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Catching up with Conservatism: Obama, OWS Blow Income Inequality Out of Proportion

By
January 19, 2012

Back in December, President Barack Obama rode his inner Bull Moose to Osawatomie, Kansas in a progressive tribute to Theodore Roosevelt. In the spirit of Occupy Wall Street and rising concerns of income disparity, the President lamented, “over the past few decades, the rungs on the ladder of opportunity have grown further and further apart.” According to the President, a child born in poverty following World War II had a 50-50 shot at eventually breaking into the middle class, while, by 1980, that child’s chances shrank to 40 percent. Now, apparently, the likelihood of hitting this nation’s coveted middle-class status is a depressing 33 percent. I know the economy is pretty broken at the moment, but these numbers struck me as unbelievable.

Based on everything I’ve observed from the lifestyle of my parents, my grandparents, Jonathan Franzen novels and 1980’s sitcoms, I simply couldn’t process the administration’s figures. Certainly the Great Recession has not acted as a friend to upward mobility—and I want to emphasize that a rugged belief in the accessible American Dream is a cornerstone of my conservative identity.  But how could the 1980’s and 90’s—the most tremendous quarter-century of economic growth in history—be described with such disgust? Could the decades of personal computers, cabbage-patch dolls, Disney classics, and global markets really have left so many hardworking Americans in the financial Dust Bowl?

According to the Brookings Institute’s Scott Winship, who was equally perplexed by President Obama’s address, intergenerational income mobility for generations X and Y is tough to summarize because data sets are limited. Very few economic studies have tracked children born in the early Reagan years as they grew up—and those kids are hardly 30 today. Based on what Winship does know about the data, he reports that the escape from poverty actually rose modestly, from 51 to 57 percent, when we compare 1980’s children to their predecessors in the beginning 60’s. Because some conservatives praise the Leave it to Beaver-esque social fabric of the 1950’s, the Left often challenges the GOP at their own game and points out the relative lack of income inequality during the Eisenhower years. However, as Emmanuel Saez notes, income compensation among the elites predictably fell during the Great Depression and World War II, and dramatic progressive tax rates between 1914-1945 made it virtually impossible for top capital holders to recover by mid-century.  I doubt that’s a model we want to replicate.

The tents in Zuccotti Park last fall insisted, if anything, on a national conversation regarding the distribution of wealth. Yes, the richest Americans are richer than the Rockefellers and Carnegies of yesteryear. But be careful. Many graphs documenting the seemingly exponential cavern between the haves and have-nots are cut off in 2007. The wealthiest 1 percent took a heavy beating after the financial crisis. If the goal is to cure inequality, recessions are a proven medicine: they render everyone, regardless of class, sicker. Indeed, the rich in 2009 had a smaller slice of income than they did at anytime during Bill Clinton’s second term. But whether its 2009 or 1999, income is not a zero-sum game. Decrying that the elite 1 percent hoard one-fifth of all American earnings doesn’t tell us how the other 99 percent lives. The difficult experiences of the contemporary poor shouldn’t be diminished, yet it’s telling that, according to a well-circulated Heritage Foundation study, the vast majority of Americans beneath the poverty line still have their own refrigerator, multiple televisions, an oven, a microwave, and air-conditioning. The Vanderbilts themselves couldn’t have fathomed these modern amenities.

While its true that quickly eyeballing income charts makes it appear as if people are trapped in the poverty bracket for all perpetuity, statistics themselves don’t have arms, legs, or 2-car garages: people do. One of my favorite lecturers at the Institute of Humane Studies, Steve Horwitz, remarks, “Immigrants and young people entering the labor force come into income distribution at low levels of income. They become the new poor when the old poor slowly move their way up.” Horwitz summarizes, “even though a first glance at the data may make it seem as if the rich are getting richer and the poor are getting poorer, the reality of the United States in the early 21st century is that everyone is getting richer, poor and rich alike.” As for those pesky millionaires at the top, they’re a fleeting income cohort as well. The Tax Foundation states that, of the 675,000 citizens who reported $1 million or more in pre-taxes at some point between 1999 and 2007, only half of them were likely to report feeling like a million bucks even one year later. Before we start moaning about a new Gilded Age, we should note that only a small 6 percent of these tax-payers were classified as millionaires for all 9 years. In short, the millionaires we love to hate aren’t even the same millionaires.  More generally, the Pew Economic Mobility Project reveals that two-thirds of middle-aged Americans belong to households with larger real incomes than their parents did at the same age. What’s more, today’s homes house fewer family members, so income is generated among fewer working adults rather than the crowded boarding rooms of decades past.

Conservatives shouldn’t remain completely mum on the chasm between the rich and poor.  A lack of interaction between the Ivy Leaguer, the farmer, and the short-order cook isn’t healthy for anyone. This trend dries up the kind of neighborliness Robert Putnam highlights in Bowling Alone.  American social capital could use a serious boost. Without it, marriage and religious faith decline, while crime escalates. But the conservative answer to reclaiming our economic spirit can’t be found in the speeches of FDR, LBJ, or even old bootstrapping Teddy Roosevelt. Let’s clean up the tax code, enact school choice, and salute an American Dream that is, quite intrepidly, still holding on.

16 Responses to Catching up with Conservatism: Obama, OWS Blow Income Inequality Out of Proportion

  1. Kieran Reichert '13 Reply

    January 20, 2012 at 5:42 am

    Danielle – what a well-reasoned, well-informed, and non-partisan look at economic inequality.

    The only thing that’s missing is an assessment of what it feels like to be poor. I don’t think that you took into account what it must feel like to see every single family on television with all the modern amenities that you described, and what it feels like to not have those. The fact that more people have these modern “necessities” doesn’t not imply that the poor are better off than they were, only that they respond to advertising to the same – if not higher – degree as
    everyone else.

    Another claim you make that seems rather unsubstantiated and hasty is that wealthy Americans suffered in the financial crisis that occurred after the 2007 data ended. This elite class, I believe, are the ones who did not suffer in the financial crisis, because they were employed in sectors of the economy which did not sag but soared in 2008. They are the CEOs and hedge-funders that made money off the fact that everyone else was losing. I think you’re sense of the American Dream is different than mine; in mine, the wealthiest people in America do not prosper while the rest struggle – there is some solidarity between the top and bottom.

    “However, as Emmanuel Saez notes, income compensation among the elites predictably fell during the Great Depression and World War II, and dramatic progressive tax rates between 1914-1945 made it virtually impossible for top capital holders to recover by mid-century. I doubt that’s a model we want to replicate.”

    Yes, Danielle, I do want to replicate that model, to some extent. Top capital holders are the only people who can afford to support those still struggling to locate their bootstraps, or those whose boots have been long ago worn through. The tax rate for the highest income bracket in 1945 was something like 94%. It now hovers around 35%. I’m not suggesting a complete return to post-WWII taxes, but some medium, fitted to the economic climate, can be found.

    You will disagree with this. I know that. But still, I think it needs to be made clear that some of what you might think preposterous (heavily taxing the top income bracket), is exactly what some people – myself included – think is just.

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  2. New Info Reply

    January 20, 2012 at 9:57 am

    Well, this inspired me to do some research, and I have since found out that my household is barely hovering above the poverty line. Fun stuff.

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  3. Mertz 3rd Reply

    January 20, 2012 at 2:36 pm

    “…the vast majority of Americans beneath the poverty line still have their own refrigerator, multiple televisions, an oven, a microwave, and air-conditioning. The Vanderbilts themselves couldn’t have fathomed these modern amenities.”

    “The Vanderbilts themselves couldn’t have fathomed these modern amenities”? Here’s an enlightening article on the history of the oven, complete with beautifully lit photo of a 17th century BCE oven: http://en.wikipedia.org/wiki/Oven#History

    What would it mean if the poor didn’t own refrigerators and ovens and microwaves? Presumably that they went to restaurants for almost every meal, which generally they don’t, and can’t typically afford to do. on the other hand, you can buy a microwave for 70 dollars (http://www.sears.com/shc/s/p_10153_12605_02069079000P?blockNo=1&blockType=G1&prdNo=1&i_cntr=1327087274600), and a mini-fridge for around $85 (http://www.amazon.com/Danby-DAR0488W-Diplomat-1-7-Cu-Ft-Refrigerator/dp/B001DSIFX2/ref=sr_1_9?ie=UTF8&qid=1327087226&sr=8-9). These aren’t luxuries, they’re practically necessities. You don’t have to be homeless with no money or possessions whatsoever to be poor.

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  4. Mark Reply

    January 20, 2012 at 5:27 pm

    The median income has been stagnant in the United States for the last 35 years, while the income of the top 1% has skyrocketed. Real GDP has about doubled in that time, with the gains going almost exclusively to the top 10% and disproportionately to the top 1%. Yes, there is some churning at the top of the income distribution, but the wealth distribution is more unequal than the income distribution, so it’s not like these things are canceling out. The author talks about the increase in household income for 2/3rds of Americans relative to their parents, which should be a shocking argument against her point of view- if national income has doubled in the last 35 years, but 1/3rd of people live in households poorer than their parents, doesn’t that suggest income inequality is a serious problem? We have twice as much stuff as our parent’s generation, but a third of the country has less than their parents… this sounds to me like a very serious problem, and I hope Obama and OWS continue to beat the drum on the increasing inequality in our country.

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  5. Sara '12 Reply

    January 20, 2012 at 10:51 pm

    “Decrying that the elite 1 percent hoard one-fifth of all American earnings doesn’t tell us how the other 99 percent lives. The difficult experiences of the contemporary poor shouldn’t be diminished, yet it’s telling that, according to a well-circulated Heritage Foundation study, the vast majority of Americans beneath the poverty line still have their own refrigerator, multiple televisions, an oven, a microwave, and air-conditioning.”

    Is it really telling? This seems to be working towards the idea that the poverty of today is so much better than the poverty of yesterday, based on the fact that everyone’s lives are so much better off, due to amenities such as these.

    This may be true in many respects, but having “amenities” (as Mertz 3rd pointed out, at least some of them are practically necessities for modern life in most places in the US) does not translate to not being poor.

    In my experience of only ever having lived in apartments, most tend to have some of these things as part of the deal. Of course you’re still paying for them as part of your rent–no doubt an apartment with no kitchen appliances would cost less to live in–but if you’re renting a place with a kitchen, you’re pretty much guaranteed to have a stove and a refrigerator, if not also a microwave.

    And if someone is able to buy a microwave that lasts them years and which allows them to quickly and cheaply prepare food for themselves, does that really mean that they aren’t poor? Surely being able to buy a microwave does not necessarily mean that one is able to avoid living paycheck to paycheck, etc.

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  6. Tommy Fortuna Reply

    January 22, 2012 at 6:57 am

    I appreciate your use of statistics to make your case, because so often political discourse is devoid of any factual reality, but I think some of your information is inaccurate. Please correct me if I am wrong.

    Before I get to inequality, I just want to make a quick point about your alleged link between religious faith and crime, because nearly every related statistic I have ever seen has indicated that there is an inverse correlation between religiosity and human development, both within the United States and across the Western advanced nations. To quickly illustrate my point, I took the ten most religious states in the country according to both Pew and Gallup polls, which are most of the Confederate States or states claimed by the Confederacy (which I will abbreviate as R for religious) (total population of 53 million): Mississippi, Alabama Arkansas, Louisiana, Tennessee, South Carolina, North Carolina, Kentucky, Georgia, and Oklahoma, and compared them with the least religious states (which I will abbreviate as S for secular) (total population of 43 million): New Hampshire, Vermont, Alaska, Massachusetts, Maine, Connecticut, Rhode Island, Colorado, Oregon, and New York. The ungodly states had dramatically less crime rates per 100,000 people across the board: violent crime, 438 to 355; murder, 5.95 to 3.51; rape, 29 to 24; assault 296 to 221; property crime 3,475 to 2,263; burglary, 987 to 436; larceny 2,255 to 1,677; and motor vehicle theft, 233 to 150. Funny, I would have thought the South’s love affair with capitalism would have led to more respect for private property. With so much crime it is little wonder they are so religious; they are praying for deliverance. But crime is not the only area in which the secular states do better, teen pregnancy rates are 76.3 in the R states versus 65 in the S states, and the percentage of children in single parent families is 39% in the R states versus 33% in the S states. Then there is educational attainment, where in the R states 83% have graduated from high school, 24% have an undergraduate degree, and 8% have advanced degrees compared to 87%, 33%, and 14%, respectively. And if you average the scores of the 4th and 8th grade tests in math, science, reading, and writing administered by the National Assessment of Educational Progress, all but two of the R states fall below the national average (100), with North Carolina at 100.3 and Kentucky at 102.1, whereas all but one of the S states falls above the national average, with Alaska at 98.1. Maybe that is why Southern conservatives hate the Department of Education so much; they are tired of everyone else knowing how poorly they educate their children. I am actually surprised that the S states perform better in academics and educational attainment because, as the Bible tell us “He that spareth the rod hateth his son,” so those loving Christian parents have ensured that every state in the South still has corporal punishment, and you would think beating children in school would increase there desire to be in school. Us S-staters could definitely use child-rearing advice from our R-state brethren, because child poverty in the S states is only 17.3%, and just 19.6% of children under the age of 6 live in poverty compared to 23.7% and 27.4% in the R-states, respectively. Children and toddlers are so needy, and one cannot allow them to take advantage of one’s Christian charity, you really have to start teaching them self-reliance right out of the womb. If you do not teach children to raise themselves up by their bootstraps when their babies and infants when will they ever learn. If they do not grow up poorer, less educated, and more religious than those in the North, they might end up turning to the Dark Side when they’re older- secular progressivism. I won’t continue to beat a dead horse but across all different measures of human development from income, to life expectancy, to educational achievement, etc., whether doing national or international comparisons, religious faith and human development are not positively correlated. If God favors the faithful, then God has a funny way of showing it.

    As far as inequality goes, it is not just income inequality that is the problem, but wealth inequality, which is such a major problem in this country that it could not possibly be blown out of proportion. In 2007 in the United States, the top 1% owned 35% of all privately held wealth; the top 5%, 62%; the top decile, 73%; the top quintile 85%; leaving the bottom 80% of Americans to share 15% of the country’s privately held wealth. The top 1% threshold for net worth was nearly $8.4 million- 69 times the median household’s net worth of $121,000.The massive inequalities in income distribution are unjust and problematic to be sure, but the fact that capitalism is designed to reward capital makes it so that even much smaller inequalities in income lead to massive inequalities in total wealth as the wealthy do not need to take on as much debt, have better access to credit when they do need to take on debt, and are better situated to invest and accumulate assets, etc, allowing those with money to make money off of those who work or who did not have enough initial capital and needed investment or were required to take on debt. For many lower and middle class persons to start out in life, he/she has to begin by taking out loans for college and a car, and when they start a family, a loan on a house. That indebtedness immediately enslaves them within corporate America, where they have to work off that debt so the interest on that debt can go to those with capital. Even in places such as the Scandinavian countries, where income inequality is relatively low, wealth inequality is still quite high due to the fact that capitalism rewards capital, not labor. Obviously, in any economy, there is a need for resource accumulation and allocation in order to facilitate growth, but there is no reason that private citizens must be the ones to fulfill that function and thereby profit off the labor of others.

    According to economist Edward Wolff, the recession only exacerbated the country’s wealth inequality, as median net worth dropped 36.1%, while the top 1% only saw a decline of 11.1%, and the Gini coefficient rose from .834 to .865 (the closer you are to 1.0 the closer you are to complete consolidation of wealth, as you can see, we are quite close to that). I am always fascinated by people who think recessions reduce economic inequality when the lower classes lose jobs, income, tangible assets, whatever financial assets they had, and then they sometimes need to take on more debt or go into bankruptcy, whereas the wealthy see a relatively small loss to their income and a hit to their financial portfolio.

    Of the seven recessions since 1970, within two year of each, corporate profits after taxes as a share of the national income grew, while worker compensation as a share declined. And with the exception of the 2001 recession, each of those recessions was followed by an increase in the Gini ratio for households in the following year, and the Gini ratio has risen every year since 2007. It is true that recessions do sometimes cause a temporary, slight decline in the 1%’s income share, but since 1980 they have just been tiny blips in an otherwise steep upward climb. And as I mentioned earlier, recessions are far less detrimental to their total wealth than to the rest of us. And maybe if some of those at the top stopped trying to manipulate financial markets and tools and actually tried to produce something of value to this world, they might be even better poised to weather recessions.

    I would also like to address this ongoing myth shared by conservatives and moderates alike that Reaganomics/Thatcherism and the neo-liberal policies of the past thirty years have ushered in the greatest economic expansion in history. As you say in your article

    “But how could the 1980’s and 90’s—the most tremendous quarter-century of economic growth in history—be described with such disgust?”

    If by “the most tremendous” you actually mean the worst, which is in fact the case, then you can answer your own question. The Bureau of Economic Analysis actually has GDP data going back to 1929, and only two times in that span has the United States economy failed to double in chained 2005 dollars over the course of a 25-year span, 1969-1993, when we had Republican administrations for 20 of those 25 years, and 1985-2009, when we had Republican administrations for 17 of those years, and a neo-liberal for the other eight. The fact is that the thirty-year period from 1980-2009 is the single worst economic period in our records, with the economy expanding only 118% (the previous low was 141%). Our best twenty-five year economic expansions were actually 1933-1957, and 1949-1973. The fact is growth has been getting worse in each successive decade as we have continued to embrace conservative and neo-liberal economic policies. In the 1960s, with JFK/LBJ and the Great Society programs, our economy grew 51%; in the 1970s, 37%; in the 1980s, 35%; in the 1990s, 34%; and in the 2000s, an impressive 13%. And from 1949-1973, real median income for males over the age of 25 in 2010 dollars doubled, yet from 1980-2009, they actually suffered a 5% decline. In fact, it is now at its lowest level since 1968.

    Also, that Horwitz comment is truly unbelievable. I cannot believe he would try to explain away poverty and income inequality with age demographics. Yes, older people tend to get paid more, but the working age population’s poverty rate has been quite stable for the past half century, hovering around 10%. And income inequality started its tremendous upward trajectory in the 1980s and the early 1990s, at a time when our working population was as young as it has ever been.

    And as far as his assertion that everyone is getting richer, he could not possibly be more incorrect. In 1979, the mean household income of the three lowest quintiles in 2010 dollars were $11,213, $27,889, and $45,981 respectively; when Clinton left office in 2000, they were $12,860, $32,110, and $53,472, and in 2010 they were $11,034, $28,636, and $49,309 (even prior to the recession the three lowest quintiles never enjoyed a single year under the Bush administration in which their income exceeded their 2000 level). The top quintile enjoyed much greater growth from 1980-2000, going from $121,097 to $180,129, but only in 2006 did there income ever exceed that 2000 level and today their mean income is $169,633. According to IRS returns, even the top 1% went from a mean of $1,324,485 in 2000, to $980,087 in 2009. So, it is the exact opposite, everyone is getting poorer, which is not surprising because even the IMF admits economic inequality is detrimental to long-term, stable growth. I am assuming you have seen all the historical income inequality charts, and I doubt it is a coincidence that our period of lowest inequality, the 50s and 60s, corresponds with the greatest postwar American expansion.

    This idea that allowing more wealth inequality and letting the wealthy take a bigger portion of the pie will cause a rising tide that will lift all boats has been a proven failure. But the problem is more than just that the inequality is stifling growth and hurting everyone, the problem is also that worker exploitation is bringing back memories of the Gilded Age. From 1949-1979, business labor productivity per hour grew 131%, while real hourly compensation grew 112%, and manufacturing labor productivity per hour grew 108%, while real hourly compensation grew 102%. But then from 1980-2010, business productivity per hour grew 90%, and hourly compensation went up just 39%, while in manufacturing, labor productivity grew a whopping 171%, and hourly compensation went up just 37%. Furthermore, in 1929, corporate profits after taxes drew 10% of the national income, while worker compensation drew just 54%, and by 1980 corporate profits after taxes accounted for 5% of the national income, with working compensation accounting for 68%. In 2010, after the recession mind you, corporate profits after taxes accounted for a record-breaking 11% of the national income, with worker compensation accounting for just 62%.

    Now for all of recorded history the wealthy have been exploiting laborers, this phenomenon is not new. But the fact is capitalism, especially the present Anglo-American version of it, is just a slightly more benign form of slavery that utilizes the rhetoric of liberty (free markets, right to work, etc.) in order to enslave and exploit people. And capitalists will tell people all these anecdotes about those few rags-to-riches stories and those few lazy welfare queens to get people to think that as long as you put in the effort you can make it, poor people are lazy, rich people are industrious. According to the World Values Survey, 60% of Americans think the poor are lazy, compared to 26% of Europeans, no doubt thanks in part to Reagan’s welfare queen anecdote and the use of racial stereotypes and prejudices. On the other hand, only 30% of Americans think luck plays into income compared to 54% of Europeans, even though the advanced countries of the European Union enjoy far more intergenerational social mobility than we do in America. But because we have been indoctrinated into believing that capitalism adequately rewards effort, against all evidence to the contrary, we willingly submit to our exploitation. The fact is that of those in poverty, 10.4 million spent at least half the year in the work force, making them the “working poor.” In fact, 4.3 million Americans worked full-time, year-round and still fell below the poverty level in 2009. Meanwhile, in 2009, Lawrence Ellison, the CEO of Oracle, was paid $557 million. I find it hard to believe that any two human beings could be so unequal in their value to the economy that one person could work full-time year round and not escape poverty, while another could make more than 25,000 times the poverty rate for a family of four.

    And poverty should not be acceptable, regardless of whether there is high turnover or low turnover. Everyone should have the opportunity to work and earn a living that allows them a quality standard of life.

    “Necessitous men are not, truly speaking, free men, but, to answer a present exigency, will submit to any terms that the crafty may impose upon them.”
    -Lord Henley

    But poverty does not just hurt the individuals in it, because poverty has proven to be a detriment to all of society from its negative effects on crime, lost economic productivity, health care costs, welfare costs, etc. And those problems are likely to continue, as, according to the U.S. Census’ new poverty measure, nearly one in three Americans is classified as either poor or near poor. In 1959, the year before JFK was elected, child poverty was at 27.3% and overall poverty was at 22.3%; when LBJ left office in 1969 those figures were down to 14% and 12.1%, respectively. The Reagan and H.W. Bush administrations fought to get child poverty back up to 22.7% and overall poverty to 15.1% by 1993, but the Clinton administration reduced both rates every single year in office, until they were down to 16.2% and 11.3% in 2000. The W. Bush administration then ushered in a steady increase and now those rates stand at 22% and 15.1%, respectively. Another job well done by conservatives to reverse the progress of society.

    Also, poverty is much more than about what amenities and consumer goods a person happens to own or not own at a given time. Their impoverishment prevents them, materially and, often times, socially and psychologically, from being able to enjoy opportunities that many others in their society get to pursue. Objectively, do they enjoy a better material quality of life than many people of higher socioeconomic status did a hundred years ago, yes, but does that justify condoning their restricted capacities in the modern world? Societies should be encouraging and enabling every person to explore the opportunities afforded by contemporary conditions so that each individual can develop himself/herself as fully as possible, and become the best that he or she is capable of. And societies rely on educated, creative, and productive individuals with a sense of autonomy, self-esteem, and self-efficacy in order to flourish, so it is in societies’ and the individuals’ interest to free people from the capacity/opportunity-depriving condition that characterizes poverty.

    I do not care about economic inequality on principle; if the massive inequality we have today actually had the effect of spurring economic growth and bettering the lives of everyone, like conservatives love to claim, than it would not bother me. But they fact is it actually hurts everybody; it slows economic growth, robs everyone of potential contributions (such as in science and technology) that people in lower classes might have made were they better positioned to more fully develop their skills and talents, and prevents millions from enjoying the opportunities and quality of life they ought to be entitled to as productive members of society. And we are not asking that the wealthy give money to labor, we are simply asking that they give back the money they siphoned from labor. Whether it’s the sports star, the CEO, the banker, or the corporate lawyer in the top 1%, it is the wealth generated by labor that allows for them to be paid so lucratively. Do many 1%ers deserve to be compensated well? Probably. But does the average 1%er really deserve an income 30 times greater than the median income? And if they are going to be paid so exorbitantly then we should return to the tax brackets and rates similar to those of the 50s and 60s. From 1946-1964, the top tax rate was 91% on incomes over $200,000 in current dollars and somehow both the country and the wealthy seemed to do just fine. We were able to send new returned war veterans to college on the G.I. Bill, which benefited all of society by creating a well-educated workforce, and we started to build the interstate highway. And we landed a man on the moon in 1969, when the top tax rate was 70%. Back in those days, we had 24-26 tax brackets. But conservatives in the Reagan/H.W. Bush era ingeniously reduced the number of tax brackets dramatically (getting it down to just two at one point) so that they could justify very low top tax rates. The fact is that people making $500000, $5 million, $50 million, and $500 million should probably be getting taxed at different rates. While I agree that the tax code does need to be simplified, I also believe we need more tax brackets and a higher top tax rate. Of course, we also need to elect more competent politicians so that taxpayer money is spent more wisely.

    As far as social mobility goes, anyone who pays attention knows that the United States has one of the worst records of intergeneration social mobility of any advanced nation, and that the “American” dream is more likely to be found in Canada and the Nordic countries. The fact is that economic and political elites like propagating fictional narratives that provide simple stories for simple-minded people, but for those of us that like to live in a fact-based reality, it is a little harder to digest. Because, in reality, America did start as a land which offered more opportunity than many immigrants’ home countries, but over time capitalists have used this part of our national mythos, sprinkled with a few anecdotes about guys like Henry Ford and Steve Jobs, to manipulate us into accepting increasing exploitation and increasing inequality, and the OECD and other organizations have shown that greater inequality is correlated with lower social mobility. As George Carlin said, “it is called the American dream because you have to be asleep to believe it.” And until we are willing to wake up to reality, it will never be more than a dream, because we will never have an equal opportunity society that rewards effort and hard work until we have an economic model that fosters equal opportunity and is designed to reward work. And that will not happen until people acknowledge that the American dream is mostly fiction in the early 21st century, Anglo-American style capitalism. Capitalism is designed to reward capitalists, those with capital; socialism is designed to rewards labor, those who actually work.

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  7. Adorin' Larson Reply

    January 23, 2012 at 8:59 am

    @Fortuna
    Brilliant, if perhaps the longest comment I’ve ever read. Maybe you should have an actual column.

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  8. Big fan Reply

    January 24, 2012 at 2:20 pm

    @Fortuna
    Fuck. Yes. Well done. My only comment is that, despite your thorough understanding of the wage-slavery system of capitalism, you seem to be unable to let go of the insistence that things would be better under a democratic president/legislature. Wage slavery would still exist, no matter which party is running the country.

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    • Tommy Fortuna Reply

      January 24, 2012 at 6:11 pm

      @Big fan

      Thanks for your comment.
      I actually do completely agree with you that things do not dramatically improve under the Democratic Party, as they are very much pro-capitalist as well. In my own personal opinion it seems that quite often you see the wealthy manipulate social conservatives to exploit as much wealth as they can from labor until an inevitable economic crisis comes along and then moderates come in to make things just bearable enough, for just enough people, that there is not a social revolution. And then, once the economy stabilizes, because most people are traditional-minded, we go back to more conservative leaders. As Jefferson wrote in the Declaration, “All experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed.”

      To be sure, I think Democrats in America and social democrats in Europe have done more to ensure the survival of capitalism than any conservative factions have, because the creation of the welfare state has helped to somewhat disguise how ill-suited modern capitalism is for promoting human flourishing in a 21th-century, knowledge-based economy.

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  9. There's Something In the Air Reply

    January 24, 2012 at 7:04 pm

    It is perhaps worth noting that racial minorities and the low-income population have disproportionate rates of disease, due in many cases to the ills of poverty: improper nutrition, lack of access to preventative care and treatment, and high levels of pollution (water/airborne) in their communities just to name a few.
    http://www.healthreform.gov/reports/healthdisparities/
    http://www.medicalnewstoday.com/releases/148257.php
    There is nothing here that cannot be addressed by legislation. If poor communities had the resources to lobby Congress and state legislatures these issues would be paramount in our national narrative. Instead we are told that regulation is killing us and that envy is the root of disputes of income inequality. Let us not forget that people are dying due to our inaction. Whatever your economic leaning, be it to Friedman, Keynes, or Herman Daly, I repeat, Herman Daly, http://steadystate.org/discover/envisioning-the-good-life/
    these are issues of social justice that need to be addressed; further the impact on the economy due to the loss of health and productivity of workers and students from these areas should be obvious. Numbers or emotions should provide sufficient reason to fight against the status quo that seeks to stifle progress.

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  10. Implorin Larson Reply

    January 24, 2012 at 11:07 pm

    Danielle,

    I’ve been following your column pretty closely ever since you started writing it, and I’ve always been impressed with the fact that nearly all of your pieces have sparked lively and interesting comment threads.

    One thing that you don’t do very often, however, is respond to your critics. Given the massive analysis provided by Tommy Fortuna, I think it’s time that you did so. I mean, the sheer amount of effort he must have put into that thing (good god, did he drop out of school to write that?) deserves some sort of reply.

    You argue that income inequality is not a big problem for the United States today. Tommy demonstrates otherwise.

    Your move.

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  11. Conformin' Larson Reply

    January 24, 2012 at 11:25 pm

    I agree with Implorin.

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  12. Encorin Larson Reply

    January 27, 2012 at 1:04 pm

    Danielle,

    Response???

    Sincerely,
    The Seventeen People Who Approved Of My Previous Comment

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  13. The take-no-BS I'm-on-the floor'n Larson Reply

    January 30, 2012 at 3:43 pm

    Tommy-

    First –– seriously –– that comment is so long. Oh my. I couldn’t read all of it.

    (1) Your comparisons of statistics across states are not sufficient to actually show consistent differences. You have a confounding problem: How do you know the differences you observe actually show the trends you claim, and aren’t just determined by some other thing that you don’t care about and that you can’t observe? Most of the issues you cite have been described as being deterministic processes (so someone thinks they can come up with a set of things that consistently explains variation in the issues you’ve cited), but you’ve got to (A) try harder to defeat these cofounding problems or (B) concede that there are confounding issues and let people subjectively decide what they mean. But what you use here constitute a severe misuse of “statistics.”

    (2) You wrote. “But they fact is it actually hurts everybody; it slows economic growth, robs everyone of potential contributions (such as in science and technology) that people in lower classes might have made were they better positioned to more fully develop their skills and talents, and prevents millions from enjoying the opportunities and quality of life they ought to be entitled to as productive members of society.”

    Um……. How do you know any of this?! You might be right that liquidity constraints hinder income mobility to some extent, but none of these claims have actually been shown in the data, as far as I know. This is because all of these processes take place over time, and time-series data suffer from serious issues that are difficult to resolve. Further, coming up with a valid experimental structure is terribly difficult. Most of these links have endogeneity problems. Can you imagine how a researcher would get a causal link to any of the relationships you cite? For instance, is it that inequality makes it harder for those in the lower class to develop skills, or is that when those in the lower class fail to develop skills inequality increases? I imagine your biases incline you to suggest the former possibility, but how do you **know** the latter possibility is improbable? If you’re going to throw around “statistics,” you have to answer these questions, and not just rely on your subjective biases. If you want your subjective biases back, then you have to give up the ‘stats.’

    You then go on to cite some anecdotes about things that happened while tax rates were high, but all of that suffers from confounding issues that you don’t even acknowledge. Either you don’t know any better or you’re being disingenuous.

    (3) “I also believe we need more tax brackets and a higher top tax rate.”

    Why? Because it feels good? Because top-earners “ought” not make so much? Why? How much “ought” they make? What is sufficient reward for the risks they take on? How do you decide what’s work worthy of top income and what’s not? How do you know this won’t introduce perverse incentives? Do you care? I’m not really interested in your responses to these questions; I introduce them because this issue is terribly complicated, both in terms of any policy change’s effects and in determining as a society what “our” values are.

    (4) “As far as social mobility goes, anyone who pays attention knows that the United States has one of the worst records of intergeneration social mobility of any advanced nation.” Actually, it appears as if income mobility hasn’t changed much over the last 10 years; if anything, it may have increased slightly.

    In sum, stop reading the Daily Kos and the NYT. Think more critically about what you read. You might be unsurprised to find that the media tends to be terribly incompetent when it comes to stats. So whenever you read some claim, ask,

    (A) “HOW DO THEY KNOW?”

    (B) “CAN I REPLICATE THIS?” “HOW’D I DO IT?”

    (C) “HOW DO I KNOW MY INTERPRETATION OF AN OBSERVED TREND IS THE RIGHT ONE? ARE THERE CONFOUNDING FACTORS THAT MIGHT INVALIDATE THESE INTERPRETATIONS? HOW DO I RESOLVE THESE ISSUES?

    Hot debate. What do you think? Thumb up 5 Thumb down 4

  14. TranslationParty Reply

    April 6, 2012 at 9:30 pm

    Microwave poverty line, a Heritage Foundation study: you can distribute. The latest equipment and the Vanderbilts itself…

    Thumb up 1 Thumb down 0

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