Income Inequality vs. Lifestyle Inequality

While the amount of wealth controlled by the top 1% is at record highs, real inequality is smaller than ever.

Tyler Cowen‘s American Interest essay “The Inequality That Matters” has sparked some interesting commentary on the wealth of bankers.  But, while that is indeed the meat of the piece, the titular topic is actually more important to the 99 percent of us who aren’t hyper wealthy bankers, athletes, and entertainers.

[T]he inequality of personal well-being is sharply down over the past hundred years and perhaps over the past twenty years as well. Bill Gates is much, much richer than I am, yet it is not obvious that he is much happier if, indeed, he is happier at all. I have access to penicillin, air travel, good cheap food, the Internet and virtually all of the technical innovations that Gates does. Like the vast majority of Americans, I have access to some important new pharmaceuticals, such as statins to protect against heart disease. To be sure, Gates receives the very best care from the world’s top doctors, but our health outcomes are in the same ballpark. I don’t have a private jet or take luxury vacations, and—I think it is fair to say—my house is much smaller than his. I can’t meet with the world’s elite on demand. Still, by broad historical standards, what I share with Bill Gates is far more significant than what I don’t share with him.

Compare these circumstances to those of 1911, a century ago. Even in the wealthier countries, the average person had little formal education, worked six days a week or more, often at hard physical labor, never took vacations, and could not access most of the world’s culture. The living standards of Carnegie and Rockefeller towered above those of typical Americans, not just in terms of money but also in terms of comfort. Most people today may not articulate this truth to themselves in so many words, but they sense it keenly enough.

Not only do lower middle class Americans live better by almost every measure than their wealthy counterparts of a century ago, there are many ways in which they’re better off than the rich of even fifteen or twenty years ago.  Technology, particularly in medicine, information, and entertainment, has moved at a lightning pace with fantastic changes having occurred right before my eyes.

While there’s simply no doubt that being wealthy — or even in the comfortable professional upper middle class — allows parents to confer untold advantages to their children, the differences between the well off and the fabulously rich are relatively modest.  Going from making $30,000 to $60,000 in annual salary makes a profound difference.  Doubling it again to $120,000 makes less difference in day-to-day lifestyle but does make nice vacations, private school for the kids, and other luxuries more easily affordable.  Doubling it again to $240,000 may mean a second home and a fancier lifestyle.

But at some point it’s meaningless.  Is Bill Gates living more lavishly than Tiger Woods?

Earlier this week, Cliff Lee, the hottest free agent in Major League Baseball, left close to twenty million dollars on the table to sign with the Philadelphia Phillies rather than the New York Yankees.  But he apparently decided that his social and family life would be more comfortable in Philly and that, once you’re making over $20 mil, the rest is pretty much funny money, anyway.

Then again, Lee’s decision was unusual:

A neglected observation, too, is that envy is usually local. At least in the United States, most economic resentment is not directed toward billionaires or high-roller financiers—not even corrupt ones. It’s directed at the guy down the hall who got a bigger raise. It’s directed at the husband of your wife’s sister, because the brand of beer he stocks costs $3 a case more than yours, and so on. That’s another reason why a lot of people aren’t so bothered by income or wealth inequality at the macro level. Most of us don’t compare ourselves to billionaires. Gore Vidal put it honestly: “Whenever a friend succeeds, a little something in me dies.”

Most free agent athletes will go for the bigger salary — even if it means no improvement in lifestyle or, indeed, less take home pay because of higher taxes.  Salary is an indication of respect and it can chafe the ego to see someone you consider a peer, much less someone less accomplished, drawing more money.

Occasionally the cynic in me wonders why so many relatively well-off intellectuals lead the egalitarian charge against the privileges of the wealthy. One group has the status currency of money and the other has the status currency of intellect, so might they be competing for overall social regard? The high status of the wealthy in America, or for that matter the high status of celebrities, seems to bother our intellectual class most.

While there are other factors at work, I think this is right.  Intellectuals chose a line of work that pays reasonably well but much less so than fields that require comparable smarts and education.   They tell themselves that the psychic rewards of the life of the mind more than makes up for the difference.  But human nature makes sure they resent the hell out of those who make more money just the same.

FILED UNDER: General,
James Joyner
About James Joyner
James Joyner is a Security Studies professor at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. Brian Knapp says:

    This seems to make a good case then for a heavy progressive tax.

  2. Keith Ivey says:

    There is a huge difference between making $60k and making enough money that you can quit tomorrow and have more than enough money to live out the rest of your life free to do whatever you like. Of course the difference between making $20 million and making $50 million is meaningless, but that’s not the inequality people are talking about. In fact, the meaninglessness of the difference is all the more reason why a preferable income distribution would have more of that $50 million going to people whose lives it would actually improve. Not that there’s a simple answer to getting there.

  3. Once again, can we distinguish between wealth and income? They are not the same thing. How many times does this have to be said to prevent yet another call for taxing people making money but let’s leave people who already have it alone. Nothing promotes class division and even greater income stratification than these ridiculous calls for ever greater progressive taxation levels on income.

  4. floyd says:

    “Not that there’s a simple answer to getting there.”
    “”””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””
    True, but there’s a lot of simple people pushing communism, which simply makes prosperity a punishable offence.

  5. john personna says:

    “Not only do lower middle class Americans live better by almost every measure than their wealthy counterparts of a century ago, there are many ways in which they’re better off than the rich of even fifteen or twenty years ago. Technology, particularly in medicine, information, and entertainment, has moved at a lightning pace with fantastic changes having occurred right before my eyes.”

    The link I gave you yesterday says that the number of “good years,” that is “life expectancy – years of chronic illness” has gone down, not up.

    You can be sure it has gone down more for the poor. Take that to the bank … if you are fortunate enough to have one, that is.

  6. john personna says:

    Overall, I think your reading of Cowen hit the best bits. Perhaps because that is because you started with the “middle class Americans live better by almost every measure than their wealthy counterparts of a century ago” trope and read for reinforcement.

    A less expected, or accepted, paragraph might be this one:

    For the time being, we need to accept the possibility that the financial sector has learned how to game the American (and UK-based) system of state capitalism. It’s no longer obvious that the system is stable at a macro level, and extreme income inequality at the top has been one result of that imbalance. Income inequality is a symptom, however, rather than a cause of the real problem. The root cause of income inequality, viewed in the most general terms, is extreme human ingenuity, albeit of a perverse kind. That is why it is so hard to contro

  7. john personna says:

    What early morning no-coffee brain affect made me type “hit” when I meant “missed” the best bits 😉

  8. mantis says:

    You write about income inequality (or lifestyle inequality) and ignore the poor entirely? That’s an….interesting take.

    Just so you know, a bit more than 14% of the country lives in poverty. It’s even more for kids, at about 20%. That’s 15 million children.

    What does it mean to live in poverty? For a two adult, three child home the income threshold is under $25,603. For less kids or parents, the numbers are lower, down $11,161 for a single adult with no kids.

    While Tyler Cowen might “have access to penicillin, air travel, good cheap food, the Internet and virtually all of the technical innovations that Gates does,” other than penicillin and cell phones, chances are the vast majority of those poor Americans do not have such access.

    While it’s true that the middle class takes for granted a lot of things that folks 50 or 100 years ago would see as lavish luxuries, much of that is not accessible to the poor. They do get some things the middle and upper classes don’t, though, like much higher rates of asthma, diabetes, heart disease, crime, violence, and earlier deaths.

    I guess I can’t blame you for ignoring the poor in your post. Cowen largely ignores them too, noting that income inequality between the middle and lower class hasn’t grown much in recent years as it has between the rich and everyone else, but he forgets to mention that it hasn’t shrunk any either. We still have millions of poor people, but as Cowen notes, they get to shop at WalMart! So, it’s all good.

    But really, who cares if the ultramega-insane rich don’t live demonstrably better than the super rich, or if well-paid “intellectuals” resent the “lifestyles of the rich and famous?” What does that have to do with anyone you know, or anything you care about?

  9. sam says:

    @Charles

    “How many times does this have to be said to prevent yet another call for taxing people making money but let’s leave people who already have it alone.”

    Does this mean you’d support a higher estate tax?

  10. wr says:

    And of course this all misses the dinosaur in the room — the reason the rich have so much money is because we’re busy bankrupting the country shovelling money at them in the form of tax breaks, subsidies, and other scams. While James proudly sings hosannas to the comfortable life we all lead here, he forgets that because of the economic situation half of our elected leaders are declaring that we have to destroy the social safety net, eliminate all those icky freebies for the poor and middle class like social security, school lunches, public education, medicare and the rest. So if they have their way, the rich will still have access to the best things in the world, and the rest of us will be scraping pennies together to afford that penicillin.

  11. JKB says:

    Intellectuals chose a line of work that pays reasonably well but much less so than fields that require comparable smarts and education.

    But what really chafes them is when those whom they consider lesser in smarts and education make more money. I used to work research vessels. On day a biologist (BS or MS, I doubt they were a PhD) asked my why the engineers made so much money. On this ship none of the engineers were maritime grads, having worked their way up from the bilge, i.e., not formally “educated.” The biologist was quite distressed at my reply that it was because we needed them for water, power and propulsion and that when we pulled in there’d be another 5 or 10 biologists standing on the dock waiting to take this biologists bunk. What may drive academia’s disgust with capitalism is that in the rough and tumble world of supply and demand it isn’t how smart or educated or intellectual you are but whether you can supply something in demand.

    I remember back around 2000, the WP was replete with stories about those people, i.e., the NoVA high tech (Worldcom) people, were bumping the DC feddies from the social spots with their “money.” Of course, the tech bubble burst and in traditional DC fashion the high flyers were found to have been scammers but the tone was quite distressing surrounding the displacement of the betters by mere business types.

    It was around that time I read “Bobos in Paradise”. Really DC makes much more sense when you view it as a continuation of high school with cliques and one-upmanship.

  12. Steve Plunk says:

    I can’t help but notice the growing envy and greed but it’s the progressives who show it. they want to take and take through higher taxes while those they take from just want to produce and earn. It sickens me to see so many who feel they have a right to force others to live to their expectations.

    I’m not rich but don’t begrudge those who are and find those that do carry that envy to be petty and immature. It takes a special type of hypocrisy to call people greedy while you promote the government taking from them for your own desires.

  13. Keith Ivey says:

    JKB, if the high-flyers were scammers, then weren’t the people who were disgusted with them and didn’t think they were worth the money right? Surely the past decade has demonstrated that the market isn’t always right when assigning value, especially at the high end of the income scale.

  14. john personna says:

    Steve Plunk, Cowen frames his piece around the absence of envy as a political motivator, not its presence, or prominence, even among “liberals.”

    As he says, the estate tax is broadly opposed.

    (I support that tax, not for reasons of envy, but for reasons of political and economic philosophy. This is America. We should all get in the game. We shouldn’t have generations of idle rich. Euro-trash are bad enough, without breeding our own version.)

  15. Rick Almeida says:

    they want to take and take through higher taxes while those they take from just want to produce and earn.

    Plunk, do you think “progressives” are poor? I thought the conservative line is that progressives are educated, wealthy, ivory-tower elites. That would make them the people who actually pay boatloads of taxes.

  16. PD Shaw says:

    The world will only be a just place when doctors of philosophy become king and all kings become doctors of philosophy.

  17. James Joyner says:

    @mantis and @john personna

    The poor aren’t really part of this discussion. The “income inequality” conversation of the last couple years has focused almost entirely on the top brackets of the top 1%.

    @john personna

    The intro to the post specifically said that I was focusing on the part of the Cowen piece that everyone else was skipping over. That high finance has a certain “game” aspect to it really doesn’t have anything to do with the lifestyle inequality topic.

  18. Stan says:

    At one point during the mid 90’s my wife and I spent a few months in the Netherlands. While there I read the results of a Wall Street Journal interview of Marty Feldstein, a well-known conservative economist who served for a while in the Reagan administration. Feldstein discussed the economic situation in the US in his interview. It was great, he said, except for the lousy income distribution, but that wasn’t something Republicans worried about. That stuck in my mind. Yes, Feldstein seemed to be saying, we’ve developed into a country of haves and have-nots, but who cares?

    I can see from Joyner’s original post and from many of the replies that income inequality is still not the kind of thing that Republicans worry about. This raises the question as to whether there is ANY distribution of income, no matter how unequal, that conservatives might regard as bad for the country. I expect the answer is no, and to my mind that’s part of the reason why we’re in decline.

  19. john personna says:

    OK, so the “middle class Americans live better by almost every measure than their wealthy counterparts of a century ago” is your thing.

    I’m not really sure that I need to engage that, but if I did, the link I mentioned about declining health is a good one.

    Or, I might ask about the number of Americans on food stamps. Do you count them as “better off” today?

  20. john personna says:

    Overall, I have never been that interested in “inequality” discussions. That’s because they focus on the breadth of the curve rather than the distribution beneath it.

    I do think we have a problem with people falling out of the middle class, and an entire generation little prepared for retirement. Those groups are probably in the inequality numbers somehow, but inequality is not the direct path to those discussions.

  21. ratufa says:

    Some of the main points from the Cowen article are:

    — The share of income of the richest 1% (and this effect is stronger if you go to the richest 0.1% or 0.01%) of Americans has grown a great deal since 1974.

    — Growth in incomes for people working in the financial industry is a major driver of the growth in income share for those in the top 1%.

    — A major reason financial sector incomes have grown is because of financial companies “going short on volatility” and doing other trading strategies that have the long-run effect of corroding productivity since “what the banks do bears almost no resemblance to a process of getting capital into the hands of those who can make most efficient use of it.”

    — When things go wrong, such as they did in the latest crisis, taxpayers unavoidably (that is, if you want to avoid 25% unemployment) wind up paying the price for bailing out companies, pay the cost of unemployment and other safety net programs, etc. The main players in the financial industry who have caused the mess have usually made their millions by then and come out of it in pretty good shape.

    — As Cowen put it: “For the time being, we need to accept the possibility that the financial sector has learned how to game the American (and UK-based) system of state capitalism. ”

    So, why it is so terribly wrong to have progressive tax levels on income, particularly the incomes of people at the very very top of the distribution (1% or higher)? Should we be going after the financial industry specifically, instead, perhaps?

  22. James Joyner says:

    @Stan:

    I don’t care about how much money Bill Gates has compared to, say, programmers at Microsoft. I do care about opportunity and poverty, both of which have policy consequences which may lead to redistribution. I’m just not interested in redistribution for the sake of “fairness” or “equality.”

    john:

    Those are real concerns to which I don’t have any obvious solutions. I truly worry — and have for years — that we’re moving into an economy that has little use for those who don’t have above average intelligence, skills, and training. It’s increasingly hard to make a decent living if you weren’t born with the right tools.

  23. john personna says:

    “So, why it is so terribly wrong to have progressive tax levels on income, particularly the incomes of people at the very very top of the distribution (1% or higher)? Should we be going after the financial industry specifically, instead, perhaps?”

    Indeed. Especially given that we can’t pay bills. Instead we borrow from these same clowns to float a debt.

    Brilliant!

  24. James Joyner says:

    @ratufa

    We actually have a progressive income tax system. But the answer to the problems you cite isn’t to take more money from high earners but rather making people accountable for their actions. Bailouts do just the opposite, divorcing risk from reward.

  25. sam says:

    For me, the interesting part was this:

    [L]arge numbers of Americans oppose the idea of an estate tax even though the current form of the tax, slated to return in 2011, is very unlikely to affect them or their estates. In narrowly self-interested terms, that view may be irrational, but most Americans are unwilling to frame national issues in terms of rich versus poor. There’s a great deal of hostility toward various government bailouts, but the idea of “undeserving” recipients is the key factor in those feelings. Resentment against Wall Street gamesters hasn’t spilled over much into resentment against the wealthy more generally. The bailout for General Motors’ labor unions wasn’t so popular either—again, obviously not because of any bias against the wealthy but because a basic sense of fairness was violated.

    It’s a basically Rawlsian point. Most of us do not think the income distribution is unfair because we don’t have the sense that the really (really, really) wealthy are getting even more wealthy at our expense. That’s to say, we don’t think it is unfair. We would think it unfair if it were shown that increasing wealth at the top is leading to increasing impoverishment of those below in the income distribution, especially at lower end. But, as I said, we don’t have that sense. (This is partly because of our progressive taxation system and social safety net.) This, I think, accounts for the near-universal almost-hatred of the Wall Street “gamesters”. Given events of the last few years, most of us think those folks did in fact get wealthier at our expense, and this sense of unfairness was heightened by the financial bailouts. Our sense of fairness is profoundly implicated when we make economic, political, or social judgments.

  26. sam says:

    damn, blockquote should have ended at “violated”. Sorry

  27. john personna says:

    No James, as much as we degree on the plight of the middle, I really consider that a math fail.

    We have a progressive system, geared toward a “top” bracket of 373,650 dollars, right?

    In what meaningful sense is that progressive, with respect to the actual population?

  28. john personna says:

    Yeah (to lay it on), let’s look at our actual income distribution, to the hundreds of millions of dollars income in a single year, and say “hey, since we top out rates at 373 thousand dollars, we’re progressive!” Yea!

  29. Brian Knapp says:

    Steve, valuing everyone highly and wanting each of them to have access to food, water, shelter, education, and health care has nothing to do with envy or greed.

    Or, you don’t understand “envy” and “greed”.

  30. ratufa says:

    Yes, ideally, we wouldn’t bail the financial industry out the way we have. But, is that politically feasible, especially if the downside is a good probability of 25% unemployment or the like? Keep in mind that such a level of unemployment would likely not be friendly to conservative goals of smaller government, so it’s not clear what even conservatives should prefer given the possible downsides.

  31. EJ says:

    mantis,

    The wat poverty statistics are calculated oversstates poverty for two major reasons.

    1. this is just a snapshot in time based on annual income. We really should stop measuring poverty by income and rather measure it by consmption. Someone who gets laid off for 6 months could every well show up in poverty statistics yet not live anywehre close to a life stype of poverty. Many of those 15 percent of households are just temporary reductions in income, not a decline in material consumption. When i was in HS, my father was lated off for about a year. We were technically in poverty, but we in no way were living a life of such.

    2. these statistics ignore trasnfer payments and social services. They only measure taxable income. Add in in the various transfer payments on gets iwth income that low, and the amount that these poor households consumer is much higher.

    Combining these two together, if you look at consumption statistics, the bottom quintile (roughly matching the poverty line) consumes about 30-35k per year, despite that being much higher than poverty income.

    Though poverty does exist, quoting poverty statistics greatly overstates the problem.

  32. EJ says:

    and on the other end, the high incomes earned by people is before taxes. After tax incomes and after transfer payment incomes are far less unequal then is ussually stated when looking at just taxeable income.

  33. EJ says:

    lastly, just as the tax system is progressive with high earners paying more tax, the welfare state system is progressive with lower end receiving much more in services and transfer payments. If measures of material inequality are going to be used, something needs to take this into account- not just taxable income.

  34. James Joyner says:

    @John P

    I’m not sure under what definition of “progressive” we’re required to have more than a handful of brackets. Indeed, a tax system would be “progressive” even if it had a single, flat rate and a high standard deduction.

    The purpose of progressive taxation is to ensure that those at the very bottom aren’t taxed about their ability to pay, not differentiate between very high earners and mega high earners. $373,650 in taxable income is a hell of a lot of taxable income!

  35. mantis says:

    The poor aren’t really part of this discussion. The “income inequality” conversation of the last couple years has focused almost entirely on the top brackets of the top 1%.

    They should be part of the discussion. That was my point.

  36. JKB says:

    @Keith Ivy – That Worldcom and that family owned cable company turned out to be corrupt doesn’t alter the fact that the “DC elite” (Agency heads and other bureaucrats) were upset that the new money was usurping their previously status given positions on boards and committees. The intellectuals couldn’t compete with a cash donation regardless of how many Ivy league degrees or the GM or SES status.

  37. mantis says:

    EJ,

    Agreed. Those numbers are not reliable and poverty statistics should be based on more comprehensive data.

  38. Steve Plunk says:

    Brian, I understand it. I also know we do a great deal to supply food, shelter, education, and health care to those who can’t afford it. The question is where do we draw the line? Many progressives see unlimited needs and don’t really care how much we have to tax to meet those needs. Many conservatives see needs being met and understand higher taxes lead to a less productive and efficient private sector that provide the number one anti poverty program, jobs.

    The rich man who builds mansions employs carpenters. The rich man’s money in the bank is capital for small businesses to borrow. The rich who travel provide business for those in the travel industry. That same money in the hands of government has a smaller multiplier, is more often wasted or given to cronies, and corrupts those who control it.

    I believe it is progressives who have ignored their own lust for power and greed. We can all justify why we need more money but taking it for whatever use we desire is none the less greed.

  39. mantis says:

    Many progressives see unlimited needs and don’t really care how much we have to tax to meet those needs.

    Which progressives, exactly, think that the government needs to provide for “unlimited needs.” Which ones don’t care how much we have to tax?

  40. wr says:

    But Plunk, by your “everything the rich do is necessarily good” reasoning, there shouldn’t be a be a problem with the government taking money and giving it to “cronies.” Because those cronies will then stick it in a bank, where it will be lent to small businesses, or build mansions, which will employ all those construction workers, or travel, providing business for the travel industry.

    In fact, if the only thing you respect — I’d say worship — is the wealth of your billionaire overlords, why should it matter which set of people control those billions? They’re all going to end up using it the same way — to make their own lives better, in the course of which some small amount will trickle down to help the little people.

  41. Gerry W. says:

    Steve Plunk,

    ***That same money in the hands of government has a smaller multiplier, is more often wasted or given to cronies, and corrupts those who control it.***

    If we lived in a world of our own, I would agree with you. Certainly the government has a lot of waste. But what is waste? Throwing a trillion dollars in war while China grows at 8% is that waste? Having tax cuts for years and seeing our jobs go overseas, is that waste? Doing nothing on energy independence, is that waste? Letting our infrastructure fall apart, is that waste? Yeah, we all can have tax cuts, but if you ignore all the problems-then I see a lot of waste.

    If you criticize the democrats on raising taxes which is unproductive, then isn’t it unproductive to do nothing?

    The world is much more complicated than before. The rich guy who builds a mansion, is he using illegal immigrants? Are the materials made in America? And at the same time, we have lost 30% of our manufacturing. A certain percent of white collar jobs went to India and Pakistan. We lost most of our textile industry. A lot of our steel. And most all of our electronics.

    We can no longer think that if a new widget is to be made, that it will be made here. We can no longer think if you put money in the hands of consumers that they will buy an American product. We can no longer think that we can support small business when factories around them have closed up. Small business needs traffic of employed people. And we can no longer think that many small businesses can be created because of monopolies. Try having a bakery when Wal Mart, Meijers, and Krogers have bakeries. Try raising animals on farms in which 75% is controlled by Tyson, Smithfield, and Monsanto.

    We lost the upward movement for people. The uneducated can no longer rely on going to a factory and being middle class. Even electrical engineers and chemical engineers have less jobs as factories have closed. Human resource people are less as companies want you to use the internet. Today, we have a glut of 2 billion cheap laborers and that will put pressure on our middle class on jobs and wages. Add to that automation and lean principles that take away more jobs.

    Was it a waste for space exploration? Was it a waste to have interstate highways? Was it a waste to get the internet from DARPA? Is it a waste for the FDA to keep working on drugs as companies shelve some of their drugs as they don’t want to spend the money on them?

    When our government worked for a common cause, like interstate highways, we all benefitted. While incomes may been different, people had the sense of benefitting from what the government did and what that meant to the local community.

    We used to have that upward movement . Of course, we had that upward movement as we supplied the world with our products. Those days are diminishing and we have to find new ways of creating jobs, jobs that won’t go overseas. We have to get back to the public/private partnership that we had years ago. Running our country on an ideology is not going to make it anymore. It will be a combination of a lot of things.
    http://finance.yahoo.com/tech-ticker/'the-next-american-economy'-govt.-sponsored-innovation-is-our-best-hope-holstein-says-535628.html;_ylt=AmoMedQqgmqDLlCxkOtovpK7YWsA;_ylu=X3oDMTE2MXIxdmZ0BHBvcwMxMQRzZWMDdG9wU3RvcmllcwRzbGsDdGhlbmV4dGFtZXJp?tickers=BBH,IBB,XLK,%5EIXIC,QQQQ,%5EDJI,%5EGSPC&sec=topStories&pos=8&asset=&ccode=
    http://www.theatlantic.com/magazine/archive/2010/01/how-america-can-rise-again/7839/

    http://www.time.com/time/nation/article/0,8599,2026776-2,00.html

  42. Zelsdorf Ragshaft III says:

    Mantis, you are the answer to your own question. You want take from others but I would like to know what you give. No one gave Bill Gates anything. He is far, far more generous to others than they were to him. If you want what he has, you must do what he did. You are never going to be anything buy poor if you stay on welfare. Lastly, I don’t owe support to anyone. If you want to steal from me, try it. Don’t send a government agent to do it for you. What people like praying mantis forget or ignore is even the very poorest in this country are better off then they have ever been.

  43. Gerry W. says:

    That first url will not work. Here is what it said.

    “Despite myriad past mistakes, America has a bright future, Holstein says. “We have the best ideas in the world still because we attract the best talent,” which is largely a function of our government. “The government is deeply involved in the economy” — and that’s a good thing, he argues.

    If done right, government involvement in research and development can spark new industries and create millions of jobs. Innovation in communications, the Internet, biotechnologies all have their roots in government funding, Holstein notes. “Look at so many of these thing that have come out of the right kind of federal funding that goes into the right kind of institutions and then allowing those ideas to blossom commercially.”

    But, he warns, if the government fails to support funding in public institutions and sciences these potential jobs will move aboard, where the talent feels welcome.”

  44. Brian Knapp says:

    Many progressives see unlimited needs and don’t really care how much we have to tax to meet those needs.

    I don’t think that’s true at all, and there’s certainly no evidence to suggest this.

    Progressives pay taxes too and don’t want all of their money to be necessarily funneled to the government to distribute. But, yes, ideas of “public good” are different among Progressives, Liberals, Conservatives, Libertarians, Neo-Cons, etc.

  45. john personna says:

    If Steve’s just-so story is true, why are so many on food stamps? We’ve more billionaires than ever in this country. Surely they shop.

  46. anjin-san says:

    > I truly worry — and have for years — that we’re moving into an economy that has little use for those who don’t have above average intelligence, skills, and training.

    Yet you laud the “comfort level” of the lower middle class, who are engaging in slow motion economic suicide as a group by going to Wal-Mart and purchasing the made in China creature comforts that allow this rather thin veneer of prosperity.

  47. john personna says:

    BTW, I think Steve’s just-so and Jame’s “we have progression” tie together.

    I’m fine with someone making 100 million paying 36 million in taxes, in the abstract. It’s as good as any other arbitrary number, and it certainly doesn’t approach half, let alone most, or all.

    The thing is, you can’t talk about that (progressive) tax bill in the abstract. It only makes sense in the context of spending, budget balance, and debt.

    I mean, if 100 million dollar guy pays 36 million from here on out … and the government suffers a debt crisis and a failure in treasury bond offering, is it all good? Seriously?

  48. anjin-san says:

    > Many progressives see unlimited needs and don’t really care how much we have to tax to meet those needs.

    RIght. Sort of like your “fact” that Obama is anti-business by his own admission.

    Are your arguments so weak that you have to keep peddling these fantasies? Apparently so…

  49. Mercer says:

    ” lower middle class Americans live better by almost every measure than their wealthy counterparts of a century ago, there are many ways in which they’re better off than the rich of even fifteen or twenty years ago. ”

    Income for the lower middle class has been stagnant for twenty years while housing, medical care, gas and tuition is higher. I don’t see how they are better off. I think most Americans would rank owning a house as more important then owning an Ipad. In many metro areas owning a house is out of reach for the lower middle class even after the recent fall in house prices.

    Most Americans don’t care about rich people who earned their money. As Cowen points out how Wall Street has been making money has not been beneficial to the rest of the country.

  50. steve says:

    The way that our wealthy have been making money has not been contributing to growth in jobs or in new business. Our investor class does what profits it the most. It no longer benefits the rest of us very much.

    Steve

  51. floyd says:

    Steve;
    Honestly, If the wealthy have resorted to depicable means to accumulate wealth, why not seek to make that behavior illegal rather than have the government become an accessory by confiscating the proceeds of their crime. Isn’t an ounce of prevention…?

  52. floyd says:

    “Despicable” please pardon the typo.

  53. Gerry W. says:

    I don’t think that is what Steve is saying. I will give you my spin on it.

    Companies owe themselves to their shareholders and perhaps they owe nothing to our country. It is the capitalistic way. Heck, if I started a company, I would have widgets made in China. Why pay middle class wages when you don’t have to. And if the companies don’t do it, then someone else will and the company will go broke. So if the private sector fails the American people, then it is up to the government to fill in the gap. One side says to spend more money, and the other side says more tax cuts. Neither one works, but I have pointed out previously that you need a public/private partnership to create the investments to create jobs of the future. In other words, the government needs to take the leadership to find the areas to create jobs and what will benefit society as companies will not do that.

    In short, the policies put in place is not working for us. We have to find other solutions to deal with our high unemployment. 2 billion cheap laborers has changed the dynamics and a lot of economic arguments do not make much sense for today. So the tax cuts in the hopes to create jobs will be minimal and we will do little to benefit the rest of us.

  54. SA says:

    It’s increasingly hard to make a decent living if you weren’t born with the right tools. You mean like intelligence? And access to training? I’m totally mystified as to why people with lower native intelligence don’t deserve a minimum amount of comfort and respect. You’re really brilliant. That’s very nice for you, but it obviously doesn’t mean you’re more human.

  55. Keith Ivey says:

    SA, also I don’t imagine we’ll all agree on how much of the wealth results from intelligence and how much results from luck. For that matter, being “born with the right tools” is a matter of luck. And people are opposing estate taxes, which are surely the least merit-based, most luck-based wealth of all.

  56. Richard Gardner says:

    In a different direction on being able to afford private schools, I’m in a school district with bad schools (meets the definition of “dropout factory”). If I had children in school I would either move 10 miles away to a better district, home school, or use private schools. But looking at my local private schools, I find the costs interesting:

    [Bottom Line: Religious schools $8-12K, Prep Schools $20K, in a blue-collar area on the West Coast of 800K population]

    In-city Jesuit Prep High School (has also produced several NFL players 1934): $11,865/year (plus books @$300-500). 1000 students, 75% Catholic

    Suburb-rural Lutheran High School $8264 120 enrollment 9-12

    Urban Christian School (mega-church, discounts for multiple children enrolled) 1973
    K-5 $650/mo = ~$7150 (they use an 11-month billing cycle)
    High School $846/mo =~$9300
    High School Staff of 22, so 200-300 HS enrollment

    Suburban Independent Academy: 800 enrollment K-12 1947
    K-5 $18,500
    High School $20,900
    Plus maybe bus @ $1,940

    High-end area Girls School (est 1884, enrollment 475 K-12))
    K-5 $17,100
    High School: $20,300 (5-day boarding $30,000, 7-day $40,200)

    —–
    I think $120K income is probably too low a number for private schools (maybe $150K) unless there is a religious affiliation. 2-3 kids in a non-religious school will wipe out the entire differential income over $60K

  57. Kevin says:

    If inequality were simply a matter of my having one television while Tiger Woods has ten I agree this would be no big deal. What I fear is that the US is developing into the sort of society typical of the Third World where the elite and common folk live by a different set of rules. Aristocracy leads to corruption–or would if elites didn’t then exercise the power to relabel this as some sort of necessary privilege.

  58. James Joyner says:

    @SA “You mean like intelligence? And access to training? I’m totally mystified as to why people with lower native intelligence don’t deserve a minimum amount of comfort and respect.”

    and

    @Keith Ivey “SA, also I don’t imagine we’ll all agree on how much of the wealth results from intelligence and how much results from luck. For that matter, being “born with the right tools” is a matter of luck.”

    I do think we’re losing most of the jobs — notably, those on assembly lines — where people of substantially below average intelligence can make a very nice living. And a whole lot of the jobs — pumping gas, — where they can make a decent living. Alas, we’re getting to the point where many high IQ, high training jobs can easily be shipped overseas.

    And, no, it’s not anybody’s fault or to anyone’s credit to be born with a given IQ or good parents or a decent neighborhood.

    I’m just not sure what the hell we do about all this. It’s one thing to collect tax money to support the severely retarded and those with disabilities to preclude their working. Almost all of us think that’s the right thing to do. But we can’t support a quarter to a third of society to middle class standards on the backs of those who were lucky enough to be able to have the opportunity to go work their asses off and be successful.

  59. Egypt Steve says:

    I think this is ridiculous. I’m a reasonably well off college professor so I suppose I’m the sort of person you’re writing about. The reason I want to tax the rich more is not because I resent or envy them. The reason is because there are real problems in this country that require tax revenues to address, and the rich are preventing many of those problems from being solved by their constant whining. And not really the “rich,” per se: it’s the Club for Growth tax fetishists. My theory: we should decide what size government we need and what it should do. Then we should fully fund it with a fair, progressive taxation system.

  60. James Joyner says:

    Egypt Steve:

    You’re advocating the Willy Sutton school of taxation: Going after the rich because that’s where the money is. And, up to a point at least, I’m on board with that.

    But this is actually problematic at the implementation level: “We should decide what size government we need and what it should do. Then we should fully fund it with a fair, progressive taxation system.”

    You’re advocating a true pay-as-you go system? No deficit spending? Because that would be crippling. We have a massive mountain of debt that we simply can’t pay off in one lump sum. And there’s an argument both for spreading out long-term investment costs (say, highways, bridges, and buildings that will last for decades) over the life of the project. And for borrowing to fund emergency spending.

    What’s “Fair”? Apparently, not “everyone gives the same portion of their income.” Maybe, “everyone gives the same portion of their income after subtracting the cost of basic sustenance”?

    How “Progressive”? Is three tiers enough? Five? Fifteen? And at what rates? See “Fair” above.

  61. Drew says:

    “Intellectuals chose a line of work that pays reasonably well but much less so than fields that require comparable smarts and education. They tell themselves that the psychic rewards of the life of the mind more than makes up for the difference. But human nature makes sure they resent the hell out of those who make more money just the same.”

    In my experience, this is almost exactly correct, with a modification: many intellectuals don’t have what it takes to make it in the business world, and this bugs them to no end. They perceive intellect to be the trait above all others. (WTFU, pointies, there is so much more than taking a test, or having a specialized body of knowledge) Hence: envy, and their political views. This shouldn’t be so, nor should this observation be controversial. I used to sport a plus 1 golf handicap; but I couldn’t play with the likes of Fred Couples or Paul Azinger, or Nick Faldo………the studs at the time. I’m really good, but not that good. And I’m smarter than Freddie. But I didn’t resort to “Tax Freddie Couples’ ass off,” just because I couldn’t hit a 6 iron to 6 feet with regularity. The left’s is a bizarre wordld view.

    And then Brian Knapp leads off with an idiotic remark………….

  62. Drew says:

    Egypyt Steve says:

    “The reason I want to tax the rich more is not because I resent or envy them. The reason is because there are real problems in this country that require tax revenues to address, and the rich are preventing many of those problems from being solved by their constant whining.”

    Right. “Preventing” and “whining” gives away the view, which is ridiculous. And, Egypt, with the massive tax revenues the US government receives each year exactly what problems has the US Government “solved.” Perhaps a good point to start is the “War on Poverty,” now in year 45………………..and yet invioked routinely today as a predicate for yet more taxation.

  63. An Interested Party says:

    “The left’s is a bizarre wordld view.”

    Not quite as bizarre as the world view attributed to “the left” by people who don’t like “the left”…

  64. Drew says:

    “The way that our wealthy have been making money has not been contributing to growth in jobs or in new business. Our investor class does what profits it the most. It no longer benefits the rest of us very much.”

    Sometimes you just shake your head.

  65. floyd says:

    “What I fear is that the US is developing into the sort of society typical of the Third World”
    “””””””””””””””””””””””””””””””
    Or the former Soviet Union.

  66. anjin-san says:

    Well, the last time the GOP was in power we had the gulags and loss of privacy and torture, so you may have something there.