Up and down, left and right

Is the legend (and the post) consistent with the horizontal axis? It seems the horizontal axis depicts the median, that is the 50th and not the 10th percentile.

Fascinating.

It isn’t precisely up and down, is it? There aren’t many downward steps, and those few are all accompanied by a rightward shift.

Well, they never happened in sync. If I were determined to tell a trickle down story, I would only need to add a delay or anticipation to the causal linkage.

All the model needs is an epicycle!

On the basis of the data presented in this chart one conclusion is clear: Thatcher really did significantly change the UK; perhaps forever.

Now I understand the cover of The Economist 13th April 2013.

And I quote: “Now especially, the world needs to hold fast to Margaret Thatcher’s principles”. Really?

Never mind, I seem to recall now that Rawlsian inequality has to be a post-tax, post-welfare inequality, since taxation/redistribution is the only way of affecting inequality that’s properly part of the basic structure of society. Anyway, this is great work, a really impressive demonstration.

Veryinteresting, many thanks.

It gets even more interesting if you follow the link to Tom Forth’s site, where he has a similar graph plotting GINI coefficient against household income after housing costs. Here, there is a very strong, consistent and prolonged southwest-to-northeast trickle-down trend under Thatcher, after a wobbly first couple of years: exactly the effect which, in the first graph, never happened. A really difficult case for liberal political philosophy?

Two minor points. The start of the great rise in GINI began under Callaghan, before Thatcher: of course that may have been a random fluctuation, not an effect of a coherent economic policy (my memory of the Callaghan years holds few traces of anything coherent). And the highest point of inequality seems to have occurred in the reign of Good King Gordon.

@Stephen – but why should housing costs be excluded – they are core to life.

Indeed surely this is a clue to how the arrangement of the economy has and is changing. GINI increases are at least partly buttressed by the arrangement of the retail banking and the housing markets.

As a long-term subscriber to the view that the two major parties are largely the same on these issues – Blair most of all – I must admit I find myself surprised and epistemically humbled.

@Stephen – notable comparing the Thatcher with Blair era for median disposable income (i.e. not the graph on CT) that they both seemed to have a similar income growth rate, but rather different GINI growth rate…

I’m not expert on GINI co-efficients, but is the scaling skewing the graph a bit?

I look at the critical Thatcher/Major era and the GINI coefficient rises 36% while income rises abotu 10%, that would imply a 3.5:1 ratio not the near verticle slope that the chart implies.

Looking over the full scale of the graph GINI rose from about 26 to 34 or 31% while incomes approximately doubled, surely there is some inflation effect, but that ratio doesn’t seem nearly as drastic as the chart seems to imply.

Maybe there’s something about GINI that makes the scaling correct, but the two scales are certainly not proportional to one another – which is what would be necessary for the SW to NE slope Daniel is looking for.

“The sort of thing that generates the difficult cases for liberal political philosophy – increases in inequality which nevertheless benefited the worst-off, which would have showed up as a southwest-to-northeast upward slope – never happened.”

The chart doesn’t quite show this. As some of the other commentators have noticed, during the Blair government there was a small increase in GINI (about 1.5%) it appears, but the income of the least well off increased fairly substantially.

I was also surprised that the chart showed a real difference in the records of the two big parties, or more specifically between that of Thatcher and Blair, which combined account for half (21 out of 46) of the years covered. Most of the increase in inequality occurs under Thatcher, going from roughly 25 to 34, while the incomes of the poorest stay flat. Under Blair, as I stated, inequality goes up a little and the incomes of the poorest go up fairly substantially. I had the impression that Thatcher increased welfare spending and that inequality went up much more substantially in the Blair years. I’ve had to revise my opinion of Blair up and of Thatcher down.

For the other half dozen PMs covering the other half of the period, the chart confirms my previously held opinion that the Labour governments of the 60s and 70s are seriously underrated, the chart in those years slopes down and to the right. Under Major, Brown, Cameron, and to some extent Heath it does these loop-de-loops and at first glance I’m not sure what to make of that.

Metatone, I think one can think of this as a two regime period. The choice of regime affected Gini coefficient by changing it, but growth under both regimes benefited the worst off. Thatcher changed regimes, and later prime ministers continued that regime of policy.

The question is whether the welfare state could continue. Much of the economic regulation of the Fordist era was just stupid: see the ICC for details. States like Japan that continued the Fordist regime have not done particularly well. At the same time the much vaunted Nordic model has meant very little regulation, and much more tax transfers.

Barry, you can look up how the CPI is calculated. Hint: it’s not via real wage growth of the 90%.

The only time in the history of capitalism that “growth benefited the worst off” was during its one and only middle class boom. Roughly 1947-1973 in America, and pretty close to those dates in Europe.

It’s the only time in the history of our current economic system when the middle class and the poor actually gained ground on the rich. Before and after, it has lost ground.

And, of course, that’s saying a ton. Because when the top percentiles are already so incredibly ahead of everyone else, you need protracted periods of massive gains (for the middle and lower) to make a significant difference. They were solid during the one and only middle class boomlet, but not spectacular . . . and they were also primarily limited to white males, with exceptions here and there.

It has never, ever been the case — and it can’t be, logically, mathematically — that the top can “grow” without it radically increasing the gap between them and everyone else. They have too much of the total income and wealth for that to happen. The myth we tell ourselves, the one lodged inside all too many heads, is that people can get filthy rich and it doesn’t affect anyone else. Sorry, it does. It always has. Not only in that they can’t get richer in the first place without subtracting income and wealth from those below them; they can’t get richer without putting far more distance between themselves and everyone else. It’s simply magical thinking to suppose everyone can benefit from the growth in riches at the top.

How convenient that the people peddling this alchemy are the rich and their shills.

Zamfir,

I’m not seeing that. The distance between the top and everyone else still increased and was already grand canyonesque. And, again, given the already massive gap, even staying the same is an actual loss. The gap itself weakens the poor and the middle, reduces its net over time, increases its cost of living, especially for big ticket items — education and health care, especially. Asset growth at the top means all of that. A reduction in net worth for everyone else.

You can’t have that without seriously harming everyone else, and it comes from everyone in the first place. The only way for the top to add, is for them to subtract from others.

Also, is there any kind of graph to go along with this one . . . . that would show buying power changes? While the break down of median income is very important information . . . it’s far more useful to note the changes in what the poor and the middle can actually purchase with that median income, especially regarding things they need, and things that give them a chance to live a decent life.

Health care, education, housing, transport, etc.

All too often, the Heritage Foundation retort is to point to the number of household gadgets people now have, without, of course, detailing if they’re used, purchased on Ebay, etc. etc. . . . rented and the like. And then to make this some kind of “proof” that trickle down “works.” Rather than to note the increasing loss of access to the really important things individuals and families need to make a go of it.

Cut through the BS and it’s pretty clear that things are getting worse for the vast majority, and they must, when the top does better. There is no way around this, at least without alchemy.

@Watson Ladd – Krugman posted a good graph on GDP/capita growth recently. When you subtract the demographic issue, Japan has basically done as well as anywhere…

This is a fantastic graph. But I think its important to look at the margin, not just the average, when you are looking at household data – household formation and destruction. New households in the last few years have been suppressed due to high house prices. Its possible that people just have to be richer under Blair to form a new household. If they don’t form a new household, they don’t turn up the in statistics in the same way. I can’t find good data on household under Thatcher to see if that could have had an impact on the average there.

“Off-hand it’s a combination of all those factors…..”

What about the introduction of the minimum wage in 98 ?

Ed @23

Under Blair, … inequality goes up a little and the incomes of the poorest go up fairly substantially.

Yes, that’s what the graph shows (bracketing the household data issue Nick raises @35).

I’m guessing the household incomes of all deciles in the UK went up in the 1997-2007 period. If that guess is correct, economic growth in that decade benefited all income groups, with the better-off benefiting slightly but not much more proportionately (b.c inequality rose only slightly).

What implications does this have? It shows that under certain conditions, caused by a combination of various factors already discussed by commenters above, the benefits of economic growth can be distributed reasonably (not perfectly) equitably. But we already knew that that is *possible* under certain favorable (policy + luck/whatever) conditions. So offhand I’m doubtful that any grand, startling inferences can be drawn from this.

Am I miscomprehending the graph? The run under Thatcher sure looks SW to NE to me.

Thanks, Layman.

Omega Cen @44 — Thatcher-period income started at £6.2K, went down to 5.6 and then up to 6.5. That’s a 4.8% increase in 11 years or (drumroll) 0.43% annualised. The entire series goes from 4.2 to 8.5 over 50 years, equivalent to 1.4% annualised or 1.7% in non-Thatcher years. That 0.43% is probably below the noise level. Wilson saw white-hot annual growth of 2.6% over his first term. It’s just arithmetic.

Thatcher’s period in office put on 9 Gini points, which is the same as the difference between the 50-year endpoints. Gini’s a funny measure, a lot less tractable than growth rates (where are the mathematical economists when you need ’em, eh?), but surely that number’s got to count for something.

To accept this chart, one has to believe that there was dramatic improvement in the quality of life in the UK in the 70s. This was a time, it must be remembered, when the UK was literally unable to keep the lights on for years at a time, and when a bankrupt UK had to go beg the IMF for loans. Even if you don’t think things were actively getting worse (I don’t) it’s hard to argue that they were getting better quite so rapidly. What I see here is not a story of the glorious triumph of british socialism, but the failure of whatever inflation adjustment was used to accurately capture real changes in purchasing power.

Could you post/comment on the charts for the other deciles? That would be really interesting.

Thirding the wish to see the charts for the other deciles.

Looking through Tom’s twitter feed I think he started with a chart for median income, which shows a clear SW/NE slant during the Thatcher years. But up to the lower 25% or so the pattern is basically a S/N vertical. Stagnation at the bottom, with all growth going to the top. What is fascinating is that only the Thatcher period that stands out like that.

I wonder what similar charts for other countries would look like.

Cassander,

Again, the failed experiment of capitalism, which has destroyed hundreds of millions of humans, endless numbers of ecosystems, and more than 50% of animal life on the planet in the last 40 years, had just one middle class boomlet. Prior to that, and after its end in the early 70s, we’ve had accelerating inequality. That boomlet lasted roughly from the late 1940s to the early 1970s in both the Americas and Europe, and had ripples in Asia. Africa has pretty much never had a middle class boomlet in the capitalist era/error. It has pretty much always been a source of wealth for developed nations, but never the beneficiary of its own resources.

So, yes, there was a brief moment in time when the developed world saw some slowing down of inequality. But it didn’t last. The powers that be had their revenge, like the Death Star/Empire striking back. We call it “neoliberalism,” but it’s really just the norm for capitalism. The aberration was the Keynesian Golden Age, and even that was rather limited to white folks.

Technically Britain didn’t, quite, need to go to the IMF. The treasury initial figures made it look like we did, when the final figures were calculated they were rather better than the preliminary figures.

@Plume

When you’ve been reduced to arguing that living standards were higher in the 70s than today, I think your argument is self refuting. But just in case, I’ll pile on anyway.

>If the rich gain 10%, and the poor gain 10%, the rich are still pulling away from the poor at light speeds. So it’s worse than disingenuous to speak of “equal gains,” ever — again, for obvious reasons.

So, in other words, you define progress for everyone as failure. That explains a lot, actually.

>Bottom line, it’s ridiculous to pat ourselves on the back and talk of “gains” for the middle and the poor.

No, it isn’t. There have been massive, real gains in living standards across the globe, for all classes of people, in almost every country. No amount of manichean fantasizing by you, or yearning for the glory days of maoist enthusiasm, will change the fact that the neoliberal era you so detest has seen the largest increase in human living standards in history.

And, of course, the example of a gain of 10% at the top and the bottom was only for the purposes of showing that even this radically increases income and wealth disparities. In reality, the bottom and the middle aren’t coming anywhere near matching raises at the top. It’s not at all close.

In the 1950s, the average CEO made roughly 20 times the rank and file. In the 1960s, it was 25 times. Today? It’s in the 300-400 times range . . . and if the CEO is in a Fortune 100 company, it’s more than a thousand times.

(Larry Ellison in a typical year makes 10,000 times more than his rank and file).

Obviously, workers haven’t kept up — the understatement of the decade. Not even in terms of percentages of their income. And back then, back in the 1960s America, the richest 1% took in roughly 8% of all income. Today it’s nearly 25%. Again, obviously, the gap has accelerated well beyond a matching percentage.

Before and after our one and only middle class boomlet, which was really a white male middle class boomlet, inequality has accelerated dramatically. The graph above? I think it obscures the facts, while people like Harvey, Wolff, Piketty and Stiglitz have brought them to the fore.

Take away the second bread-winner, the credit cards and the multiple mortgages, and the middle class all but disappears. We get obscene highs and obscene lows, then. The right-libertarian’s dream.

@plume

>I wasn’t talking about “living standards,” and you know it. I was talking about reducing inequality across the board

And my point is that this is insane. As long as everyone is getting richer is good. It is not bad just because some people are getting richer faster than others.

> by access to cheap goods and gadgets of dubious quality and no lasting value,

access to goods and services is literally the definition of living standard. Buying power means what it costs you to buy goods and services, and by that standards the wages of the poor buy more stuff today than in the 70s, period.

> forget about the massive increases in health care costs, education, transportation, housing and the fact that most of that cheap stuff is on the credit card

the cost of health/education have not gone up, we buy much more of those things, and that’s good. As for transportation, the costs of that have actually gone down, not up, but you’ve repeatedly made it clear you have no need for research so I’ll let that one slide for now. Housing is perhaps the only place where costs have actually increased, but that’s hard to know for sure, because the amount of housing square footage per person has risen dramatically so you don’t have a real apples to apples comparison.

As for debt, the overwhelming majority of the debt is in housing, an area of economic activity where government meddling has only increased, not decreased, over time, and where massive government subsidies accelerate the cost spiral.

>. Take a look at how many people now have to work in order to have the buying power of one single bread-winner from the late 1940s until roughly 1973.

From the 40s to the 70s, the labor force participation rate a little under 60%, it rose to 65% by the mid 80s. Definitely a large shift, but nothing like the picture you paint. And since then, it’s continually declined. But who cares about facts, right?

>Today it’s nearly 25%.

More like 12.5%, according to the CBO, but who cares about facts, right?

Plume, imagine we burnt down every millionaire’s house, and smashed their cars, etc, and the next day woke up and had exactly the same incomes as before, minus the millionaires. How exactly would our life be improved?

“Plume, imagine we burnt down every millionaire’s house, and smashed their cars, etc, and the next day woke up and had exactly the same incomes as before, minus the millionaires. How exactly would our life be improved?”

Well, if this were the U.S., it would then be something closer to a democracy instead of an oligarchy. So there’s that. Especially if the millionaires included corporations (after all, they’re people).

But that’s a strange scenario: why would we non-millionaires have exactly the same incomes as before? If the resources controlled but not consumed by the millionaires were destroyed, we’d be much worse off. If those resources were re-distributed, we’d be much better off.

“access to goods and services is literally the definition of living standard.”

Really? I can’t imagine how shallow your life must be. But perhaps BB King says it best;

“I think I’ll give up living and go shopping instead”.

If your ever so helpful and benign capitalists, would just stop making the awesome stuff for us – like that CocaCola and fast food that is simply poison, that would be a good start to the road to a better standard of living.

Seriously I have thought about every poor person I know and I cannot see any benefit that they or I have gained from having coca cola in the shops.

In reality coke kills local communities. For example, a couple of decades ago, the small family owned drink factory that supplied the local area, and where my husband at the time worked, was taken over by coca cola and within 3 years that factory had gone bust leaving a large number of employees out of pocket and out of work.

Seriously things are not better for ‘the poor’ now than they were before we had so much stuff to worry about. Life is not improved because I can now borrow enough money to buy a stainless steel fridge that makes ice cubes.

You might learn something if you actually talked to some poor people rather than continue to believe ‘you’ are more intelligent and you can see what ‘we’ need and that having obscenely rich and obviously stupid people tell lies about how clever and good they are is not a problem for the poor.

We won’t see this ‘lacking empathy disorder’ in the DSM any time soon because most of those who construct that diagnostic system suffer from this ‘disorder’.

But perhaps Freud’s defence mechanisms are all that is needed to explain the cognitive mechanisms in which hierarchical individualistic self-serving people project their own motivations, desires and beliefs onto all other people.

These are people who have managed to remain wilfully ignorant of the fact that human beings have a drive to protect themselves from negative assessments and that this tendency is what makes us crooked; it is the drive to understand and critique those tendencies to put ourselves before and over other people that straightens us out.

That is the progress, the growth that raises living standards for all.

Cassander @62,

Even your own CBO link doesn’t say that the top 1% took in 12.5% of all income. It says 16.9%, which is the lowest estimate I’ve seen anywhere.

Piketty and Saez put it at 22.46%, as of 2012:

http://inequality.org/income-inequality/

Between the end of World War II and the late 1970s, incomes in the United States were becoming more equal. In other words, incomes at the bottom were rising faster than those at the top. Since the late 1970s, this trend has reversed.

Data from tax returns show that the top 1 percent of households received 8.9 percent of all pre-tax income in 1976. In 2012, the top 1 percent share had more than doubled to 22.46 percent.

From that same page, a graph going from 1913 – 2012

http://inequality.org/wp-content/uploads/2014/09/GIMP-Top-1p-Share-of-Total-PTI.png?9aeac0

Watson Ladd @64,

Given that no one was talking about burning down houses and smashing cars of the super-rich, your question is a silly non-sequitur in search of . . . . of . . . I have no idea what.

And, Cassander,

It’s nonsense to claim “everybody’s getting richer.” It’s simply not true. As demonstrated, the poor and the middle are losing ground against the cost of living, and have been since roughly 1973. And when compared with the rich, the losses are staggering.

Again, some actual facts — something you’re quite averse to:

http://inequality.org/income-inequality/

Wages

After rising steadily during the three decades following World War II, wages have stagnated since the early 1970s. Between 1947 and 1972, the average hourly wage, adjusted for inflation, rose 76 percent. Since 1972, by contrast, the average hourly wage has risen only 9 percent.

and

CEO Pay

After adjusting for inflation, CEO pay in 2009 more than doubled the CEO pay average for the decade of the 1990s, more than quadrupled the CEO pay average for the 1980s, and ran approximately eight times the CEO average for all the decades of the mid-20th century. (Institute for Policy Studies, Executive Excess 2010)

In 2009, CEOs of major U.S. corporations averaged 263 times the average compensation of American workers. (Institute for Policy Studies, Executive Excess 2010)

CEOs who cut jobs the most cashed in the greatest. In 2009, the CEOs who slashed their payrolls the deepest took home 42 percent more compensation than the year’s chief executive pay average for S&P 500 companies. (Institute for Policy Studies, Executive Excess 2010)

And the impact of inequality on health and life expectancy. Inequality actually kills:

http://inequality.org/inequality-health/

I used to ask my students what were the two largest drug cartels, based on the deliberate shilling of products on discount to garner reliable customers to make the largest profits. They’d say something related to heroine or cocaine or marijuana of course. But of course it’s really Coke and Pepsi.

But now (of course as well) I have to also add–bottled water. We can be lured to be addicted to anything.

@Julie

>What is really puzzling though is the claim that capitalists produce coke to make people’s lives better?

A claim I never maid. but you show that straw man who’s boss!

>It is supposed to be the stupid and lazy people who just happen to benefit when a high IQ person such as yourself just thinks of a wonderful product and makes it happen all by themselves? So perhaps if you kept your coke for yourselves and it didn’t rot my kids teeth and give them too much sugar for a healthy diet, things could be better for we povo’s.

I don’t even know what you’re trying to argue here. If you don’t like coke, don’t buy it, it’s as simple as that.

>I’m happy for there to be rich people if they shut the fck up about how stupid and lazy people like me are and if they stopped buying my government and forcing me to live and work in an economy that makes them even richer and as far as I can see it is the case that everything that makes them rich seems to calculated to make me and mine poorer in spirit and self-respect.

You’re the one arguing the poor are too stupid not to buy things that make them unhappy, not me. I think people buy things that they want, and that people getting what they want is a good thing. You seem to think people should get what you want. How you so seamlessly project that desire to control others onto me is beyond my understanding, I’m not capable of so much self delusion.

>So your shallow and simplistic thinking leads you to conclude that because human beings are such that they like to be social and do what the group does (drink coke because things go better with coke) they are stupid?

Yes, jumping off a bridge because your friends are doing it is stupid. But you’re the one who thinks the poor are doing it, not me.

@plume

>. As demonstrated, the poor and the middle are losing ground against the cost of living, and have been since roughly 1973. And when compared with the rich, the losses are staggering.

No, they aren’t. They are getting more of literally everything.

>Again, some actual facts — something you’re quite averse to:

This isn’t a fact, plume, it’s a statistical construct, a time series built out of 1000 different assumptions. It is trumped by the much harder data on actual consumption. Compared to the 70s, everyone is living in larger houses, going to the doctor more, living in bigger houses, driving more and better cars, and so on. This is utterly indisputable. If you were right and wages weren’t meaningfully rising, then in order to pay for the consumption that is unquestionably increasing, people would have to be getting less of something, somewhere. They aren’t.

>. Inequality actually kills:

Funny how both life expectancy and inequality are rising in most parts of the world. But as we’ve established, you don’t care about facts

>As you know, Cassander is waaaay off the mark when he says access to cheap shit is the way we quantify “living standards.” No. It’s not. Everything depends upon what can be bought, not just any random stuff on the shelf.

yet another argument I never made. I’m not sure who you guys think you’re arguing with, but it isn’t me. But feel free to prove me wrong. Which goods commonly bought today are lower quality than those of the 70s?

Cassander

No you didn’t make the claim; the commenter known as Swami said something like that and I’ve been looking for a way to reconcile that with the whole ideology of libertarianism, ever since. But you came in quite soon after, on that comment thread, as I remember it and were happy to go with the general theme that stuff that capitalism makes *is* good for people.

” but you show that straw man who’s boss!”

Like Plume, I don’t believe in being the boss; I don’t believe in bosses at all. No masters , no guru’s no neo-liberals. You are projecting your own personality traits and preferences onto others again.

“You’re the one arguing the poor are too stupid not to buy things that make them unhappy, not me”

I am arguing that the poor have no choice in what to buy; rich people who want more and more monetary wealth use this wealth to force the poor to choose to drink their crap poison drinks and eat their crap ‘food’ and other useless products.

How can they choose to eat and drink well when there is no information available to them that tells the truth about how things just don’t go better with coke?

But lets get this clear, do you think that poor people are stupid to drink coke or are they smart and freely choosing to drink an overpriced poisonous liquid – and all the other poisons that the good capitalists produce for our consumption – possibly just because these smart poor people are choosing to get diabetes and fat and bad teeth and heart disease later on?

Plume

I don’t think Cassander has a hope in hell of understanding Marcuse. :(

He’d need to read someone with a high IQ and social class to critique the ideas.

As for products that were better in the ’70’s. Screwdrivers and cheap spanners and all cheap tools from the big box hardware stores are crap now; they break and the price and even the brand is no signal as to quality.

Cheap food and drinks as I have already mentioned are crap and cause the increase in health problems that is happening in all western countries.

Cheap clothing made by poor people in Bangladesh is crap, don’t fit and the fabric is uncomfortable and ugly. Synthetic fabrics make people’s sweat stink.

‘how exactly would our lives be improved’

Less distortion of the political process, better access to scarce goods like housing and a slower rate of ecological destruction for starters.

Also, Cassander:

I’ve wasted all too much time debating righties online and in the real world. But, I’ve rarely run into someone who is so blindly loyal to the fiction of magic capitalism, to the ridiculous idea that “everyone” is getting richer and doing better, year after year. The vast majority of diehard, capitalist-loving righties I’ve talked with — even they acknowledge that some Americans are struggling and doing worse. Not you. You use the word “everyone” frequently, and you come off sounding like the authors of those despicable old school texts that tried to describe slavery as a paradise even for the slaves.

Seriously, do you ever bother to read what you post? Anyone who has actually lived in America for the last few decades knows full well that “everyone” does not progress economically, year after year, that tens of millions struggle and fall further and further behind, that their cost of living outpaces their paychecks. That’s reality. What you present is pure fiction and fantasy. It’s the Heritage Foundation on steroids.

Oh, and education costs have exploded because states have radically slashed the money that once went to paying tuition for kids. Beginning in the 1970s, with the Revenge of the Death Star (neoliberalism), states slashed taxes for the rich and slashed public expenditures for everyone else, especially higher ed. That’s why tuition has skyrocketed. Not because state colleges suddenly started to give “consumers” tens, hundreds or thousands of times more for enrolling. It’s really amazing that you could even attempt to rationalize this on the basis of supposedly greater offerings, given the massive cuts in public funding for those colleges. Where did they get all of this money, when their main source of funding was gutted?

Since this is online discussion, and we don’t know each other, our different life contexts, our varying life experiences, I have no way of knowing if you actually believe what you write. But I can say with certainty that if you do believe it, you don’t have any clue whatsoever as to the life experiences of the vast majority of Americans. If you do believe that “everyone” is getting richer, then you’ve been living in some exclusive cave for the rich and privileged and have never seen the light of day.

(& much as I dislike John Rawls I’m not sure I’d want to infer much about political philosophy from one country’s income history over half a century)

“I’ve shown you the statistics, plume. they are inarguable. ”

I think if you stop looking at workforce participation in the aggregate, and instead look at it by age group, you’ll find plume is more right than you are about the trend. The increase in workforce participation in the prime adult group is substantial, while the decline is among the young and the old – and they’re leaving the workforce only because there are no decent jobs for them.

Cassander @91,

Data? What data? You’ve never provided one iota of data to “prove” your absurd assertions. And how could you? It doesn’t exist. There is no data, anywhere, that says “everyone is doing better,” even using your distorted version of “doing better.” That appears to boil down to nothing more than “buy more stuff,” and even that is far from true. The best case you could make is that some people are doing better and buying more stuff. But it’s beyond absurd to say “everyone” is. And I think, down deep, you know this is the case.

That’s what the inequality issue is all about. The few versus the many. You, for some bizarre reason, conflate the two.

More stats that shred your argument to nano-bits:

Top 1% receiving all the post-recession gains

The Decades-Long Rise in Inequality

The rise in the income share of the richest 1 percent remains well above the levels seen for nearly a century. The uptick in 2012, which reversed itself in 2013, probably reflects technical factors, as higher tax rates in 2013 led the rich to shift some income into 2012.

Income share of the richest one percent of families (excluding capital gains)

Take a good look at the graph, and note that it excludes capital gains. Capital gains, of course, being a very large portion of income for the rich. Note, also, that when people like Piketty and Saez calculate these percentages and changes based upon IRS data, they aren’t getting the whole picture. A great deal of wealth and income goes unreported at the top. The IRS itself estimates it loses several hundred billion a year in taxes due to this absence. Off-shoring, Cayman Islands, nano-trades, international trades, etc. etc.

Cassander: “People do not always do what is best for them. Despite this, I still think a system that gives people what they want is best, because while people don’t always know what’s best for them, they almost never know what’s best for other people.”

So, as an obvious counter-example: drinkable, running water into every domicile. The existence of such is much more attributable to “people knowing what is best for other people” than it is “[giving] people what they want”. Across the face of the earth, people have not created the medical/nutritional foundation of our rise in living standards by acting as individual consumers whose desires have been aggregated by private capital.
Rather, these are commonly public works, protected from the marketplace.

Relatedly, if people want to choose Coke or Pepsi, fine. But observe the existence of advertising for these products, and the methods employed by the advertisements. These ads target arational, associative/emotional drives rather than appealing to our equally-natural ability to reason and evaluate. Yet, if the “invisible hand” that aggregated individual choices into mass produced consumer goods is to be socially benign, the “fulcrum” of our choice must itself be rational, and not be prejudiced against our own true needs. We are not a self, we are many selves. Which selves are allowed to participate in the market is a thoroughly social choice.

Thus, advertising really should be viewed as a kind of coercive, “visible hand”: an intruder in the market place. To what degree does the very existence of advertising demonstrate that the capitalist logic of individual choice has been turned on its head?

The airwaves are a commons, the view from a street or highway is a commons, the Internet is a commons. And so even a free-market liberal should be able to muster the theoretical ratinonale for arranging these commons so as to promote a rational self interest that, via market aggregations, promotes the common good.

And of course, given the epidemics of diabetes and obesity in the U.S., this is not an academic critique of capitalism and living standards. This critique of consumerism isn’t even the main point:

The presence of trans-generational inequality in a marketplace full of private actors means that scarce resources will be channeled away from those who have lost the lottery of birth and toward those have won. Without public works, private actors would compete for installing reverse-osmosis water systems for the rich and offer various buckets to the poor. A system to be driven by individual preferences for the benefit of social welfare must have some means to generate effective equal demand among participants, at least for most essential goods. Otherwise, the “invisible hand” simply won’t exist for a large segment of the society that it purports to serve.

Thus even a free market liberal should be a strident advocate for a social leveling of each successive generation. She should have no difficulty with an egalitarianism of childhood education, healthcare, nutrition, and emotional stability. Let the doctor gain access to marginal high prestige goods without letting the janitor go without, and let the public provide the basis for the doctor’s and janitor’s children to attend the same schools and live in the same neighborhoods, etc…

So that’s my capitalist utopia.

Cassander @81,

Yeah, it’s almost like modern schools employ many more people, offer many more services, have much more luxurious facilities, and so on! We are buying much more than we used to and calling it all education. If all you wanted was some guy wearing tweed and a chalkboard, you could still get that for 3oo bucks a semester.

As you know, this forum was started by academics. I doubt you’d find any who would agree with your description of changes to their workplaces. In fact, I would be very surprised if they didn’t tell you it’s the opposite case. That rank and file staff have been cut, their salaries lowered, more and more profs becoming temps instead of full-timers . . . and if there have been upgrades in “luxuries,” the vast majority of that has gone to athletic departments.

As mentioned, I attended universities in the 1970s, 80s and 90s. I saw no such uptick in what I purchased. In fact, I saw smaller classes in the 1970s and early 1980s than in subsequent decades. Of course, that’s just anecdotal and personal observation. But I’ve searched for data that syncs up with your description and can’t find any. As with all of your other contentions, you couldn’t find it, either, or you would have posted it.

Instead, you pulled it out of your . . .

http://www.nejm.org/doi/full/10.1056/NEJMoa1305189

I believe this is the paper. I tried to post the url as a link, but it didn’t work.

“markets are not perfect”

Just remember folks GFC was 7 years ago.

@Julie

>So the market, as you conceptualise it, cannot function in the presence of a democratic government that expresses the will of the people?

Sure, I said that. It was right after I said we should murder all the immigrants and sell their organs to china.

>I love your chutzpah; the way you can imagine that you are being indulgent and having fun looking up stuff.

Well, julie, what can I say, not all of us can achieve your and plume’s zen like transition beyond all need for evidence and facts.

Cassander,

“Well, julie, what can I say, not all of us can achieve your and plume’s zen like transition..”

How do you know what you can do unless you try?

And it it not only zen that offers people a way of transitioning to a state space in which they don’t need to be a boss to fit in to the group and be a human being who matters.

As for evidence and facts; there is increasingly convincing evidence that reveals the cognitive processes that provide you and people with your personality disorder the ability to maintain faith in the dysfunctional beliefs you have about the world and it’s people. These beliefs are not based on *my* reality so I call it ‘stupid’ when you make assumptions about the ‘other’ people not like you but like me, and the evidence you rely on is collected on the basis of stupid assumptions so they lead to facts that are only facts if you still believe in the old paradigm.

You ask What can you say?

You could answer in simple terms the questions I have asked. Remember I am poor so I must be stupid and lazy :) and I may seem to be asking rhetorical questions in an ignorant and rude way, but that may be because of my poor person personality disorder and not because I am un-interested in how you as a member of your group rationalise your behaviour.

I am actually very interested in the way you can ignore the evidence that doesn’t fit with your belief system.

@ Cassander
I’m interested in the subject of workforce participation, so I did a little on-line research.

The general trend of rising participation rates from the 1950s until around 2000 seems common in US, UK and Australia. Largely this appears to be driven by women’s increasing participation, somewhat masking declines amongst men and young people, especially as more young people move into higher education.

Since then there appears to have been some decline, particularly in the US, smaller in UK, not really evident in Australia. In the U.S. the highest rate appears to have been about 67% around 2000, which has now fallen to about 63%, somewhat lower than comparable countries.

Falling participation rates may reflect more people receiving income support because of disability, particularly in older age groups (I am not sure if this is the case in US, it is a slight trend here), and people who are discouraged (often those who have some spousal or family support, give up looking for work and do not seek unemployment benefits). Some older people take early retirement where they can/can afford to, although this trend may be decreasing in Australia.

I don’t agree with the claim (suggested by Plume’s comments above, though probably not intended) that increased participation of women is related to increasing costs of living alone (though it may be related to increased housing costs), as there are many other reasons why women choose to participate in paid work. However in Anerica at least, there appears to have been little increase in real wages for many workers in recent years, so in that sense what Plume says is true – both members of couples have to work to maintain their living standards.

However one more proviso – at least in Australia, the way census information prior to about the 1970s-80s probably disguised much of women’s participation in paid work, which was probably more common than census figures show, particularly for working class women. I think it’s likely to have been true in US and UK too though I don’t have evidence of that.

So overall it’s complicated, but I don’t think you can disprove Plume’s claims on the basis of participation rates, as you tried to do above.

(I haven’t provided links as there are too many, but you can google most of this information. Re the Australian census, I did some research on this some years ago.)

Plume

I haven’t listened to the talk yet, but you might find this worth reading; it seems to be along the same lines.

http://www.pnas.org/content/108/Supplement_2/10918.full

From the abstract;

“The cognitive niche hypothesis overestimates the extent to which individual human cognitive abilities allow people to succeed in diverse environments and misunderstands the role that culture plays in a number of important ways. We suggest, instead, that our uniquely developed ability to learn from others is absolutely crucial for human ecological success. This capacity enables humans to gradually accumulate information across generations and develop well-adapted tools, beliefs, and practices that no individual could invent on their own. We have entered the “cultural niche,” and our exploitation of this niche has had a profound impact on the trajectory of human evolution. In the remainder of this article, we will develop this argument in more detail.”

@val

>However in Anerica at least, there appears to have been little increase in real wages for many workers in recent years, so in that sense what Plume says is true – both members of couples have to work to maintain their living standards.

Well, first I don’t accept that there has been a real wage stagnation. I am aware that some statistics show that, but others do not and the consumption data definitely doesn’t.

But let’s put that aside. The picture plume paints is women moving into the labor force en-masse to support their standard of living, but an overall rise from 60 to 66% participation does not support his story, it’s just not big enough. Nor does the continual decline in male LFP, which persisted even during the 90s boom. If we worked at 60s levels, there’d be about 10% fewer people working, lot but not the titanic shift plume describes, particularly if you’re right that female LFP hasn’t grown as much as the formal stats say.

In the U.S. the highest rate appears to have been about 67% around 2000, which has now fallen to about 63

As I understand it, at least part of this, and perhaps a lot of it, has to do with the fact that the post-2000 “recovery” wasn’t terribly good at creating jobs. And then of course the post-2008 “recovery” was much worse at creating jobs. (Which, yes, Cassander, is definitely totally Obama’s fault.)

I also think that the point about parents/mothers having to work more than they might like is particularly relevant in the US because of the lack of universal paid maternity leave provisions.

@val

>As I said, I don’t think Plume intended to suggest that women moved into the paid workforce only (or even mainly) to support a standard of living. But I think his actual contention, that in families now many parents have to keep working (and in particular, working longer hours than they might like) to maintain their standard of living, is probably justified particularly in the American context.

“some people are working more than they’d like because they want money” is not a meaningful statement. Plume claimed that it now took two people to provide the standard of living that one used to. That it implies that we now have many more people working than in the past, which we don’t. About 20% of those that used to not work are now working, but 8% of those who used to work have stopped. a 12% shift in non workers isn’t nothing, but it’s not world changing either.

Plume is also flatly wrong on the consumption side, the two working now have a massively higher standard of living, but that’s a separate question.

@Watson Ladd

>Pointing to increased populations doesn’t explain why the costs have to rise as much as they have. The real story is one of refusing to discipline middle management and its empire building tendencies.

If you double the size of a school, you will more than double the number of full time administrators right out of the door. And after, as you say, they will reproduce like bacteria unless closely monitored. But even if you assume that the per student increase is small or zero, the effect on education spending, either in terms of government budgets or share of GDP, is huge, which is what many of the statistics talking about increasing costs are actually measuring.

“That it implies that we now have many more people working than in the past, which we don’t. About 20% of those that used to not work are now working, but 8% of those who used to work have stopped. a 12% shift in non workers isn’t nothing, but it’s not world changing either.”

Each of these statements is false, as least as relates to your argument. You’re wrong, because you continue to look at labor force participation in the aggregate. We do in fact have more people working now than in the past. The increase in labor force participation among prime-age workers has increased by much more than 20% since 1948. The percentage of those 55 and over who are working is also rising, because they must work in order to survive. The only age group with declining work force participation is the young, because there are no jobs for high schoolers anymore, and relatively fewer jobs for young people in general. Adults now work in part-time jobs once done by school kids because they have to.

Layman,

Very true.

I haven’t researched this, and would love to hear from people who have . . . . but it makes sense to me that women weren’t always even counted as a part of the workforce, so their absence wasn’t a normal part of the total percentage. It is now. I could be wrong about that, but I don’t think so. My guess is government projections in the past assumed women wouldn’t be in the mix, would be at home, primarily . . . which makes me think of Katrine Marçal’s recent Who Cooked Adam Smith’s Dinner, which sounds like a very important read.

Publisher’s blurb:

It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest

When Adam Smith wrote that all our actions stem from self-interest and the world turns because of financial gain he brought to life ‘economic man’. Selfish and cynical, economic man has dominated our thinking ever since and his influence has spread from the market to how we shop, work and date. But every night Adam Smith’s mother served him his dinner, not out of self-interest but out of love.

Today, our economics focuses on self-interest and excludes all other motivations. It disregards the unpaid work of mothering, caring, cleaning and cooking. It insists that if women are paid less, then that’s because their labour is worth less – how could it be otherwise?

Economics has told us a story about how the world works and we have swallowed it, hook, line and sinker. Now it’s time to change the story.

In this courageous look at the mess we’re in, Katrine Marçal tackles the biggest myth of our time and invites us to kick out economic man once and for all.

This is on my shortlist of new book purchases.

Layman @ 121
“In the U.S. the highest rate appears to have been about 67% around 2000, which has now fallen to about 63%, somewhat lower than comparable countries.”

FFS! Labor force participation for 25 to 54 year olds – which is to say, the group where you find married couples! – is over 80%, up from around 60% in 1948. What’s wrong with you?

Plume – the figures I have cited are for total participation and include women at both times, although they probably under-represent women’s participation in paid work in the earlier periods, as I also said. I have actually researched this issue for my MA in Australian social history. The issues are probably a bit different in different countries, but there are probably some important parallels too.

“is this directed at me? ”

No.

engels – I actually did also have a look at the UK figures briefly – recognising that’s where the debate started – just have limited time as I said

“Ok – it was me that actually used those words”

Sorry, that was sloppy of me.

The numbers are available by gender as well, so if you’re interested in the rate at which women joined the labor force, you can get at it directly. Using the aggregate participation rate, as Cassander does, disguises what’s happened – many more married couples both working, the rate peaking at about 85% just before the financial crisis. It is down slightly from that peak, largely because of the lack of jobs and the impact of long-term unemployment.

@130
No worries. How do you get the breakdowns by sex for that age group though? I couldn’t see that age group by male and female.

@131 Plume

I didn’t think you were suggesting any particular reason, it’s just that it could have been read that way. But as far as “mind-reading” – you don’t have to be a mind reader, you just have to ask. My research didn’t look specifically at that question (why women wanted to go back to paid work after having children) but I’m sure there’s research that did and does.

(I looked a bit at when they wanted to go back, which varied quite a bit, but none of them had really wanted to go back to paid work full time before the baby was one year old, even where they had actually done so, showing again the importance of maternity leave. This was a small scale qualitative oral history project with 18 women as part of a larger historical study on maternity and work)

Thanks for the link about non market work. Our Bureau of Statistics does some work on this too and includes unpaid household work and voluntary community work, which in total they estimate to be worth about 50% of the value of market/paid work. http://www.abs.gov.au/Ausstats/abs@.nsf/Lookup/6CD7146F4D3CAFC9CA256A790082D9FC

I still think that they are probably under-estimating its value, because of ideological/habitual thinking/epistemological reasons, but at least it’s a start.

There’s a good article by Marilyn Waring about the limitations of economic statistics and their gendered nature, I think I’ve mentioned it before but will send the link again if I can later.