Comments on: Here’s your fucking latte, sir

By: Michael Otsuka

Michael Otsuka — Tue, 17 Aug 2004 07:06:10 +0000

Sebastian: I wasn’t claiming, and don’t need to claim, that the American poor are worse off than the poor in the other 16 countries even if you ignore inequality. This revisits the exchanges you had with Harry here href=”http://www.crookedtimber.org/archives/002218.html” rel=”nofollow”>http://www.crookedtimber.org/archives/002218.html , and I take Harry’s side in that debate.

By: Sebastian Holsclaw

Sebastian Holsclaw — Tue, 17 Aug 2004 00:08:26 +0000

Michael, in order to show how poorly the American poor are doing, you use a measure which uses ‘inequality’ as a huge portion of the ranking. You can’t argue that America’s poor are badly off in absolute terms using a measure that is highly weighted to relative terms.

By: Brian

Brian — Sun, 15 Aug 2004 16:26:36 +0000

I just don’t accept the moral implications of a tight focus on the wealthy countries. Besides, it’s not like the lowest quintile in the US is much worse off than the same in Sweden.

By: Michael Otsuka

Michael Otsuka — Sun, 15 Aug 2004 07:20:26 +0000

Others like dsquared want to point out the paltry nature of the improvement [of the lowest quintile], crucially, without indicating why it should be anything more than paltry given that people’s acceptance of redistributive policies is limited when American poor are way better off than people in many countries. The American poor are way better off than the poor in countries like Somalia with a small fraction of US per capita GDP. But they’re worse off than the poor in each of the following 16 high-income countries: 1 Sweden 2 Norway 3 Netherlands 4 Finland 5 Denmark 6 Germany 7 Luxembourg 8 France 9 Spain 10 Japan 11 Italy 12 Canada 13 Belgium 14 Australia 15 United Kingdom 16 Ireland Only one of these countries (Luxembourg) has a per capita GDP which exceeds that of the US when measured in terms of purchasing power parity. The list was posted by Chris last month href=”http://www.crookedtimber.org/archives/002218.html” rel=”nofollow”>http://www.crookedtimber.org/archives/002218.html and per capita GDP is from this OECD table href=”http://www.oecd.org/dataoecd/48/5/2371372.pdf” rel=”nofollow”>http://www.oecd.org/dataoecd/48/5/2371372.pdf .

By: s_bethy

s_bethy — Sun, 15 Aug 2004 06:03:04 +0000

brian – “Rising inequality” is just another way of looking at what Daniel’s original post discussed – that is, an extended period during which the “rising tide” was quite dramatic overall, but the little scows in the bottom quintile barely lifted at all (which reverses the trend seen from the end of WWII to the early seventies). I merely extended the point to include the 2nd, 3rd, and 4th quintiles (to varying degrees). It’s true that I have not specifically addressed most of what you wrote, but things like “If you have no children, having more income than is necessary to subsist doesn’t buy happiness” and “If lottery tickets and cab rides to the liquor store make people happy then let’s leave it at that” didn’t seem to call for a response.

By: Brian

Brian — Sun, 15 Aug 2004 04:19:04 +0000

s_bethy, we seem to be writing about different things. I was writing about the lowest quintile and you are writing about inequality. Rising inequality doesn’t refute the points I made. I have been long aware of rising inequality and the fact of rising inequality does not contradict what I have written. You shouldn’t expect that your efforts to improve your income should mean that you get a larger share of total income. This is an arithmetic truism. You only have a small influence on the denominator. You can only improve the numerator by your own efforts. Generally, you CAN IMPROVE your income if you make the effort.

By: s_bethy

s_bethy — Sat, 14 Aug 2004 20:41:41 +0000

brian – Okay, let’s look at this in terms of redistribution. Here is a table from the US census that shows the share of aggregate income for each quintile from 1980 to 2000. It shows that for four quintiles, their share of the pie has shrunk, both before and after taxes. Does this mean that the relative “personal effort” of 80% of the country has dropped? I don’t think so. I think it means that we’ve been steadily reallocating the benefits of our economy toward the very top, and I think that’s what lies at the core of Daniel’s complaint.

By: barry ross

barry ross — Sat, 14 Aug 2004 18:45:01 +0000

I would guess that those in this thread who take exception to Daniel’s original post have never lived anywhere near the lowest quintile and have no actual experience of being poor, maybe excepting some small period of time as students. More pertinently, if one checks only the housing costs of the Bureau of Labor Statistics and their changes from circa 1978 to the present, the cost has tripled. Thirty years ago a home loan was typically for 20 years, now it is typically for 30, since the costs for shelter have far outstripped the income gains of even the 50th percentile of households. The costs of transportation, especially of buying a car have similarly risen out of proportion, such that car loans, for the poor , at high interest, are most often for five rather than a former three year period. It is possible that those on the bottom have always been two provider households, but I would suspect a large number of those with children are single parent homes. The fact of the matter is that the poor are as poor as ever and the working poor need and use great ingenuity to scrape by, now as ever.

By: brian

brian — Sat, 14 Aug 2004 18:41:20 +0000

To make that clearer, I can think of two reasons why the improvement, if any, will always be small. 1. Limited acceptance of redistribution. 2. Increasing real incomes may require too much personal effort and may counterproductive as it increases unhappiness.

By: brian

brian — Sat, 14 Aug 2004 18:32:20 +0000

s_bethy, I didn’t say I was comparing rates of growth. I am comparing levels of real income. But that should be clear already. If you have data that show that the lowest quintile improved it’s income between 1940 and 1975, it would only serve to support my argument that economic growth “lifts all boats”, so thank you. All along my point has been 1940-75 was not some “golden era”. There’s been the perverse perception that 40-75 is somehow better than 2004. Even with the shocks to the economy in the past four years in particular, and also the past 60 years, there’s no reason to think that the positive trend in income has been broken. Some who have posted seem to have been made perversely uncomfortable by this good news which has been revealed in the census data which were posted at the top of the discussion. Others like dsquared want to point out the paltry nature of the improvement, crucially, without indicating why it should be anything more than paltry given that people’s acceptance of redistributive policies is limited when American poor are way better off than people in many countries. Leaving things unsaid and undebated is, I think, one of the main reasons there are divergences of opinion. Among other policies, I would say the minimum wage and import duties are redistributive policies even though they don’t look the same as welfare. I believe that there is some portion of the population, perhaps not as large as a whole quintile, for whom real income cannot grow substantially. I think that there will always be subsistence living inside and outside America. If you have no children, having more income than is necessary to subsist doesn’t buy happiness. (Some people do need more to be happy and that’s why I say that a whole quintile may not be the relevant group.) For low skilled people, it may simply make them more unhappy to have to confront their learning and discipline challenges. If lottery tickets and cab rides to the liquor store make people happy then let’s leave it at that. We simply won’t expect more redistribution, probably less.

By: Ruth Hoffmann

Ruth Hoffmann — Sat, 14 Aug 2004 08:00:11 +0000

My sister went on disability in 1995. At that time, she got $640-some per month for disability, which was her only benefit. In Minnesota, which is a relatively generous state, that was too much for her to qualify for Medicaid. They adjusted that figure in the late 90s. Now her $700 per month (rise due to COLAs) does qualify (though of course there are still co-pays). But getting seen as a Medicaid patient is very difficult because reimbursement is so low. As for housing, the market here for subsidized housing is extremely competitive and rent in general is high (though not as high as it is on the coasts). The housing that she did get into cost $450/month, was in a high-crime area, and she was robbed several times. I am finally in a position to intervene, but that’s due to sheer luck. There is no doubt that this is still a better situation than people in more-desperate countries face, but isn’t the point that the US is not one of those desperate countries? Isn’t the point that the US is quite the opposite? Until she fell ill, my sister put herself through a good college working 40 hours per week, graduated with a double degree, and then got a decent job in the computer field. I hope that qualifies as decent enough to earn some consideration in this crowd. I casually invite Jane Galt or any of the other libertarian posters on this board to try the kind of life that a mentally-disabled person in the US gets.

By: chris

chris — Sat, 14 Aug 2004 07:30:36 +0000

Did anyone else catch this comment from Jane: “Reported incomes at the bottom are growing more slowly than those at the top. If you factor in non-cash benefits, however, that changes dramaticallY: after tax, after benefit incomes of the top quintile are only four times those of the bottom, as opposed to 16 times if you look at pre-tax, pre-benefit incomes.” Jane, where did you get these figures? What are these non-cash benefits? I really find it difficult to believe that, including these benefits, median incomes in the top quintile are only 4 times higher than those on the bottom. It doesn’t ring true.

By: Detached Observer

Detached Observer — Sat, 14 Aug 2004 06:53:33 +0000

Dsquared wrote “Every twenty posts or so, I’m going to remind readers that the majority of the improvement “over the last three decades” took place either in the first half of the seventies or the last five years and the actual period of twenty years during which “trickle down” economics was in vogue was quite astonishingly dead for the poor.” So? The relevant claim here is, economic growth has been good for the poor, not reaganomics has been good for the poor.

By: s_bethy

s_bethy — Sat, 14 Aug 2004 04:02:27 +0000

And I’ll remind you that the trend is non-negative and non-zero which proves that things are better than in the 1940-75 era. Are you sure you want to compare the bottom-quintile household income trend from 1940 to 1975 with that from 1978 to 2001? The real increase was far above 100% in the earlier period, but more significantly, household income increased significantly faster in the bottom quintile than in any of the others.

By: brian

brian — Sat, 14 Aug 2004 01:44:01 +0000

And I’ll remind you that the trend is non-negative and non-zero which proves that things are better than in the 1940-75 era.