters paid more than half their incomes for housing, bringing the number with severe cost burdens up by 2.5 million in just four years, to 11.3 million,” according to the Harvard study, which was conducted with partial funding from the MacArthur Foundation.




The boom in housing prices made ownership unaffordable for many families, and the subsequent bust forced others into foreclosure. You would think that all of those foreclosed homes would make great rental properties, and they have. “Remarkably,” though, the study says, “soaring demand was more than enough to absorb the 2.7 million single-family homes that flooded into the rental market after 2007.”

The result of the spike in rental demand is a seller’s market: “From a record high of 10.6 percent in 2009, the vacancy rate turned down in 2010 and has continued to slide, averaging 8.4 percent in the first three quarters of 2013.”




As usual, the pinch is hardest on the poor, those with incomes under $15,000 a year who pay at least half their incomes on rent. “With little else in their already tight budgets to cut, these renters spend about $130 less on food—a reduction of nearly 40 percent relative to those without burdens.”

The problem would get worse if Congress, in its zeal to eliminate loopholes from the tax code, were to rid of the Low-Income Housing Tax Credit. That tax credit provides incentives for construction or preservation of affordable housing units—about 2.2 million since 1986.

Deterioration is another potential enemy of affordable housing. According to the center’s study, more than one in five mobile homes was removed from the housing stock from 2001 to 2011

[Woodsman]

Re: Inequality much worse than most think

Bottom line:

"A highly complex set of laws and exemptions from laws and taxes has been put in place by those in the uppermost reaches of the U.S. financial system. It allows them to protect and increase their wealth and significantly affect the U.S. political and legislative processes. They have real power and real wealth.

Ordinary citizens in the bottom 99.9% are largely not aware of these systems, do not understand how they work, are unlikely to participate in them, and have little likelihood of entering the top 0.5%, much less the top 0.1%. Moreover, those at the very top have no incentive whatsoever for revealing or changing the rules."

An Investment Manager's View on the Top 1%

[gwynedd1]

Re: Inequality much worse than most think

Don't be so modest, vt. Wear that 1% crown with pride! You built it, right?

Now it depends on the source, but admission to the 1% club starts at between $350k - $450k. Of course, that's just wages, government transfers, capital gains, dividends and other investment income and doesn't consider total net worth. That metric varies too, but generally starts around $1.5m.

Bill Domhoff At UC Santa Cruz has been the go to guy on this since 1967. Since he hails from a place that proudly boasts itself the leftmost city in America and is a pointy headed academic (a Sociologist - horrors!), skip him for now and look over a guest article on his site written by a private wealth manager, "An Investment Manager's View on the Top 1%."

The best part is:
The Upper Half of the Top 1%

Membership in this elite group is likely to come from being involved in some aspect of the financial services or banking industry, real estate development involved with those industries, or government contracting.

So much for boot straps. Where are the Republicans when you need them? All that wealth is created from government.

[gwynedd1]

Re: Inequality much worse than most think

altho theres been the story of the 'societies' that the (group out of favor) eat out of the same pail they...
uhhhh...
go in.

it can and does get worse.

i figger if The US goes off the deep-end and the .gov has to 'regain control'...

of 'society' ?

it'll be the lib/dems (and their efforts at 'gun control' ) who give us marshall law - as the green/leafy suburbs/gated communities/urban oasis'
start to feel threatened (by the 'barbarians' at the gate...)

I think the topic is on the basic distribution of resources with regard to the middle class. The very rude state of society you describe cannot be remedied by distribution and policy. A middle class is no guarantee of paradise, given. I think it is clear that when there is a vast number of workers that do not consume their own output, we have at least one offset on the producer consumer chain which I view to be unstable unless held to a small number. If one were to assess this as a machinery I would see more moving parts where I would typically, all things being equal, prefer steady state.

[gwynedd1]

Re: Inequality much worse than most think

What gives the government the right to tax a private beach? Would this right still exist if the beach was owned before the inception of the government?

What ontological position justifies your ownership? Also how to you plan on enforcing your claim?

[thriftyandboringinohio]

Re: Inequality much worse than most think

Don't be so modest, vt. Wear that 1% crown with pride! You built it, right?..."

Well now you are just poking a stick into the cage to rile him up

[Woodsman]

Re: Inequality much worse than most think

What gives the government the right to tax a private beach?

That would be Article 1, Section 8 of the U.S. Constitution:

"The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States..."

Would this right still exist if the beach was owned before the inception of the government?

Yes.

[Woodsman]

Re: Inequality much worse than most think

...Let's look at some of the other 1% ers on your team.

And good morning to you, vt! First, i'd say it was less of tangent and more of an aside.

You really know how to hurt a guy. "Your team." Give me a break, vt.

I'll say it again and every time I'm asked or the assertion is made. I don't have a team. Do you seriously contend that I believe the Democrats aren't standing naked on this same as the GOP? Come on, now.

I gave you plenty of fact to dismiss without contemplation. And you can find all the data and interpretation you want on Domhoff's site or go buy a copy of "Who Rules America." Give me a mailing address and I'll send you my copy on my own dime. If you're too busy running the plantation, then the one pager I linked would of given you all the facts you wanted about the entry requirements to the 1%.

As for delusional political allegiances, what do we make of this?

"If elected I believe Romney-Ryan will unwind FIRE and promote TECI."

[Woodsman]

Re: Inequality much worse than most think

Most reports I have seen the 1% starts at $7-8mm net worth which makes a lot more sense. A surgeon netting after taxes $300k needs about 30 years + asset appreciation to make it into the 1%. So I'm quite curious does a surgeon despite their (usually) above average intelligence, hard work, and 7 years of schooling + 5 years of residency/fellowship earn their entry into the 1% by your standards? Who else "deserves" to be in the 1%?

I'm curious, why all the resistance to seeing this as it is? It's a fairly easy question to answer, understanding that there's some play in the number based on how the data is collected. We don't need generalities like "most reports" because we have actual, peer reviewed work to which we can refer. Look to the article I linked and refer to that data. Check out Domhoff's work. He's been publishing these numbers for nearly half a decade; well before the phrase 1% ever entered the popular vocabulary.

It's curious to me why so many of these self-made types keep wanting to push up the threshold of entry to the 1%. And one minute these fellows crow like roosters, other times they seem a bit more hen-like. Now why is that?

I'm not the arbiter of deserving or undeserving and neither are you or anyone else. And as they have shown, the rich can take care of themselves.

But I will admit, my allegiances are with the poor, the prodigal, the alienated and the abandoned. I feel more affinity with the waitress, the bus driver, the nurse and schoolteacher than I do with the wealth manager, the surgeon, and the CEO. I identify more with Archie Bunker than Thurston Howell. I don't think it is a crime to be rich, but I know crushing poverty in the midst of unprecedented wealth is.

I just hope for everyone's sake there is no god and all of creation is an accident. Because if there is a moral intelligence operating in the universe with an interest in our collective choices, we in big trouble eternity-wise.