Will Wilkinson has a new paper out on inequality, which I will be blogging about later. But Ezra Klein has an interesting response, which focuses on the difference between income inequality and consumption inequality.
I broadly agree with Will that consumption inequality, not income inequality, is what matters. If the rich have access to broad classes of goods that the poor can't have, I find this worrying. On the other hand, if the problem is that Bill Gates has a really awesome 80 inch flat panel television, while the poor have to be content with a 32 inch CRT, well, I can't say my heartstrings are plucked very tight by this injustice. So it's important to know what the real differences are.
This theory was very popular with conservatives and libertarians over the last few years; I'm sure I referenced it myself. But of course, as Ezra points out, some of that consumption inequality may well have been due to rising credit inequality: people borrowed money from their houses to buy consumption goods.
But I think it's easy to overstate the contribution of debt, for two reasons. First, many of the discussions on consumption equality focus on the poor, who were still relatively credit constrained even at the height of the bubble. And second, income inequality figures exclude both taxes and government benefits. Things like the EITC and Section 8 vouchers really have made a quite substantial improvement in the ability of the poor to consume.
So I don't think we actually know how much of a difference consumer credit made to equalizing consumption between rich and poor. I suspect that the continued mechanization of formerly labor-intensive tasks has made a greater difference, but then you'd expect me to say that. The data we want will not be available for several years, especially since period immediately following the financial crisis will be very atypical*, and therefore not useful in assessing the longer term trend.
* Before you accuse me of cherry-picking, I expect that the data following the financial crisis will actually show income and consumption inequality falling, because financial crises tend to make bigger relative cuts in the income of the wealthy. That doesn't mean that they "suffer more" in any meaningful sense--losing 5% of a $30,000 annual salary is almost certainly a greater hardship than losing 25% of $300,000. But the numbers will still show shrinkage.
Copyright © 2010 by The Atlantic Monthly Group. All rights reserved.
Megan:
Where do you draw the line of "broad classes of goods"? I assume you mean, if the poor could no afford televisions at all, while the rich could buy giant flat screens. But I don't see the line that isn't arbitrarily set. I could complain about the lack of affordability of just flat screen tv's or sport cars, or elective surgery, or whatever. The rich will always be able to afford more than the poor, that's sort of the point of being rich. What am I missing?
Furthermore, this inequality has social value. If being rich doesn't have any advantages, and being poor doesn't kind of suck, what's the point of working hard to be rich rather than poor?
Don't get me wrong. It's a fine thing that we live in a time and place prosperous enough that the poor don't have to live in absolute squalor. But the fact that being rich is much better than being poor has been one of the primary factors driving the progress it took to get us to the point where that's possible.
If you read Will's paper, he's talking about things like $300 Haier fridges versus $11,000 SubZero fridges, which aren't functionally much different, but that "the rich" buy, more for signaling reasons than anything related to utility. So, the poor can have access to life-improving "stuff" - it's just not as fancy as the stuff the rich buy. But most poor Americans do have access to kitchens that are basically functionally identical to those used by rich people.
One thing I should point out is how this is largely a US phenomenon, as far as I can tell. When I lived in China, it was clear that non-crappy stuff *is* more expensive there than it is in the US, and poor Chinese simply can't buy refrigerators. Poor Chinese (and I guess Africa is probably worse) often still use coal or even wood in kitchens, and don't have much in the way of useful electric appliances.
Megan:
The income chart Ezra posted makes me curious about something: I've heard it suggested that the rise in income inequality was in part driven by a rise in income volatility. Hypothetically, if each year nine people make $50,000 and one person makes $500,000 (e.g., by selling a business or cashing in several years' worth of stock options), and the person making $500,000 is a different person each year, income equality is high only on paper.
Are you aware of any statistics on trends in the inequality of multi-year income?
Also, I don't see that Ezra mentioned the poor anywhere in his piece, though he did mention the middle class. I suspect that Ezra Klein is more concerned about the inequality between the rich and Ezra Klein than between the rich and the poor.
Brandon -- sorry to jump in--
there is at least one study on the top 400 returns ranked by AGI from 1992 to 2000 ( admitedly, rarified air income wise and kinda old) -- only 25% of individuals showed up more than once, and only 13% showed up more than twice. Link: http://www.irs.gov/pub/irs-soi/00in400h.pdf
I know of another study that drives down deeper and is more current that shows similiar statistics for the top 5% (iirc) of filers that follows a similiar trend -- top income group is pretty dynamic and the majority only spend a year or two in that group.
There are so many ways to look at inequality. What about inequality in the amount of leisure time? The gap in that has been growing, but in the opposite direction from income inequality (i.e. high income people working longer hours). Perhaps it takes very high incomes to compensate people sufficiently to convince them to give up that much time relaxing, being with their children, etc.
And what about inequality of contribution, i.e. income relative to the amount of value produced? There are many types of inequality, but the bottom line question is whether it's worth capping the contributions of those at the top in order to reduce income inequality.
The gap in that has been growing, but in the opposite direction from income inequality (i.e. high income people working longer hours).
Care to share the source of this statistic?
Perhaps for the first time since we’ve kept track of such things, higher-income folks work more hours than lower-wage earners do. Since 1980, the number of men in the bottom fifth of the income ladder who work long hours (over 49 hours per week) has dropped by half, according to a study by the economists Peter Kuhn and Fernando Lozano. But among the top fifth of earners, long weeks have increased by 80 percent.
http://www.nytimes.com/2008/09/02/opinion/02conley.html?_r=1&scp=1&sq=income%20work%20hours&st=cse
Good stuff. Thanks, jmo3.
Yes, thanks, jmo3. I knew I'd seen it before (on Megan's blog, I believe), but it would've taken me a while to find it.
Quite a few professions that are populated almost entirely with the rich are those with long hours, insanely long hours if you ask my opinion; and, in a number of those, the hours don't always stop when you walk back through the front door to your home. The line between work and leisure sometimes gets exceedingly blurred, especially if you are highly compensated.
Nimed, how much would you have to be paid to work 14-16 hours a day?
Yancey,
A Mercedes S550 is a fine car with many cool features. It has Radar Cruise Control that can bring the car to a complete stop and inch it's way forward in traffic and resume freeway speends when traffic clears up. It has massaging heated and cooled seats in addition to any number of other features.
Now, the question: What % of the population would agree to work an extra 2 hours a day in exchange for a company S550?
Many people are middle/working class...even poor, because there just aren't any goods or services that they feel are worth the extra effort to obtain.
That would be a cool system to have, but I am not sure I would ever feel comfortable trusting it entirely.
jmo:
I would think more people on the bottom of the ladder would take that deal if offered than on top. If you are already making 150k getting a $80k car (just a guess) for extra work is not the same as being offered the same car for the same hours when you are making minimum wage.
Nimed, how much would you have to be paid to work 14-16 hours a day?
I don't think I could do it regularly. I sometimes do it "spontaneously", when work is going really well, but it never lasts longer than 1-2 weeks (where I gladly work on weekends, because it doesn't feel like work). And other times I do it when I have a paper or meeting presentation deadline.
Working 14-16 hours in the stuff I do for a year seems almost unimaginable to me. But I suppose that depends on the kind of work we're talking about. And there's, of course, individual variability in these things.
Of course, being a lefty, I have to have something against income inequality. My worry is not that Gates and other billionaires we never see anyway have lots of stuff. My worry with income inequality (once basic needs are satisfied) is that, if sufficiently large, it can bring about a sort of informal two-tier society, where people with low income are looked down upon and de facto treated as less valuable.
Of course, another libertarian idea that has received some attention lately is the buying and selling of transplant organs.
If the rich have access to transplant organs, and the poor do not, that is considerably more toublesome than differnt sizes of TV's.
they do already, its just not explicit
see Jerry Garcia and Steve Jobs
Yeah, one thing I've noticed over the years is the rich and famous seem to be able to get a new organ within a month or so, whereas the rest of us stand a good chance of dying before an organ becomes available.
[Quote]
Of course, another libertarian idea that has received some attention lately is the buying and selling of transplant organs.
If the rich have access to transplant organs, and the poor do not, that is considerably more toublesome than differnt sizes of TV's.
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Which is why it would be a good idea to have the payment come from some sort of agency or fund instead of direct transfers.
In the case of kidney transplants it cost $100,000 per year to keep a patient on dialysis. It would save [who ever is paying those bills Insurence company/Government] $50,000 the first year to pay a donor $50,000.
The other issue is that the rich do have more access to transplant organs under the current regime.
And who will have more influence over the agency or fund?
Yep, the FOOs (Friends Of Obama) that are running this country.
Um, yeah them or the same type of people currently deciding who gets an organ. Medical boards, etc.
I suppose we have to assume here that paying people will reduce the supply. Especially since dialysis is already paid for by the state if a person cannot pay. There are plenty of threads to be paranoid on. I don't know if this particular topic(paying organ donors) is one. Especially since it is shear fantasy to think that our legislative overlords are going to consider allowing compensation of donors.
That said knock yourself out and have a nice day.
The only goods, or class of goods, that concern me are subsistence.
I'm fine with re-directing enough wealth to provide able-bodied people with a bed to sleep in, food to eat, an address to get mail, and toiletries/garments adequate to let them complete a job search.
That's it. After that, it's up to them.
If I have an iPhone and you have nothing, work and buy an iPhone.
If I have an LCD TV and you have nothing, work and buy an LCD TV.
If I have a $2,000 Armani Suit and you really want an Armani suit, work and buy one.
Etc.
When did this become complicated? When did "Life, Liberty, and the Pursuit of Happiness" become obsolete?
Ann's points, above, are excellent and similar to ones I've made in the past. What about the person who values time more than money - do I subsidize them so that they can have my money, but I have to spend more time earning it?
What about inequalities in personal attributes? When do I get free plastic surgery so that I can look like a Hollywood Star? Is it equitable that someone is sleeping with Jessica Biehl tonight - and it's not me?
Is it equitable that right now there is someone flying an F-22, and it's not me, just because they were born with perfect eyesight, a perfect physique, and cat-like reflexes? When is it MY turn to pilot that plane? I mean, that's what equity is, right?
Life
Liberty
The Pursuit of Happiness
Some would encapsulate the three and call it "freedom."
It should be MORE than enough.
I disagree with you slighly about the iPhone.
I subsistence as the basics to keep body and soul together: food, clothing, shelter.
There's then another layer of basic capitalization to allow you to work effectively, I consider things like a basic cell phone and service to be part of that.
Exactly,hagbard, exactly.
There are so many things that are required for basic life in today's world, all of which should be provided to anyone and everyone free of charge:
- Cell phone -- preferably one with unlimited internet, texting, gps & voice. Those things are invaluable in allowing more efficient work and should be the bare minimum provided to everyone.
- Computer w/ high-speed internet -- so much of life is lived online now-a-days, everyone absolutely needs access to a computer of their own with plenty of bandwidth.
- car. Goes w/o saying
- occassional "luxuries" -- like money to spend on movies at the theater or decent dinners out and the like. Even people who can't or won't work deserve to have a little fun on their time off.
- Personal training -- b/c if you're out of shape, how can you respect yourself? And if you can't respect yourself, no one else will and where will that leave you? Nowhere. Also, this would create enormous savings in our new excellent National Health Plan benefiting everyone.
I think the basic "bed & food" regime needs a little juicing up as well to be acceptable. Basically, the accoutrements of your average slightly upper middle-class lifestyle should be available to everyone regardless of ability or desire to produce enough value to pay for their provision.
It's the only way to organize a just society: a good life for all, regardless of circumstance, gumption or talent.
You are missing my point slightly.
I've helped folks up when they've been quite down (who are now self sustaining) (voluntarily, with my own money).
Sometimes that meant getting them a cell phone so they could work. Sometimes it meant giving them an older computer of mine so they could work. Sometimes it meant lending them the down payment on a car. Those were the things that really made the difference in allowing them to launch themselves towards self sufficiency.
I'm not arguing for expansive cradle to grave pay-for-everything welfare. I'm simply pointing out that it's incredibly harder for a motivated person to lift themselves up without a little capitalization (communication, transportation).
The above is actually a really strong argument for private charity, rather than public welfare. Public welfare never quite gets the 'hand-up' thing right. They'll give someone food stamps, section 8 housing, medicaid, and then fail to notice that they can't get a job because they can't get to work.
On the flip side, I know of private charities that take donated cars and give them to folks trying to lift themselves up so they can get to a job, because they saw the need and stepped in to fill it. I am also a huge fan of modest needs which allows micro-charitable giving, often directed specifically at things like 'someone who just needs to get a clutch so they can keep getting to their job'.
I'm wondering if any person here is half as juvenile as I am.
Did anybody thought of George Costanza's "Significant shrinkage!"?
I was in the pool!
I remember that episode. How the hell did you think of that? That's just sad.
Yeah, I know...
LOL! Almost every time someone uses the term "shrinkage" or "breathtaking".
Right there with you.
Definitely a classic episode.
Does purchasing political influence count as consumption? If it does not, and the rich can and do make larger campaign contributions, that difference should trouble one.
Megan - Re that *, I'm not certain I'd go so far as to say that "losing 5% of a $30,000 annual salary is almost certainly a greater hardship than losing 25% of $300,000".
Spread across a year, that's $28 per week vs. a little less that $1,450 per week. I realize few people are instinctively going to shed a tear for the family making $300K, but those folks are likely going to have a signficant number of fixed costs -- mortgage, insurance, car payment, childcare, tuition for the kid(s), etc. -- that won't easily be adjusted to absorb an unforeseen $75,000 reduction to their income. Even people that live within their means seldom have a 25% cushion in their income needs.
Really? Why can't the family making $300K send their kids to public schools? Hell, I wonder how many people reading this blog make $300K(or $150 to 200K if they are single).
Why can't a family making $400K send their kids to public schools?
Two words:
National Security
Just so.
They should be sending their kids to public school, living in a modest house and driving a modest car. The extra money should be saved (or, ideally, taxed to provide that same modest house and modest car to those less gifted or lucky) and thus the reduction in their income should affect thier day-to-day lives not at all.
I don't know where we get this idea that those who work long and hard and get paid exorbitantly for it have some right to spend that money on luxuries like better schooling, housing and transportation. Working long and hard and seeing a check with lots of numbers on it should be reward enough without having to compound that with extravagant lifestyles that are cruelly denied to those who are less intelligent, dilligent or otherwise lucky.
Right here is where liberals, conservatives and libertarians start talking past each other.
The conservatives and libertarians think the liberals want to take everyones stuff so that noone has more stuff, services etc.
The liberals think that the conservatives don't care about anyone but themselves.
What I want for society is that we have a reasonable floor. So that being poor does not suck horrifically. I know europe has its issues but I'd much rather be a poor/middle classed european with a month or more vaction, healthcare than a rich american who works 70-120 hours a week for more than a $1,000,000 per annum. The bigger picture is that the world will always need janitors as well as CEO's so as a society we have to decide how to handle that fact.
I don't think either of the caricatures that people form in their heads is entirely accurate. Despite that one can usually find at least one crazy on the other side of their argument.
@ThatPirateGuy --
A reasonable floor for all of society is exactly what I think we are all in favor of. It's the bare minimum that every memeber of society should be provided regardless of his ability or desire to provide it for himself.
My definition of a reasonable minimum includes smartphones; computers w/ internet access; sizeable homes with yards and walkable retail access; decent, reliable cars; unlimited access to cutting edge medical care; plenty of delicious, locally grown, sustainably-produced food; graduate-level education in the field of your choice and a few simple luxeries on top to make sure we all feel human once in a while.
Does the list of items included in your reasonable floor match mine or do you hate the poor and wish to deny them a quality, liveable life?
ThatPirateGuy,
The problem with the 'reasonable floor' comes two ways.
First, it keeps going up.
Second, most of what is horrific about being poor is having to live around other poor people.
I have no idea how to fix the second problem :(
As we get wealthier wouldn't a gap begin to appear between what is possible with considerable effort and a decently comfortable minimalist existence.
For example: I have a friend who works part time as a bartender and plays in a band. He makes OK money, lives in the city, rides a bike, he lives simply and cheaply and is happy.
He doesn't have a nice car, a nice apartment, a top of the line laptop, he has an older RAZR not a new iPhone, etc. We live in MA so he has health insurance.
Now, as technology improves and we get wealthier, won't the lifestyle gap grow between someone who is hardworking and ambitions and your typical affable slacker?
"income inequality figures exclude both taxes and government benefits": is that a peculiarly American feature? It certainly is an odd way to do it.
People talk about the qualitative differences in income inequality while ignoring most of the qualitative differences. Maybe it's no big deal between someone owning a 30 inch TV versus a 60 inch. But what about access to a top surgeon versus whoever is working at the local hospital. What about political access? What about the quality of one's neighborhood, it's schools, and local services as compared to those of the super rich? What are the differences in opportunities? How stratified can massive income inequalities become?
I think it's a red herring to compare the poor of today with those of yesteryear. The question is how unstable is a society with massive inequities, especially if they become stratified?
Precisely, shadesofgrey, precisely.
Until everyone has equal access to the very best surgeon, we have failed as a society.
Same thing for quality of neighborhood. Why should areas full of the unemployed and criminal be less pleasant to live in than gated communities full of self-selected hard-chargers?
Until everyone's neighborhood is equally safe (or, I suppose, unsafe...), we have failed as a society.
There's absolutely no reason that the children of the most ambitious & intelligent should end up in schools full of good teachers and smart students all pursuing knowledge together and the children of the indolent & indigent must suffer through schools with lazy, mediocre teachers and disinterested, disruptive, borderline-criminal students.
In fact, in a truly just society it would probably be exactly the opposite. The children of the most successful will prob. suceed no matter what, so every opportunity should be taken to provide obstacles to that success: give them crappy schools, outdated books, disruptions galore in every school day. Meanwhile, take the children who seem to have no prediclection for learning and give them the best of every educational opportunity you can think of.
We would certainly see what a good society looks like if we could only manage to effectively hamstring our most capable while attempting to boost our most incapable.
If your delivery becomes any drier, it will desertify a twenty-mile radius around your computer terminal, and then become a relevant factor in climate change models.
Not that I ain't enjoying it.
Seriously.
As St. Hubbins once said, it's such a fine line between stupid and clever. I was fearing stupid, but after a line like "while attempting to boost our most incapable," I'm leaning clever.
Really! Did I call for a completely egalitarian society? I just suggested that societies with massive inequities are unstable. I think history has proved me out on that. I think the CIA even has a study that predicts a country's chance of upheaval with inequity being a contributing factor. Iran under the Shah was an example.
If his delivery becomes any drier most people will mistake him for an earnest dorm room Marxist.
"Really! Did I call for a completely egalitarian society? I just suggested that societies with massive inequities are unstable. I think history has proved me out on that."
It hasn't. The problem with this line of reasoning is that the United States is radically different from other societies with great income inequality in many very important ways. You're just assuming, presumably due more to a fondness for the policy implications than to any logical necessity, that the one factor the US has in common with those societies is the one that promotes instability.
Oops. I meant quantitative vs qualitative.
There's always going to be some new class of goods that hasn't become cheap yet. There was a time when only the rich could afford refrigerators and indoor plumbing. Then, eventually, the technology spreads downwards through other classes, and eventually every has it.
VCRs did the same thing, and DVD players did so afterwards. Computers seem to be on the same path. Eventually, the stuff all gets to be too cheap to steal.
I can think of two exceptions to this rule. One is personal services, such as attention by an elite hairdresser or education by Nobel prize winners at top schools. Non-commodity medical services would fall into this category too, as would real designer (not just fancy label) fashions. And the other is open space, particularly when it has some extra value because it is near the water or in Vail.
The rich aren't outclassing everyone else by buying more iPhones, or even high end refrigerators. They do it with things that can't be reproduced on the assembly line and sold to the masses.
The rich aren't outclassing everyone else by buying more iPhones, or even high end refrigerators. They do it with things that can't be reproduced on the assembly line and sold to the masses.
But that's the critical issue -- the coolest, best, most-useful things in modern life, the things with the most bang-for-the-buck are all mass market goods produced on the assembly line. Included in that are electronics (obviously) but also appliances, automobiles, and pharmaceuticals, for example.
All of these things tend to have high fixed costs (they're expensive to invent/discover/design) but low marginal costs (each additional unit is relatively cheap to crank out of the factory). The beauty of that is that the producers are lead to try to spread out those fixed costs by selling to a mass market, which means all segments. Which is why 'cheap' cars, appliances, and electronics are amazing and provide nearly all the functionality of the gold (or stainless steel) plated luxury versions.
Yup, we can have all the cool portable stuff, and if we can't it's just that the price hasn't come down yet. The problem is affording housing, education, and custom medical procedures.
The problem is affording housing, education, and custom medical procedures.
But even in those areas, the same processes are at work. So, medical procedures also follow the same high fixed cost/low-marginal cost logic, although to a lesser extent. That is, it is difficult and expensive to invent and perfect, say, a minimally invasive hip-replacement process. But once the process has been perfected (and the tools and technologies invented), then it is much cheaper to make use of those tools and train up a bunch of practitioners who couldn't have invented the tools and process themselves, but certainly can be trained to carry them out efficiently. So why can't you buy a low-cost hip replacement? Actually, you can:
http://www.articlesbase.com/health-articles/hip-resurfacing-surgery-in-india-save-money-get-a-vacation-178163.html
Housing? Improved technologies and methods have dropped the price per square foot of construction considerably (and now that the popping of the bubble has helped out with the cost of land...)
And education should be *much* cheaper than it is if we could get rid of antiquated, overpriced delivery methods (e.g. non-tenured lecturers droning on in front of a 400 seat lecture hall where have the students haven't bothered to show up and the other half are half asleep). But there are powerful interests that will fight changes there.
To the extent that housing, education, and medicine can be made into commodities, I'd agree. But GOOD housing, education, and cutting-edge medicine aren't commodities and probably never will be. That's not to say the mass market can't improve. Just that the rich will always snag the prime locations, the hands-on, small class education with the best teachers (i.e., the kind of education that works), and being first in line at the snazziest clinics.
These things have elements of "best" that can't be reproduced. Having your suits custom made is the same sort of thing, as is getting the best seats for the Superbowl. And they aren't JUST positional, either. Pretty much everybody, including those with no interest in showing off, can figure out which are the best seats in a stadium.
Wait a minute, I thought all the politicians and bankers were saying housing prices are too low... now they're too high? I'm so confused!
More seriously this time...
I disagree. There's a difference between best and good enough. The supply of best is finite, by definition. However, good enough is entirely possible.
Housing prices are falling (and can be mass produced) and they provide adequate shelter. As far as neighborhoods go, good is free, it just requires good mores among the population (or alternatively, good law enforcement and good laws).
Medicines are becoming cheaper all the time. $4 generic drugs for medicines that would have cost hundreds only a few decades ago.
Education just requires a good starting point. Once you can read and do basic arithmetic you can basically teach yourself anything else (especially with public libraries and the Internet).
No, GOOD housing is absolutely a commodity if one means spacious, comfortable, enjoyable, energy efficient etc. Compare the average new house in terms of size, amenities, and energy efficiency to one built 50 years ago, and there's no comparison. Now if you mean that the rich get to live in the most prestigious locations -- that's true -- but that's what we've been saying (for their money the rich don't get much functional utility -- mostly they buy prestige).
As for 'cutting edge' medicine. Again, the rich may get the treatments first, but if so, it's only for a brief time. No company invests millions bringing a new drug or medical device to market intending to sell it to the rich exclusively--they couldn't remain in business doing that.
As for the rich getting the 'kind of education that works', do some reading on Krueger & Dale's research -- at the college-level, at least, an elite institution buys you little or nothing above an ordinary state institution. It's the characteristics of the students that are critical. Harvard graduates do very well, of course. But that's because they were smart, disciplined, and ambitious to begin with, not because of great teaching at Harvard (or even because of the Harvard brand stamped on their diplomas). Krueger and Dale showed that when Harvard-qualified students decide to attend state universities instead, they do just as well in life (no measurable difference in income).
There areas of inequality aren't always in the consumption of good.
Legal services comes to mind -- there's a huge inequality gap there. Sit in on a typical Civil Court, and you'll see people being nickled and dimed for "crimes" they committed; an expired inspection sticker or registration on their car because they couldn't afford repair, insurance, inspection, or registration costs. Parking tickets in cities where they can't afford a parking space. Sit in a probate court and you'll see families fighting over $20,000 estates that weren't planned more often than $200,000 estates. You have to have the threat of jail hanging over you before you get a court-appointed attorney. And we don't even want to talk about inequality in representation if that happens.
Yup, that fits into my "services" exception too.
Exactly, zic.
And legal representation is clearly a universal right -- mentioned by name in the US constitution!
What we need, as someone somewhere or the other recently suggested, is universal legal care. Let's have one central administration that handles all the billing and allocation of appropriate amounts of legal involvement based on in-depth studies about what the appropriate cost-effective amount of legal provision people need. And, contrariwise, what they are able to pay for. The model could be something like the universal health care model we are ever-so-slowly progressing towards.
We could completely eliminate this dismal disparity between rich and poor with the right legislation and just a bit of political will.
Never take a court appointed lawyer. I sat on the jury for a DUI case and the defense's case was "The Defense rests."
I was like WTF??? The prosecution showed evidence and the defendant was found guilty, but the defendant's lawyer should have at least *tried* to challenge the assertions of the prosecution.
Not sure about that.
How many people, in your estimation, who are older than 25 and making less than 30k a year are in that position because they actively chose to consume large amounts of leisure - at perhaps inopportune times?
And how many have no leisure because they're working two jobs, maybe three, and paying for health care, heat, food, mortgage, college loans, car loan, etc?
zic,
Perhaps for the first time since we’ve kept track of such things, higher-income folks work more hours than lower-wage earners do.
http://www.nytimes.com/2008/09/02/opinion/02conley.html?_r=1&scp=1&sq=income%20work%20hours&st=cse
Your theory that the poor are all working crazy hours is just not correct. Many of them are just comfortable with less and are fine with living a simler life.
I'm not talking about poor people, jmo3. I'm talking about people who've started their own businesses, who have seasonal work (Maine Guide, ski instructor, etc.) , farm, landscape. . .
Since you ask about my personal experience, virtually all the people I know who are over 25 but making less than 30k a year are in that situation due to unplanned child birth. Which starts a pretty sad cycle, because they are unable to pause working long enough to get a simple degree.
Ken,
So your saying it was more that they chose to consume pleasure at an inopportune time? Perhaps without taking the proper precautions?
Well yes, but that is not to say that will continue to make the same choice over and over again.
Paging Harrison Bergeron! Harrison Bergeron, please pick up the white telephone...
Regarding debt-funded consumption, Matteo Iacoviello wrote a paper on the correlation between Debt and Income inequality (i.e., the rise in household debt could be explained by rising income inequality):
Abstract
I construct a heterogeneous agents economy that mimics the time-series behavior of the US earnings distribution from 1963 to 2003. Agents face aggregate and idiosyncratic shocks and accumulate real and financial assets. I estimate the shocks driving the model using data on income inequality, on aggregate income and on measures of financial liberalization. I show how the model economy can replicate two empirical facts: the trend and cyclical behavior of household debt, and the diverging patterns in consumption and wealth inequality over time. In particular, I show that, while short-run changes in household debt can be accounted for by aggregate fluctuations, the rise in household debt of the 1980s and the 1990s can be quantitatively explained only by the concurrent increase in income inequality.
http://escholarship.bc.edu/cgi/viewcontent.cgi?article=1173&context=econ_papers (warning - pdf)