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Can we please get this over with? Wealth inequality study

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Wheylous Posted: Fri, Dec 2 2011 7:07 PM

I saw this on Facebook today:

http://28.media.tumblr.com/tumblr_lvj6lk2L4T1qj90dro1_500.jpg

Right after that, I saw this website I'm tired of seeing:

http://www2.ucsc.edu/whorulesamerica/power/wealth.html

Can we get together a collection of resources and answers to use whenever this study is brought up?

Here's what I can come up with off the top of my head:

http://mises.org/Community/forums/p/27169/447155.aspx#447155

http://www.politifact.com/truth-o-meter/statements/2011/oct/10/facebook-posts/viral-facebook-post-ceo-worker-pay-ratio-has-obscu/

- And? People are richer than I am. Your point? Should I feel worse off for it?

- A video by Sowell on income inequality and mobility (but I can't find it).

 

I'd also like to be able, however, to say "to an extent, you're right." In a sense, government creates this inequality in the first place.

- FED benefits the rich

- Regulations prevent easy opening of smaller businesses

- Minimum wage hurts employment

- Government monopoly status to companies (can we get a nice list of this going?)

 

Hopefully you can add on some more so that we can have a card to pull out when we see this.

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Wheylous:
A video by Sowell on income inequality and mobility (but I can't find it).

 

 

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Wheylous replied on Fri, Dec 2 2011 10:13 PM

Great, thanks! Anything more?

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Nope! Nope! Nothing to see here. Nobody is rich. We're all hurting. And that bum you saw last week is running Goldman Sachs today. Keep moving along...

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Jargon replied on Sat, Dec 3 2011 2:23 AM

What exactly is your point?

Land & Liberty

The Anarch is to the Anarchist what the Monarch is to the Monarchist. -Ernst Jünger

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Wheylous:

I'd also like to be able, however, to say "to an extent, you're right." In a sense, government creates this inequality in the first place.

- FED benefits the rich (-why all caps in Fed?)

- Regulations prevent easy opening of smaller businesses

- Minimum wage hurts employment

- Government monopoly status to companies (can we get a nice list of this going?)

 

Hopefully you can add on some more so that we can have a card to pull out when we see this.

 

Benjamin Tucker's four monopolies of money, land, tarriffs and patents. I think Kevin Carson has theorized that state infrastructure has acted to externalise to costs of big businesses. 'Public work spending' is generally just a give away to politically connected unions - but you will first need to convince them that modern day unions are as bad as modern day corporations. 

I know he's economically illiterate, but Kevin Carson does do a good job at highlighting state benefits to the rich and powerful:

Yes - The Rent really Is Too Damn High!

Welfare State For The Rich - A good article up until the last three paragraphs.

 

 

 

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Jargon:
What exactly is your point?

I forgot you're new here.  Don't mind the pony.  She regularly doesn't have one.  It's part of her charm.  You can see threads here, here, and below to see this in action.

Wheylous, you might find this useful...

What exactly is poverty?

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tunk replied on Sat, Dec 3 2011 8:54 AM

I recently wrote an answer on Quora.com, which you may find useful, to the question "What are the libertarian answers to why salaries of CEOs are rising while workers' wages are declining?"

Now, the study you linked to ("Wealth, Income, and Power") begins by measuring the concentration of wealth (as opposed to income, which is far more dubious, for reasons Sowell points out). And, unsurprisingly, wealth is rather concentrated; it's pointless to try and deny this. Yet, as they go on to partly acknowledge, a number of studies show that, depending on what numbers you use, wealth concentration in the top 1% has either not been increasing or has been declining:

Interestingly, "wealth" includes only immediately marketable assets like stocks and not, say, houses or cars. Obviously, the rich would do better by this definition. I wonder if there are any studies that measure all assets. Studies of "income inequality" are usually skewed by the fact that the more than 2/3 of income going to the lower income groups consisting of transfer payments are left out of the data. Similarly, measures of wealth might also be compromised.

It's also amusing how they begin by speaking ominously of the top 1 percent, but when they compare the US to other countries in terms of wealth, they conveniently choose to compare in terms of the top 10 percent. We are living in a bizzare world indeed if anyone making over $100,000 a year is labelled and denounced as a "millionaire".

They then go on to make a series of unsubstantiated claims, like that apparently greater stock ownership correlates with more social "power". They also babble in the usual boring, PC way about "equality": 

For example, in a study based on 18 Western democracies, strong trade unions and successful social democratic parties correlated with greater equality in the income distribution and a higher level of welfare spending (Stephens, 1979).

Presumably they mean countries like our most very favourite place in the whole world on the Mises forums, Sweden. What they fail to mention is, as Per Bylund points out in his essay “The Modern Welfare State: Leading the Way on the Road to Serfdom", that ethnic Swedes in Sweden are about as well-off as American blacks, and don't make 2/3 of the income of American whites (if you can read Swedish, go to page 58 of this essay for the source). As well, Swedes generally have a high rate of income equality and low poverty wherever they happen to live. According to Nima Sanandaji, American Swedes not only tend not to be poor but also make 55% more income than Swedes living in Sweden. In other words, many of their perks, like their long life expectancy, predate, outpace, and will outlive their welfare state and have more to do with their homogenous population and tradition of social co-operation.

The homogeneity point is particularly important. The United States is an extremely diverse region. For example, consider "the nearly three year disparity in life expectancy between Utah (78.7 years) and Nevada (75.9 years), despite the fact that the two states have essentially the same health care systems." Asians have the highest life expectancy of 84.9 years, while urban blacks have the lowest at 71.1 years. And yet, all these disparate measures are averaged out in the general US "life expectancy" figure and cast against places like ethnically-homogenous Scandinavia, as if that were a fair comparison!

Many people obsess over the Gini coefficient as well. Yet again, battle is not being done on a level playing field. The US is one country with 50 states with a population of about 300 million. Europe is 29 separate countries with 500 million people. Is it any wonder that the Gini coefficients of the two regions will vary? There's reason to suspect much of the disparity would disappear if each American state was considered as a country unto itself.

The study goes on to make the same points about income that have already been rebutted. They then say this:

[T]axes [as a share of income] are progressive for the bottom 80%. But if we break the top 20% down into smaller chunks, we find that progressivity starts to slow down, then it stops, and then it slips backwards for the top 1%.

Here's a chart from the IRS that basically consolidates this:

Average Federal Income Taxes Paid, as Percent of Income

Income

Average tax rate

Under $75K

6.6%

$75K to $100K

8.5

$100K to $200K

11.9

$200K to $500K

19.6

$500K to $1M

24.4

$1M to $1.5M

25.3

$1.5M to $2M

25.6

$2M to $5M

25.8

$5M to $10M

25.4

$10M or more

22.6

And here's a very good response from Americanthinker.com:

There is a simple reason the "mega-rich" pay a slightly lower average rate on personal income taxes than the merely "rich."  That reason is not some dark secret known only to tax loophole experts.  It is that most of their income is from capital gains, which is taxed at a lower rate than "normal" income.

And there is a simple reason for that: capital gains have already been taxed in the form of corporate income taxes. Warren Buffett likes to include payroll taxes in his little anecdotal calculations, but he neglects to include corporate income tax, inheritance taxes, and other forms of taxes that are paid disproportionately by the mega-rich.

So the supposed evidence that the US tax system is barbaric and quasi-regressive is lacking, to say the least. They then go on to measure the impact of transfer payments on the Gini coefficient, which tells you nothing for reasons I already gave.

The last bit compares CEO pay to production worker's pay. Again, this is extraordinarily disingeuous. Pay qua wages has only been declining because of stupid federal laws that demand you take your pay in the form of benefits. Wages + benefits, i.e. real compensation, has continued to rise uninhibted. As Alan Reynolds writes,

The fanciful claim that everyone except management is now paid less than in the early 1970s is contradicted by every other measure of living standards. The index of real hourly compensation, for example, has increased from 83.8 in 1974 to 123.1 -- a gain of 47 percent.

Your study also tries to blame all this on compensation consultants. Reynolds rips that explanation apart:

Estimates by other critics of CEO pay show [steep] declines [in CEO pay]. Thomas Piketty and Emmanuel Saez gathered chief executive officer pay from the top 100 in Forbes, and that figure fell 54 percent from 2000 to 2003. Lucian Bebchuck and Yaniv Grinstein estimated that among the S&P 500 firms, average CEO pay fell 48 percent from 2000 to 2003. An unstoppable march?

Miss Morgenstern tries to blame the increases (but not the declines) on compensation consultant Frederic Cook, who has been in the business since 1973. If that is to be believed, nobody listened to Mr. Cook until stocks began rising in the Reagan years. After that, he must have advised corporations to increase executive pay when stocks soared, and to cut pay when stocks fell. Yet that is exactly what happens automatically when pay consists mainly of stock or options, rather than salary and perks.

Using the same small sample of executive salaries on which Miss Morgenstern relied, Xavier Gabaix of the Massachusetts Institute of Technology and Augustin Landier of New York University found "the sixfold increase of CEO pay between 1980 and 2003 can be fully attributed to the sixfold increase in market capitalization of large U.S. companies during that period." CEO pay rises and falls with the global value of U.S. companies. That is what "pay for performance" means. Stockholders foot the bill for stock-based CEO pay, not workers or consumers, and stockholders generally like it when the CEO makes money only if they do, too.

The last point in your study is an even more incoherent one, attributing the (nonexistent) fall in worker's pay to low levels of union membership. This is doubly stupid, considering the fact that union membership in the US has historically been low and correlated with a high rate of growth in real income. According to Tom Woods, for instance,

Labor historians and activists would doubtless be at a loss to explain why, at a time when unionism was numerically negligible (a whopping three percent of the American labor force was unionized by 1900) and federal regulation all but nonexistent, real wages in manufacturing climbed an incredible 50 percent in the United States from 1860—1890, and another 37 percent from 1890 to 1914, or why American workers were so much better off than their much more heavily unionized counterparts in Europe.

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tunk replied on Sat, Dec 3 2011 8:59 AM

Birthday Pony:
Nope! Nope! Nothing to see here. Nobody is rich. We're all hurting. And that bum you saw last week is running Goldman Sachs today. Keep moving along...

Birthday Pony, we aren't trying to say that there aren't cases of severe injustices in the US economy today. Doubtless, many of us would agree that many of the rich now have profited at the expense of the taxpayer by socializing their losses, and definitely belong behind bars.

What we're concerned with is whether there is an increasing historical trend in inequality, not whether there are plenty of anecdotal cases of it. For that you have to look at objective statistical data, not sensationalist reports on the nightly news.

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tunk replied on Sat, Dec 3 2011 9:04 AM

Hey, I'm trying to post a rebuttal I just wrote to the study Wheylous linked to, but it says my post is pending moderation. What's the deal? None of my other posts needed to be approved by a moderator.

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I knew you'd reply, my faithful Pony. Would you argue that Japan, Italy, and Mexico are better than the US?

My point is that looking at these statistics and getting outraged is not as justified once you break down these statistics and see that they're very superficial, and that others being richer doesn't necessarily make you poorer (unless, I suppose, BIll Gates decides to buy all the cabbages at your local stores and thus starves you).

Now that I think about it, ha! That sounds like another argument against capitalism. At any time BIll Gates could easily buy up nearly an entire town and have everyone starve! Does he? No.

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tunk:
Hey, I'm trying to post a rebuttal I just wrote to the study Wheylous linked to, but it says my post is pending moderation. What's the deal? None of my other posts needed to be approved by a moderator.

"trying"?  As in plural?  Chill out dude.  It means what it says.  Your post went through, sometimes they just need approval...and we can see it there now, so obviously it's been approved.  All is right in the world.  You can calm down.  You honestly don't see a difference between that behemouth and all your other normal posts?    Obviously it's filled with enough links and graphs to trigger an automatic spam detector.  All it does is shove it over to the mod section so a human can look at it and make sure it's not spam.

You don't need to keep submitting it.  (why do people keep pushing the button after it's already illuminated to show it received the command?)

 

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tunk replied on Sat, Dec 3 2011 11:56 AM

Alright fine. I'm perfectly calm, I was just asking.

For whatever reason, some of us are not personally very familiar with the inner mechanics of internet forums. Perhaps there are other fields of study more rewarding.

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I don't want to make this a big thing.  I honestly do appreciate your contributions and you bring a lot to the forum with informative and well-cited posts like that.  My issue is with someone who obviously has a brain (and one that functions evidently much better than most) not being satisfied with the clear notification that was given, which you obviously read, as your concerned post basically regurgitates what the system tells you.

I have had many posts that got flagged for moderation...(in fact it happens probably at least once a week, as one might be able to guess, given my posts sometimes get as link-filled as your own).  So I'm quite familiar with what the system tells you when that happens.  The system clearly says "POST PENDING MODERATION" and then follows with a little explanation that the post will appear once it's approved by a moderator.  It takes up the whole screen.  There's no way you can miss it.  And as I said, you obviously saw it and read it and understood it.

No one who can read has to be familiar with the inner mechanics of internet forums to understand where their post went and why it isn't appearing in the forum.  It was flagged for moderation and will appear once a moderator approves it.  That's what it says.  It doesn't say there was an error.  It doesn't say your post didn't go through.  It says your post is pending moderation and will appear momentarily.  I do not understand what would possess someone to intepret that as "I need to submit the same post more times...try again and maybe it'll work this time."

Perhaps my response was a bit more curt than necessary but I hope this explains the source.  Apologies if you were offended or hurt by it.

 

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tunk replied on Sat, Dec 3 2011 12:29 PM

No one who can read has to be familiar with the inner mechanics of internet forums to understand where their post went and why it isn't appearing in the forum.

As far as I know, I have a brain and I can read, and I did understand where it went. What I didn't understand was why it went there because it didn't say. That threw me off and so I kind of panicked. I have written other long posts with charts that weren't flagged. If the message read, "Your post contained an abnormal number of links and images and was hence flagged for moderation," I would have grasped it faster than I did since I'm still rather new here. Thanks for the clarification.

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Neodoxy replied on Sat, Dec 3 2011 2:00 PM

I'm going to post some of the things performed by governments which prevent real wages from rising which are often performed by governments which I don't believe have yet been posted.

1. Government spending that is utilied in either unwise ways or for useless things.

The biggest example of this is the military which has trillions of dollars going to it a year, this means that economic developement which could have otherwise been spent going to productive causes is instead spent on tanks and planes to literally blow wealth up if it is ever used. Government of course also spends a large deal on transfer payment and bureaucracy. The fact is that whenever the government spends anything it is likely to be used less efficiently 

http://www.youtube.com/watch?feature=player_profilepage&v=mmAgSOgJ7NY

http://www.youtube.com/watch?feature=player_profilepage&v=IHDqxVsIP7c

This negative effect of spending extends itself to healthcare costs and poor services. This is true in almost all countries, whether public or private, that government intervention in the healthcare industry, either through direct control or through regulation/manipulation, either increases costs or decreases quality.

2. Inequal taxation/tax code

You could argue that this benefits the poorer classes, however the problem is that the tax code has major holes in it, so it's easy for the up and coming rich to be hurt whilst old money already has the entire tax system wrapped around their fingers

3. Bad education

This warrants its own category because of the fact that it is so incredibly important. Now the government has played a massive role in education. It has effectively destroyed lower education and significantly harmed higher education. In lower education it has 

a. Forced children into schools when they could otherwise be learning a trade/self educating themselves/learning general job skills or even enjoying themselves as opposed to learning either nothing at all or things that they will never actually need! When I think of oppurtunity cost there's literally very few better examples than the public education system

b. Killed free thought. Because kids today are almost entirely focused on their studies which happen in a very set method throughout their lives, teacher tells class truth, class learns what other people want with no input, there's relatively little reason why it is that people would maintain independent thought and self reliance when the most important faculty of man, the mind, is being exercised in such a way for the first 12 years of one's life.

c. Harmed entrepreneurship. Entrepreneurship is all about being independent and using one's own judgement based upon reason in the economy. How can this happen when people are taught to think in static patterns and rely upon the will of others to tell them what it is to do? Especially when they have no business savvy because, well, they're in school for much of their lives!

d. Prevented people from actually learning how to learn and to be adaptive. The cirriculum is taught in a specific way, you have to do specific work, there is often little open help, and the kids are already in an apathetic mindset, so of course they don't learn how to learn, they learn how other people want them to learn. This means that they aren't exactly prepared for later life or real learning/critical thinking

e. Waste potential and labor training. Most education today is utterly un-vocational, especially in the United States. This means that kids learn, insofar as they do learn, a bunch of useless facts when at very least they could be being taught things surrounding an actual vocation or they could be able to really choose what it is that they want to learn and pursue their interests as much as possible! I can tell you that highschool is little short of a waste for most people. This also means that the division of labor is literally bastardized because people are being given a relatively narrow education when they could be splitting off into different branches.

f. They kill the student's will to learn. I can forgive for all of the above, it's only slightly more messed up than most of what goes on surrounding government, but this is something that I can never forgive. By the time that most people are out of school they have no real will to learn anymore except  that which they need to for college, they certainly don't think of learning as 'fun' or most likely even 'enjoyable', that which they do consider fun to learn are probably things like fast facts. I adore education, I love the act of learning, I truly do. I hated gradeschool but I love learning, and I'm great at doing so idependently, but if I had not had certain revelations and a family that was very pro-education then I would probably not and that infuriates me.

g. They prevent innovation or actual within schools. School sucks, it has no reason to be innovative or work well or for the students. The quality of American education is terrible, and worldwide I can assure you that education is sub-par compared to what it could be. There's no market mechanism, it's crap and the entire setup is stupid.

h. They act as indoctrination camps. This allows the democratic machine to be even worse than it naturally is, and ensures that nothing is done about most of this stuff. 

http://schoolsucks.podomatic.com/

http://www.youtube.com/watch?v=Bx4pN-aiofw

i. To sum up college education, for the most part it's somewhat uneffective and expensive specifically because the government offers so much aid. This has also lead to the party school culture over time and generally detracts from what college should be for for 70% of people, getting a degree for a job, not this liberal arts 'well rounded student' bull****. Overall, however, American colleges are far better than lesser schools specifically because competition has been allowed

4. Business Cycles. Pretty self explanatory TBH, it also leads to the problem of properly evaluating the value of labor. Also everything that the government does to worsen/prolong recessions

5. Minimum wages and wage increases caused by the law either through payrole taxes, benefits, minimum wages, ECT.

6. Welfare/unemployment insurance. Brings economy under capacity and increase the search time for jobs

7. False solutions. This means that people work entirely through the government, wasting money attempting to influence it. This also means that anything that the government does will be done less efficiently than it could otherwise have been does through the voluntary interactions of people. Have a problem with healthcare? Form voluntary collectives to provide it. So not only does the government perform the services it controls badly, it prevents better solutions from coming around at all

8. International tariffs, quotas, subsudies and the like. Fortunately this is fairly uncommon in our day but it still exists. 

Now some problems with actually measuring quality of living

How do you truly measure real wages? It's a very difficult thig to do properly, a problem which is exacerbated by the recent changes in technology which have occured. The effect of the internet on people's lives can literally not be measured. This also means that the economy has been and is still undergoing serious changes in terms of the labor force.

Also in our day the fact is that the demand for skilled labor has been increasing as opposed to unskilled labor, especially when other markets have opened up for unskilled labor in other areas of the world.

At last those coming came and they never looked back With blinding stars in their eyes but all they saw was black...
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Tonk, here's the data for Gini by state:

http://www-958.ibm.com/software/data/cognos/manyeyes/visualizations/new/scatterplot/gini-coefficient-of-us-states-2006/1

Here's the internationl Gini data:

http://en.wikipedia.org/wiki/List_of_countries_by_income_equality

It seems like the overall gini is lower than when broken down by states (going against what you say), though I am not sure what years the data is from and who made the estimate. Note that on wikipedia the gini coefficients are quite different depending on the organization who makes them.

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Haha, someone on the page for one of the Sowell videos mentioned class mobility and how it affects statistics and said that talking about a top X percent is

like the statistical misunderstanding which goes "I hear that a man gets hit by a car every 8 minutes in NYC" to which another man replies 'wow he must get awfully tired of that'

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I'd also like to be able, however, to say "to an extent, you're right." In a sense, government creates this inequality in the first place.

Ah, there's the rub. How can we get people to hate the government for the inequality it creates and then at the same time get them to believe that the existing inequality doesn't need to be reduced?

"The limits of my language mean the limits of my world." ~ Ludwig Wittgenstein
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z1235 replied on Sat, Dec 3 2011 8:47 PM

Fool on the Hill:

Ah, there's the rub. How can we get people to hate the government for the inequality it creates and then at the same time get them to believe that the existing inequality doesn't need to be reduced?

Where's the rub? Why would you need to worry about reducing inequality after you've presumably eliminated its cause?

 

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Ah, there's the rub. How can we get people to hate the government for the inequality it creates and then at the same time get them to believe that the existing inequality doesn't need to be reduced?

So everything must have only one dimension? The subject is multi-faceted. There can be simultaneous forces acting to create an apparent effect. My argument is

1) Statistics about wealth inequality do not mean that the poor are being trampled per se

2) On the other hand, government does help to increase the earnings of the big businesses

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z1235: Where's the rub? Why would you need to worry about reducing inequality after you've presumably eliminated its cause?

You mean if a thief steals money from me and gives it to his boss, I don't need to worry about getting it back as long as the thief has been caught?

Wheylous:

So everything must have only one dimension? The subject is multi-faceted. There can be simultaneous forces acting to create an apparent effect. My argument is

1) Statistics about wealth inequality do not mean that the poor are being trampled per se

2) On the other hand, government does help to increase the earnings of the big businesses

What do you mean by "per se"? Is the inequality that the government creates trampling the poor or not? I mean, statistics about the number of homes that have been destroyed in Iraq over the past 10 years does not mean that the US has bombed them per se. We could talk about the hypothetical scenarios where such statistics might indicate voluntary economic development (for example, such a statistic might indicate how many old dilapidated houses were replaced by new ones), but the truth is that in this case they indicate an aggressive bombing campaign. Similarly, the wealth inequality statistics indicate massive government intervention in the economy on behalf of the corporate elite.

"The limits of my language mean the limits of my world." ~ Ludwig Wittgenstein
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z1235 replied on Sat, Dec 3 2011 10:17 PM

Fool on the Hill:
You mean if a thief steals money from me and gives it to his boss, I don't need to worry about getting it back as long as the thief has been caught?

By all means, if you can prove someone has stolen something from you, then you should definitely worry about getting it back. Now, who exactly has stolen from you, and what exactly?

Is the inequality that the government creates trampling the poor or not?

How exactly is this entity (inequality) trampling the poor? 

Similarly, the wealth inequality statistics indicate massive government intervention in the economy on behalf of the corporate elite.

How exactly does the wealth inequality between person A and person B, on its own, indicate that one necessarily must owe something to the other? Are you suggesting that wealth inequality would be nonexistent in a world devoid of aggression and government intervention?

 
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Some Inequality in wealth is due to genetics (but I don't think all of it is). Anyways, I saw what I believed to be a good refutation of an inequality graph by Mother Jones. It pretty much confirmed that equality has a negative correlation with interest rates. What Thomas Sowell has written is also good.

http://www.rightcondition.com/2011/10/wealth-inequality-in-america.html

There could be things wrong with it as I just took it at face value, but I think that in a free society inequalities in wealth could be reduced to about 75% of what they are now. For example, I couldn't imagine an economically egalitarian Occupy Wall Street before Lincoln came to power. It illustrate my point, the Jeffersonians were the vast majority and they were the laissez-faire ones vs. the minority Hamiltonians who favored heavy government intervention in the economy which was proven to be for the elites and by the elites. The popularity of the Jefferson and Jackson, the Whiskey Rebellion, and Shay's rebellion (which we know was mostly a tax revolt) also illustrate that point as well as the fact that Lincoln lost more than 3/5 of the popular vote.

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Your article links to this study by the St. Louis Fed, which appears to discuss similar things as Sowell:

http://www.stlouisfed.org/publications/itv/articles/?id=1920

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By all means, if you can prove someone has stolen something from you, then you should definitely worry about getting it back. Now, who exactly has stolen from you, and what exactly?

The government has stolen my money through taxation and has given it to bondholders.

How exactly is this entity (inequality) trampling the poor?

Huh? I was asking whether Wheylous thought it was or not. I take it your answer would be no.

How exactly does the wealth inequality between person A and person B, on its own, indicate that one necessarily must owe something to the other? Are you suggesting that wealth inequality would be nonexistent in a world devoid of aggression and government intervention?

Wheylous said that "government creates this inequality in the first place." So it seems to me that Wheylous indeed is suggesting that wealth inequality would be nonexistent (or at least drastically reduced) in a world devoid of aggression and government intervention.

"The limits of my language mean the limits of my world." ~ Ludwig Wittgenstein
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http://www.stlouisfed.org/publications/itv/articles/?id=1920

Income inequality will still exist even if the income inequality statistics are adjusted to account for the aforementioned factors. Given the negative attention income inequality receives in the media, it is important to ask whether reducing income inequality is a worthy goal of public policy. It is important to understand that income inequality is a byproduct of a well-functioning capitalist economy. Individuals’ earnings are directly related to their productivity. Wealthy people are not wealthy because they have more money; it is because they have greater productivity. Different incomes reflect different productivity levels.

Haha. What else could you expect from the FED though?

"The limits of my language mean the limits of my world." ~ Ludwig Wittgenstein
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z1235 replied on Sun, Dec 4 2011 10:23 PM

Fool on the Hill:

The government has stolen my money through taxation...

It has stolen everyone's money. Get in line. Btw, where's the government going to get the money to pay you (and everyone else) back?

...and has given it to bondholders.

Um, it's the other way around. Bondholders are the ones lending (giving) money to the government. 

Huh? I was asking whether Wheylous thought it was or not. I take it your answer would be no.

I meant, how could inequality (a non entity) be trampling anybody?

Wheylous said that "government creates this inequality in the first place." So it seems to me that Wheylous indeed is suggesting that wealth inequality would be nonexistent (or at least drastically reduced) in a world devoid of aggression and government intervention.

I think he meant that the government contributes towards making the wealth inequality larger. This doesn't mean that all wealth inequality is necessarily created through aggression and government intervention. 

 

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tunk replied on Mon, Dec 5 2011 9:05 PM

Wheylous:
Tonk, here's the data for Gini by state:

http://www-958.ibm.com/software/data/cognos/manyeyes/visualizations/new/scatterplot/gini-coefficient-of-us-states-2006/1

Here's the internationl Gini data:

http://en.wikipedia.org/wiki/List_of_countries_by_income_equality

It seems like the overall gini is lower than when broken down by states (going against what you say), though I am not sure what years the data is from and who made the estimate. Note that on wikipedia the gini coefficients are quite different depending on the organization who makes them.

Yeah, you're right. I shouldn't have said that disparity would "disappear" if you divvied things up by state.

My basic point was that it isn't fair to compare the "income distribution" of ethnically homogenous regions (like Scandinavia) to ethnically heterogenous ones (like the US), because the latter will always tend to have more "income inequality" simply by virtue of the diversity of the population, while the former will tend tohave a more uniform distribution of wealth because of the similar culture, values, experience, work ethic, etc. The following chart might illustrate this:

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Two things Misesesesians hate. Graphs and equality. This thread has both.

First of all, graphs are a mode of empiricism, which we all know is cultural Marxism, and all statisticians are actually Marxists. Except when they make graphs we like. We will take them when we like them.

Second, "capitalist property is inherently inegalitarian" and therefore, egalitarianism is evil, and most likely Marxist as well.

Third, I'll bet there's inequality because of all that integrating in the US. Not because of slavery. Because of integration.

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Malachi replied on Tue, Dec 6 2011 7:41 PM
I am pretty sure that NAP is about the most egalitarian thing possible.
Keep the faith, Strannix. -Casey Ryback, Under Siege (Steven Seagal)
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Rcder replied on Tue, Dec 6 2011 7:53 PM

Two things Misesesesians hate. Graphs and equality. This thread has both.

An appeal to ridicule as well as an unvalidated assertion.

First of all, graphs are a mode of empiricism, which we all know is cultural Marxism, and all statisticians are actually Marxists. Except when they make graphs we like. We will take them when we like them.

Misesians reject the notion of econometric data invalidating economic laws which are derived via logical deduction from the synthetic a priori action axiom.  Instead, Misesians believe that the information gleaned from econometrics can be rationally interpreted through the lens of economic analysis to a certain extent (conditions of cetris paribus never hold in reality). 

What's "cultural Marxism"?

Second, "capitalist property is inherently inegalitarian" and therefore, egalitarianism is evil, and most likely Marxist as well.

Any Misesian would tell you that economics is a value-free, i.e. positive science.  Therefore, when a Misesian makes a proclamation on whether a certain policy or social construct is "evil" they're no longer acting as economists but rather as philosophers. 

You know, these half-hearted attempts at satire would be improved immensely if they even attempted to lampoon what we actually believe in.

Third, I'll bet there's inequality because of all that integrating in the US. Not because of slavery. Because of integration.

What?

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"Misesians reject the notion of econometric data invalidating economic laws which are derived via logical deduction from the synthetic a priori action axiom.  Instead, Misesians believe that the information gleaned from econometrics can be rationally interpreted through the lens of economic analysis to a certain extent (conditions of cetris paribus never hold in reality)."

I hope this is just sloppy wording on your part, because you are essentially saying, "we reject any evidence that doesn't fit what we already believe," which is basically (what I think is) just a vulgar caricature of a methodology I disagree with. I was pretty sure that there's a little more to very hardline atomostic deduction than that.

"What's "cultural Marxism"?"

I don't actually know, but I've been called one (a cultural Marxist) quite a bit. I figured you would know. Does anyone here know?

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I don't actually know, but I've been called one (a cultural Marxist) quite a bit. I figured you would know. Does anyone here know?

This is what I go by:

 

http://www.amazon.com/Cambridge-Companion-Marx-Companions-Philosophy/dp/0521366259/ref=sr_1_9?s=books&ie=UTF8&qid=1323246728&sr=1-9

 

This piece cover almost 0 econ and all sociolology / culture.  As a non Marx expert - it seems like a good book to go by for cultural Marxism  / Mar a sociologist

"As in a kaleidoscope, the constellation of forces operating in the system as a whole is ever changing." - Ludwig Lachmann

"When A Man Dies A World Goes Out of Existence"  - GLS Shackle

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It sounds like you're all having a wonderful debate, and I'mma let you finish, but this argument is the most confusing one of all time.  Of all time!

 

Seriously, this has always confused me.

I am reading someone staunchly attacking capitalism.  Then, in the middle of the paper is usually a small diatribe about income inequality, how big it is, how it's getting bigger, and there is always a ominous overbearing tome.

Imagine you are someone who is a frequent attender of horror movies.  However, nearly EVERY horror movie you've seen, usually incorporates a guy with a newspaper on top of his head.  WHENEVER this guy appears, the rest of the audience goes into a sullen, fear-like trance.  However, you, obviously, remain fairly confused on the whole matter.  So, there's a guy with a newspaper on his head?  Why does he show up in every horror movie I've been watching?  What is the deal with this?  Is there something I'm not getting here?  This is beginning to become a pattern...

THE SAME THING HAPPENS TO ME WHEN I SEE INCOME INEQUALITY STATISTICS.  They are the "Guy with a newspaper on his head" that appears in every capitalist "horror show" diatribe I've read.  What.  Is.  The.  Deal?  So some people make a lot of money?

 

 

 

 

 

 

 

 

 

?

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Rcder replied on Wed, Dec 7 2011 12:22 PM

I hope this is just sloppy wording on your part, because you are essentially saying, "we reject any evidence that doesn't fit what we already believe,"

How did you get that from what I typed?  Is it your contention that evidential statements can only be observations?

which is basically (what I think is) just a vulgar caricature of a methodology I disagree with. I was pretty sure that there's a little more to very hardline atomostic deduction than that.

This has to be a deliberate misunderstanding of what everyone who has ever had a discourse with you has already elucidated; economic laws derived from deduction cannot be refuted from observation for the same reasons that a mathematical proof of the Pythagorean theorem cannot be refuted empirically.  Moreover, because the action axiom is synthetic a prioi (do you know what this means?) it does not require repeated observations to establish its validity, nor is it subject to the constraitns of probability, i.e. it is always and everywhere true.  If you still think I'm constructing a "vulgar caricature" of praxeology then I can send you primary sources on the subject.

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"This has to be a deliberate misunderstanding of what everyone who has ever had a discourse with you has already elucidated; economic laws derived from deduction cannot be refuted from observation for the same reasons that a mathematical proof of the Pythagorean theorem cannot be refuted empirically."

No, I understand that quite well. And mathematics are always correct in a closed system. Economics is dealing with something that is, by nature, not a closed system. It can very nicely prove itself over and over again, but that does not mean it applies to anything outside of itself. Just as any theory, it should be tested and observed to see just how far it goes.

Imagine water droplets. We don't use drops of water to teach sums because its quite possible that one droplet plus one droplet might only make one droplet if they are spaced too close together. Yes, on the atomistic level all the math applies quite well, but it does not tell us about droplets without a number of qualifiers. Does this disprove mathematics as a functional system within itself? No. But it tells us where we shouldn't be using mathematics, or at least how we should be using mathematics.

Then the question becomes whether or not humans are more analogous to atoms or water droplets. There are a number of ambiguities about using a simple eqaution for humans, such as 1 human plus 1 human = X humans. What does the plus mean? Standing side by side? Intercourse? In the case of the latter 1 + 1 could equal 3. And in the case of the former what exactly is the proximity for the "plus"? Once again, there are spots where it applies and spots where it doesn't, and that's just doing arithmetic. Bring in economic equations and theorems and there's even more ambiguity.

To reject empirical data that doesn't stand in line with what you believe doesn't make you more hardcore. And really it weakens your theory to not search for clarity in ambiguous scenarios to see where it applies and where it doesn't. A synthesis of ideas working in conjunction with each other for further clarity and more precise reasoning would probably make your theory stronger than flat out rejecting everything that doesn't fit with your current understanding. But hell, that's the kind of thing you get when "all rights are property rights" or "praxeology encompasses all human action."

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tunk replied on Wed, Dec 7 2011 3:37 PM

I know I'm replying to a troll (and a very skilled one, at that), but here I go anyway.

Birthday Pony:
graphs are a mode of empiricism

Yeah, they are. But praxeology doesn't necessarily reject empiricism (the notion that knowledge comes only or primarily via sensory experience). It was Rothbard, after all, who considered the action axiom an empirical truth, i.e. a law of reality as opposed to a Kantian law of thought.

What praxeology rejects is positivism, the self-contradictory claim that if a statement is not about an empirically observed fact or a tautology, it is completely meaningless (which of course renders positivism itself meaningless).

Praxeology does derive a priori theorems. But as Mises wrote in HA, “All theorems of economics are necessarily valid in every instance in which all the assumptions presupposed are given [...] [but] have no practical significance in situation where these conditions are not established.”

That's to say, it is important to do empirical work to discover whether the conditions for praxeological laws hold in reality.

In practise, therefore, there's no reason why an Austrian shouldn't be comfortable with employing the tools of modern economics to a certain extent. (Since, after all, he is among the few who actually have a coherent philosophical justification for doing so.) He only treats their ability to hit upon truth with a little more skepticism than they have so far been accorded.

Birthday Pony:
all statisticians are actually Marxists. Except when they make graphs we like. We will take them when we like them.

What we've been doing in this thread is examining the evidence that's been given for the supposed increasing trend in income inequality. I went through an entire study and took a look at the claims being made, and in the end I concluded it didn't provide any convincing evidence of that trend.

This is what people who are actually interested in the truth do, you know. We review evidence, compare it against other evidence, and see whether our original hypotheses hold up.

It just so happens that many of the demagogues shouting and screaming about income inequality, so they can acquire more free benefits from the state at everyone else's expense, have not been doing this.

Birthday Pony:
"capitalist property is inherently inegalitarian"

You know, libertarians actually have a theory about property, about what's justly acquired property and what isn't. We don't simply defend every property title currently in existence.

We generally think property is only justly acquired through Lockean homesteading: you only "own" something if it is the product of your blood, sweat, and tears, or if you acquired it through voluntary exchange with its original owner.

We disapprove of the quasi-feudal power structures, where monopoly rents are coercively extracted by the state and its allies from peasants tilling their own land, that prevail in much of the world today.

(In fact, I recommend you read Chapter 11 of the Ethics of Liberty, where Rothbard basically advocates expropriating land from corporations in the developing world and redistributing it to the poor.)

By the way, all this is more or less the same position the younger Marx took:

The Communist Manifesto, ch. 2:
We by no means intend to abolish [...] personal appropriation of the products of labour, an appropriation that is made for the maintenance and reproduction of human life [...]. All that we want to do away with is the miserable character of this appropriation, under which the labourer [...] is allowed to live only in so far as the interest of the ruling class requires it.

Birthday Pony:
I'll bet there's inequality because of all that integrating in the US. Not because of slavery.

I think the evidence does point to that to some extent, yeah. Especially since "slavery" was pretty much a universal phenomenon:

Economic Facts and Fallacies, p. 180:
For centuries before [the Atlantic slave trade], Europeans had enslaved other Europeans, Asians had enslaved other Asians and Africans had enslaved other Africans. [...] North Africa's barbary coast pirates alone captured and enslaved at least a million Europeans from 1500 to 1800, carrying more Europeans into bondage in North Africa than there were Africans brought in bondage to the United States and to the American colonies from which it was formed. Moreover, Europeans were still being bought and sold in the slave markets of the Islamic world, decades after blacks were freed in the United States.

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Tunk, check my latest post. We're almost saying the same thing.

And I'll get to the integration thing when I have some more time to cite the stuff I have in mind.

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