US Government Stopped Inequality From Rising

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sardia
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US Government Stopped Inequality From Rising

Postby sardia » Thu Feb 19, 2015 3:53 am UTC

http://www.nytimes.com/2015/02/17/upsho ... ref=upshot
inequality is extremely high from a historical perspective – worrisomely so. But a new analysis, by Stephen J. Rose of George Washington University, adds an important wrinkle to the story: Income inequality has not actually risen since the financial crisis began.
How could that be? Because the crisis, which ran roughly from 2007 to 2010, reduced the pretax incomes of the wealthiest Americans more than the incomes of any group. The wealthy have indeed received the bulk of the gains since the recovery began, but they still haven’t recovered their losses. Meanwhile, the steps that the federal government took in response to the crisis, including tax cuts and benefit increases, have mostly helped the nonwealthy. The numbers, however, make clear that inequality isn’t destined to rise. Not only can economic forces, like a recession, reduce it, but government policy can, too. And Washington’s recent efforts to fight inequality – as imperfect and restrained as they’ve been – have made a bigger difference than many people realize.

The existing safety net of jobless benefits, food stamps and the like cushioned the blow of the so-called Great Recession. So did the stimulus bill that President Obama signed in 2009 and some smaller bills passed afterward. “Not only were low-income people protected – middle-income and some higher income-households had much lower losses because of these public policies,” Mr. Rose said. “For those who think government programs never work, maybe they need to think again.
Emphasis mine. You can thank the Democrats later, you know, like during an election. Or better yet, you can accept these programs like entitlements, and then demand future generations get none of the goodies you got because back then 'things were different'.

As usual, there's all these caveats. For one thing, all the programs helping to stem inequality are temporary, have expired, or have been repealed. As of today, we have lower income taxes and that's it. We can expect inequality to grow because the GOP is in charge now, especially on the state level. Since people voted for the GOP, the GOP will do what they promised and increase inequality at every turn. You can expect higher reliance on sales taxes (mostly regressive increasing inequality) reduced social services(again regressive increasing inequality) and tax reform (mostly regressive increases inequality.)
Last edited by sardia on Thu Feb 19, 2015 4:22 am UTC, edited 2 times in total.

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Re: US Government Stopped Inequality From Rising

Postby CorruptUser » Thu Feb 19, 2015 3:59 am UTC

Meh, I despise the Democrats. Then I look at what the OTHER party does, and I turn right back...


Easiest way to sum up politics? Everything your party says about itself is a lie. Everything they say about the other parties is the truth.

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Re: US Government Stopped Inequality From Rising

Postby ObsessoMom » Thu Feb 19, 2015 5:28 am UTC

The wealthy have indeed received the bulk of the gains since the recovery began, but they still haven’t recovered their losses.


What losses? If you could afford NOT to sell your stocks at a lower price than you bought them, you didn't HAVE losses. Even if your "pretax income" took a hit and hasn't recovered yet, you didn't lose your initial investment. Plus, you don't pay taxes on retirement funds until you retire, so those investments aren't reflected in annual "pretax income."

In contrast, lots of other folks were forced to stop paying into and/or raid their nest eggs. THEY definitely lost money, and lost out on future dividends by not being able to continue investing while the market was down. And there are penalties (and taxes) on retirement fund money that's withdrawn early.

Bottom line--I really don't buy the idea that "pretax income" is the right metric for measuring the growth of the gap between haves and have nots.

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Re: US Government Stopped Inequality From Rising

Postby mobiusstripsearch » Thu Feb 19, 2015 5:34 am UTC

sardia wrote:http://www.nytimes.com/2015/02/17/upshot/inequality-has-actually-not-risen-since-the-financial-crisis.html?rref=upshot
inequality is extremely high from a historical perspective – worrisomely so. But a new analysis, by Stephen J. Rose of George Washington University, adds an important wrinkle to the story: Income inequality has not actually risen since the financial crisis began.
How could that be? Because the crisis, which ran roughly from 2007 to 2010, reduced the pretax incomes of the wealthiest Americans more than the incomes of any group. The wealthy have indeed received the bulk of the gains since the recovery began, but they still haven’t recovered their losses. Meanwhile, the steps that the federal government took in response to the crisis, including tax cuts and benefit increases, have mostly helped the nonwealthy. The numbers, however, make clear that inequality isn’t destined to rise. Not only can economic forces, like a recession, reduce it, but government policy can, too. And Washington’s recent efforts to fight inequality – as imperfect and restrained as they’ve been – have made a bigger difference than many people realize.

The existing safety net of jobless benefits, food stamps and the like cushioned the blow of the so-called Great Recession. So did the stimulus bill that President Obama signed in 2009 and some smaller bills passed afterward. “Not only were low-income people protected – middle-income and some higher income-households had much lower losses because of these public policies,” Mr. Rose said. “For those who think government programs never work, maybe they need to think again.
Emphasis mine. You can thank the Democrats later, you know, like during an election. Or better yet, you can accept these programs like entitlements, and then demand future generations get none of the goodies you got because back then 'things were different'.

As usual, there's all these caveats. For one thing, all the programs helping to stem inequality are temporary, have expired, or have been repealed. As of today, we have lower income taxes and that's it. We can expect inequality to grow because the GOP is in charge now, especially on the state level. Since people voted for the GOP, the GOP will do what they promised and increase inequality at every turn. You can expect higher reliance on sales taxes (mostly regressive increasing inequality) reduced social services(again regressive increasing inequality) and tax reform (mostly regressive increases inequality.)


What I gather from your post is that all this complex analysis and thought shows that Republicans suck, Democrats r the best.
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Re: US Government Stopped Inequality From Rising

Postby Tyndmyr » Thu Feb 19, 2015 2:20 pm UTC

sardia wrote: Because the crisis, which ran roughly from 2007 to 2010, reduced the pretax incomes of the wealthiest Americans more than the incomes of any group. The wealthy have indeed received the bulk of the gains since the recovery began, but they still haven’t recovered their losses.


Uh, focusing in on this, because this is the primary cause listed. The crisis wasn't a GOOD thing. And I'm not sure that it'd be fair to award Obama/democrats credit for the crisis, given that it started before he was elected. Perhaps some credit, but a great deal must surely be given to others.

And the wealthy getting most of the recovery money doesn't really strengthen the argument here.

A more accurate summary would be "this metric happens to look 'good' as a result of a major screwup flattening the economy". Just because inequality measurements showed "improvement" does not mean that life was actually better as a result of the recession. You have presented an excellent argument that this particular measurement is kind of terrible.

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Re: US Government Stopped Inequality From Rising

Postby sardia » Thu Feb 19, 2015 3:23 pm UTC

Its not arguing that the recession was good. Its explaining why the data shows no increase in inequality during and after the crisis. The dig against the GOP was my take on the fact that inequality is assumed to always increase, its impossibly to fix or that government can't succeed at anything.
Tyndmyr , are you saying inequality is a bad metric? And we shouldn't be concerned about it? What's wrong with ' government action made a problem less bad'? Are you claiming that as false?

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Re: US Government Stopped Inequality From Rising

Postby setzer777 » Thu Feb 19, 2015 6:00 pm UTC

CorruptUser wrote:Easiest way to sum up politics? Everything your party says about itself is a lie. Everything they say about the other parties is the truth.


Does that mean the Democrats are really into murdering babies? Gay people know in their hearts that their lifestyle is perverted and sinful but pursue it anyway to rebel against God and to undermine family values? Environmentalists are just using global warming as an excuse for their true goal, the destruction of the US economy? Feminists are just women who are too ugly to get men?
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Re: US Government Stopped Inequality From Rising

Postby Tyndmyr » Thu Feb 19, 2015 7:43 pm UTC

sardia wrote:Its not arguing that the recession was good. Its explaining why the data shows no increase in inequality during and after the crisis. The dig against the GOP was my take on the fact that inequality is assumed to always increase, its impossibly to fix or that government can't succeed at anything.
Tyndmyr , are you saying inequality is a bad metric? And we shouldn't be concerned about it? What's wrong with ' government action made a problem less bad'? Are you claiming that as false?


This particular metric of inequality(pretax income), what does it purport to show? What conclusions can we draw from it? How do you know it is a "problem", even?

The recession was pretty unambiguously bad from a financial perspective. The fact that it lowered inequality doesn't mean it was a problem fixing event, obviously. Metrics are only as useful as the data you can extract from them. If pretax income inequality is not a reliable indicator, then why should we be concerned about it at all?

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Re: US Government Stopped Inequality From Rising

Postby sardia » Thu Feb 19, 2015 8:10 pm UTC

It purports to show that the aphorism"the rich get richer and the poor get poorer" was false due to a combination of recession and government intervention. We can draw the conclusion that income inequality is not inevitable and that government can do something to stem the tide. In other words, the government stopped a large section of the poorest people from losing a large amount of income. That's way better than anything the GOP thought up and beyond the always fail predictions of most conservatives.
You can also extrapolate that with the rise in GOP rule, income inequality is going to get worse. Aka the poor people will have less money, and the rich will have more. (Extrapolating from increases in sales taxes, decreases in services, and more tax cuts) All of these either benefit the rich more, punish the poor more, or both.
Last edited by sardia on Fri Feb 20, 2015 12:04 am UTC, edited 1 time in total.

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Re: US Government Stopped Inequality From Rising

Postby Mokele » Thu Feb 19, 2015 9:45 pm UTC

sardia wrote:It purports to show that the axiom "the rich get richer and the poor get poorer" was false due to a combination of recession and government intervention. We can draw the conclusion that income inequality is not inevitable and that government can do something to stem the tide. In other words, the government stopped a large section of the poorest people from losing a large amount of income. That's way better than anything the GOP thought up and beyond the always fail predictions of most conservatives.
You can also extrapolate that with the rise in GOP rule, income inequality is going to get worse. Aka the poor people will have less money, and the rich will have more. (Extrapolating from increases in sales taxes, decreases in services, and more tax cuts) All of these either benefit the rich more, punish the poor more, or both.


I think the problem is that "income" isn't the best metric overall, compared to "accumulated wealth" (which, in all fairness, is probably harder to get stats on).

Your data shows that the incomes of the rich took a relatively bigger hit than the incomes of the poor, due to government intervention, and that's not nothing. But if the rich were still accumulating wealth (albeit less rapidly) while the poor were not, that might still result in increasing *wealth* inequality over time.

I'd argue that wealth is a FAR better measurement than income. In terms of income, I'm on the lower end of the spectrum (not "poor", but substantially below the median), but because I have no debt and substantial savings and assets (thanks to wealthy parents), I live a much more comfortable lifestyle than people with the same income but without the "cushion" (or with substantial debt).

Like I said, though, your data isn't nothing - it's a step in the right direction and proof that intervention can work. But as you noted, these interventions were dramatic, temporary, and in unusual economic circumstances, which suggests that to tackle *wealth* inequality, truly dramatic intervention is needed.
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Re: US Government Stopped Inequality From Rising

Postby Tyndmyr » Thu Feb 19, 2015 9:53 pm UTC

sardia wrote:It purports to show that the axiom "the rich get richer and the poor get poorer" was false due to a combination of recession and government intervention.


That's an aphorism, not an axiom. That's folk wisdom, not actual fact. It's fairly obviously not an economic law or anything, and can trivially be shown to be false in other ways(for instance, rich not getting richer, as has happened in other circumstances long before this). It's not as if this was the first recession or anything.

Shit, you've got all the various communist revolutions if you want to focus on the "government can affect distribution of wealth" claim. Pretty much nobody disputes that countries have affected that, or can. The argument is solely on the *should*, which this does not address. Surely nobody is claiming that more recessions should happen, after all. Well, nobody sane, anyway.

Therefore, all conclusions drawn are trivial, and it provides no additional insight to the actual source of the disagreement.

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Re: US Government Stopped Inequality From Rising

Postby sardia » Fri Feb 20, 2015 12:15 am UTC

Tyndmyr wrote:
That's an aphorism, not an axiom. That's folk wisdom, not actual fact. It's fairly obviously not an economic law or anything, and can trivially be shown to be false in other ways(for instance, rich not getting richer, as has happened in other circumstances long before this). It's not as if this was the first recession or anything.

Shit, you've got all the various communist revolutions if you want to focus on the "government can affect distribution of wealth" claim. Pretty much nobody disputes that countries have affected that, or can. The argument is solely on the *should*, which this does not address. Surely nobody is claiming that more recessions should happen, after all. Well, nobody sane, anyway.

Therefore, all conclusions drawn are trivial, and it provides no additional insight to the actual source of the disagreement.

Look, if you're gonna sit around and deny that income inequality means anything at all, at least provide some papers. It's incredibly boring to sit around and deny things to each other. What percent of economists think income inequality is worthless as a metric? How many economists back your position? Are you claiming that no evidence exists at all that income inequality affects economic growth, socioeconomic mobility, or has a corrosive effect on our society?

This paper is still important because unlike you, there are people out there that believe any attempt to correct income inequality is equated with communism...like you just did. The data shows income inequality can be changed by government policies and still not turn into a marxist utopia.

Even if income inequality does not correlate with bad outcomes, it will still affect you. Economists who do believe that income inequality is bad will see this data and say that more policies like it are needed because the current ones are ending. Don't be so blind to opposing viewpoints as to stick your head into the sand. A libertarian may hate foreign adventurism, but he still has to pay the war taxes. Same thing applies here.

Lastly, you're strawmanning me when you're claiming that I'm in favor of recessions.

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Re: US Government Stopped Inequality From Rising

Postby CorruptUser » Fri Feb 20, 2015 12:55 am UTC

setzer777 wrote:
CorruptUser wrote:Easiest way to sum up politics? Everything your party says about itself is a lie. Everything they say about the other parties is the truth.


Does that mean the Democrats are really into murdering babies? Gay people know in their hearts that their lifestyle is perverted and sinful but pursue it anyway to rebel against God and to undermine family values? Environmentalists are just using global warming as an excuse for their true goal, the destruction of the US economy? Feminists are just women who are too ugly to get men?


That's just the crazies, not the 'official' stance of the parties. My statement was a reference to the post USSR Russian joke "Everything we were told about Communism was lies; everything we were told about Capitalism was truth!". The Republicans view the Democrat's expansion of welfare to not be about making productive citizens, but intentionally preventing people from working and creating an entire demographic of useless Dem voters. The Democrats view the Republican's sabotage of welfare programs to be a gift to the religious nutjobs, who now have more people who MUST depend on the churches rather than have some semblance of independence. Both accuse the other of being corporate shills. Both sides are telling the truth...

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Re: US Government Stopped Inequality From Rising

Postby BattleMoose » Fri Feb 20, 2015 1:48 am UTC

Mokele wrote:I think the problem is that "income" isn't the best metric overall, compared to "accumulated wealth" (which, in all fairness, is probably harder to get stats on).


This is an important point. Having enough capital ensures high incomes just from investments and the like. Probably not the meritocracy we should be striving for. I personally am in favour of very high inheritance taxes for very large inheritances, this directly address the wealth inequality issue and has the sweet flip side that this additional government income means lower taxes are required. Also, the best time to pay tax is when you are dead!

Of course it cannot ever happen, as it is essentially the wealthy that have very large influence on the political processes and such a measure would directly conflict with all of their interests.

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Re: US Government Stopped Inequality From Rising

Postby Tyndmyr » Fri Feb 20, 2015 4:18 pm UTC

Look, if you're gonna sit around and deny that income inequality means anything at all, at least provide some papers. It's incredibly boring to sit around and deny things to each other. What percent of economists think income inequality is worthless as a metric? How many economists back your position? Are you claiming that no evidence exists at all that income inequality affects economic growth, socioeconomic mobility, or has a corrosive effect on our society?


Those are opinion polls, not evidence that a metric is good. If a metric is good, it should provide a useful measurement. That's how science works. Inflation is important because it tells us about the economy, and the resulting measurement allows us to predict a number of things.

If you believe that it is important...important to WHAT. Until you answer that essential question, how can I possibly provide detail? Claiming importance without context is hopelessly vague. What does this metric measure, how accurately does it measure it, and why do we need to measure that?

This paper is still important because unlike you, there are people out there that believe any attempt to correct income inequality is equated with communism...like you just did. The data shows income inequality can be changed by government policies and still not turn into a marxist utopia.


Look, everyone believes that government policies can change outcomes. Literally everyone. Look at the diehard republicanyist of republicans. When they talk about the poor, do they claim that the poor get nothing out of government policies? Or do they claim that the poor get way more than they deserve from government policies(probably framed as handouts, etc)?

This is a should argument, not a can argument. Demonstrating that government policies can affect the economy is trivial. This is not news. It has not been for a long time.

Even if income inequality does not correlate with bad outcomes, it will still affect you. Economists who do believe that income inequality is bad will see this data and say that more policies like it are needed because the current ones are ending. Don't be so blind to opposing viewpoints as to stick your head into the sand. A libertarian may hate foreign adventurism, but he still has to pay the war taxes. Same thing applies here.


If it doesn't correlate with bad outcomes, why should I fear it? Why should we attempt to "fix" it?

A frequent reason given for dealing with income inequality is that it IS related to bad outcomes. If that's not your real reason, what is it?

Lastly, you're strawmanning me when you're claiming that I'm in favor of recessions.


Oh yes, that's clearly the obvious way to read :roll:
Tyndmyr wrote: Surely nobody is claiming that more recessions should happen, after all.


You are welcome to defend the recession as a good outcome, if you wish. I do not assume you must do so, obviously. Your argument is equally hollow regardless of if you do or not.

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Re: US Government Stopped Inequality From Rising

Postby leady » Fri Feb 20, 2015 5:42 pm UTC

On a similar basis in the uk the poverty rate went down considerably in 2008 because of the recession

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Re: US Government Stopped Inequality From Rising

Postby Mokele » Fri Feb 20, 2015 7:13 pm UTC

"With malleus aforethought, mammals got an earful of their ancestor's jaw" - J. Burns, Biograffiti

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Re: US Government Stopped Inequality From Rising

Postby sardia » Sat Feb 21, 2015 4:28 pm UTC

I guess Tyndmyr wants evidence that economic inequality is bad. Finding studies on it is much harder since you mostly see references to studies quantifying inequality rather than the implied reasoning that it's bad.

Increased inequality can lead to financial crises
http://www.imf.org/external/pubs/ft/wp/2010/wp10268.pdf

High levels of income inequality are associated with economic instability and crises, whereas more equal societies tend to have longer periods of sustained growth
http://www.imf.org/external/pubs/ft/sdn ... dn1108.pdf

Increased inequality may increase rates of inflation
http://link.springer.com/article/10.100 ... 733#page-1

Market distortions, occur due to the increased power of those at the top of the income spectrum, and their ability to influence political debate through lobbying and ownership of media outlets. Another effect of this influence is that it leads to deregulation which increases instability
http://www.waterstones.com/waterstonesw ... y/9598864/

Research suggests that lowering the wage of a low-paid worker decreases their productivity by a greater amount than increasing the wage of a high paid worker increases theirs. This would suggest increases in wage inequality decrease productivity.
http://papers.ssrn.com/sol3/papers.cfm? ... id=1778894

People in less equal countries are less likely to believe that most people can be trusted, have less interest in politics, less confidence in their parliament, are more likely to believe that there needs to be more respect for authority, more likely to think that children should be obedient and less likely to believe that children should be independent
http://www.sciencedirect.com/science/ar ... 5712000510
People in countries with high levels of inequality are more likely to believe that those at the top of their society are competent and those at the bottom are not but have warmer attitudes to those at the bottom than the top. More unequal societies are also more likely to believe that competition between groups leads to competent outcomes
http://www.ncbi.nlm.nih.gov/pubmed/23039178


Anyway, economic inequality is bad based on the evidence above. The data for income inequality for this time period that transfer payments policies enacted during the financial crisis helped stemmed income inequality. Reducing income inequality is implied to reducing the damage that economic inequality did to the US based on the conclusions of the cited studies. The last statement is a stretch, but w/e. I don't quite understand your reluctance on the metrics used for income inequality. It's no more vague than inflation. (really high is bad, negative is bad. Just right amount is completely unknown so the world guessed it's 2%.)

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Re: US Government Stopped Inequality From Rising

Postby cphite » Mon Feb 23, 2015 10:39 pm UTC

sardia wrote:
Tyndmyr wrote:
That's an aphorism, not an axiom. That's folk wisdom, not actual fact. It's fairly obviously not an economic law or anything, and can trivially be shown to be false in other ways(for instance, rich not getting richer, as has happened in other circumstances long before this). It's not as if this was the first recession or anything.

Shit, you've got all the various communist revolutions if you want to focus on the "government can affect distribution of wealth" claim. Pretty much nobody disputes that countries have affected that, or can. The argument is solely on the *should*, which this does not address. Surely nobody is claiming that more recessions should happen, after all. Well, nobody sane, anyway.

Therefore, all conclusions drawn are trivial, and it provides no additional insight to the actual source of the disagreement.


Look, if you're gonna sit around and deny that income inequality means anything at all, at least provide some papers. It's incredibly boring to sit around and deny things to each other. What percent of economists think income inequality is worthless as a metric? How many economists back your position? Are you claiming that no evidence exists at all that income inequality affects economic growth, socioeconomic mobility, or has a corrosive effect on our society?


I don't see anyone claiming that income inequality has no meaning at all; they're simply pointing out to you that overall wealth inequality is a far more useful measurement. If you make a million dollars a year and you take a 20% pay cut, and your neighbor makes $20,000 a year and takes a 10% pay cut, which of you is better off?

The point is, yes - in terms of general income, the wealthy took a harder hit in terms of raw numbers than the poor - but that's simple mathematics. And let's be clear - the truly wealthy aren't typically concerned with income per say.

The reality is that over the past several years, the top 1% of wealth owners have increased their share of overall wealth. Unemployment and underemployment are absolutely rampant right now. There are more people dependent on government assistance than at any other point in our history. There is nothing good about that.

This paper is still important because unlike you, there are people out there that believe any attempt to correct income inequality is equated with communism...like you just did. The data shows income inequality can be changed by government policies and still not turn into a marxist utopia.


First off, to say that income inequality has been "corrected" is a fairly brazen exaggeration. Yeah, the highest incomes have come down a little; but there is still an absolutely enormous gap between the wealthy and the middle class. It's like saying that if Lamborghini cut their prices by 5% that they'd be closer to Honda... it may be technically true, but it has no practical meaning for anyone.

Even if income inequality does not correlate with bad outcomes, it will still affect you. Economists who do believe that income inequality is bad will see this data and say that more policies like it are needed because the current ones are ending. Don't be so blind to opposing viewpoints as to stick your head into the sand. A libertarian may hate foreign adventurism, but he still has to pay the war taxes. Same thing applies here.


Again, you have to look at the bigger picture. Income is only a small part of the story. The folks at the top can generally afford to take a sizable hit to their income, still have expendable capital, and perhaps most critically, still manage to increase their savings. The folks on the bottom who are scraping by paycheck to paycheck often find themselves still scraping by even after an increase. The first guy, even though his income may have gone lower, is still amassing wealth; the second guy is not.

Over the past decade the percentage of wealth owned by the top 1% has increased. This has not slowed in the Obama years; it has actually increased.

Lastly, you're strawmanning me when you're claiming that I'm in favor of recessions.


The original article included a fairly large strawman: “For those who think government programs never work, maybe they need to think again.”

Nobody thinks that government programs never work. A lot of us think they work poorly, or do more harm than good; but you'd have to live in a cave somewhere to think that they don't work at all.

The housing bubble was the result of bad loans being made at the behest of government, in the interest of "fairness" to people who could not actually handle a large loan. That was an example of government "working" in a way that had an enormous impact on not only the national economy, but the global economy.

Then, after causing the crash, the government pissed nearly a trillion dollars into the wind. Some of that money helped people, yes; but the vast majority of the stimulus money went to large corporations where it stayed.

The bottom line is this... over the past several years the job market has, to put it simply, stunk. We have record numbers of people unemployed or underemployed. We have record numbers of people on welfare, food stamps, and other forms of assistance. We have utterly staggering record-shattering debt. None of these are good things. None of them things worth celebrating.

Yes, technically if you look purely at taxable income, the really wealthy have gone down and the really poor have gone up; but for most people the change is meaningless. In terms of actual wealth, the rich have gotten richer, and the poor have remained poor. If you factor in the cost of living, the poor are actually worse off than before - because stuff costs a lot more.

To be brutally honest, the whole article is a transparent attempt to make you feel good about what the government has done to "fix" a problem that, if anything, has gotten worse.

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Re: US Government Stopped Inequality From Rising

Postby Tyndmyr » Mon Feb 23, 2015 10:43 pm UTC

cphite wrote:Yes, technically if you look purely at taxable income, the really wealthy have gone down and the really poor have gone up; but for most people the change is meaningless. In terms of actual wealth, the rich have gotten richer, and the poor have remained poor. If you factor in the cost of living, the poor are actually worse off than before - because stuff costs a lot more.


Strictly speaking, you could get the same result by handing rich people a law that reduces their taxable income.

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Re: US Government Stopped Inequality From Rising

Postby cphite » Tue Feb 24, 2015 10:30 pm UTC

Tyndmyr wrote:
cphite wrote:Yes, technically if you look purely at taxable income, the really wealthy have gone down and the really poor have gone up; but for most people the change is meaningless. In terms of actual wealth, the rich have gotten richer, and the poor have remained poor. If you factor in the cost of living, the poor are actually worse off than before - because stuff costs a lot more.


Strictly speaking, you could get the same result by handing rich people a law that reduces their taxable income.


Sure; my point was simply that if you only look at taxable income, the picture you get is very misleading. The truly rich can generally afford to take a large hit to taxable income, in large part because there are so many ways to make money from money you already have.

The very rich took the biggest hits in terms of personal wealth and taxable income; of course they did because that's math. There are more people getting (and dependent on getting) assistance than ever before. The author of the article seems to believe that these are things to be thankful for - I don't agree.

Yes, it's good that people who need assistance are getting assistance; but it's bad that so many more people need assistance. The job market is still pretty horrid out there; there are record numbers of people unemployed or underemployed. And much of that is due to the policies of the current administration.

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Re: US Government Stopped Inequality From Rising

Postby Chen » Wed Feb 25, 2015 12:49 pm UTC

cphite wrote:Yes, it's good that people who need assistance are getting assistance; but it's bad that so many more people need assistance. The job market is still pretty horrid out there; there are record numbers of people unemployed or underemployed. And much of that is due to the policies of the current administration.


Hasn't the unemployment rate been dropping steadily since 2008?

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Re: US Government Stopped Inequality From Rising

Postby leady » Wed Feb 25, 2015 2:42 pm UTC

The total claiment rate is down, but the number of part time job is higher now than historically and the labour participation rate is lower amongst those of working age. I'm not convinced thats a bad outcome compared to a usual recession (least worst option)

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Re: US Government Stopped Inequality From Rising

Postby Tyndmyr » Wed Feb 25, 2015 4:00 pm UTC

cphite wrote:
Tyndmyr wrote:
cphite wrote:Yes, technically if you look purely at taxable income, the really wealthy have gone down and the really poor have gone up; but for most people the change is meaningless. In terms of actual wealth, the rich have gotten richer, and the poor have remained poor. If you factor in the cost of living, the poor are actually worse off than before - because stuff costs a lot more.


Strictly speaking, you could get the same result by handing rich people a law that reduces their taxable income.


Sure; my point was simply that if you only look at taxable income, the picture you get is very misleading. The truly rich can generally afford to take a large hit to taxable income, in large part because there are so many ways to make money from money you already have.


That's true, of course.

It's just amusing, at least to me, that one can use "results" to claim victory when those same results could obviously have been achevied by taking what would be a clearly undesirable action to those same people. It's just so very obviously a post-hoc rationalization

The very rich took the biggest hits in terms of personal wealth and taxable income; of course they did because that's math. There are more people getting (and dependent on getting) assistance than ever before. The author of the article seems to believe that these are things to be thankful for - I don't agree.

Yes, it's good that people who need assistance are getting assistance; but it's bad that so many more people need assistance. The job market is still pretty horrid out there; there are record numbers of people unemployed or underemployed. And much of that is due to the policies of the current administration.


The job participation rate remaining low is worrying. Unemployment going down because people are employed is economically pretty good, but it going down because folks are giving up on finding a job at all is...markedly less so.

It's not really anything so extreme as "Obama killed the job market" or anything. The recession was already incoming before he took office, surely. But neither has there been a fantastic turnaround. Both sides are trying to spin this in a crazy way. It's more as if the bubble bust, and things have been puttering since. Stock market recovery? Sure. Which is great for stock owners, but stocks vs jobs...stocks are more important to rich folks, jobs are more essential for poor.

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Re: US Government Stopped Inequality From Rising

Postby cphite » Wed Feb 25, 2015 7:01 pm UTC

Chen wrote:
cphite wrote:Yes, it's good that people who need assistance are getting assistance; but it's bad that so many more people need assistance. The job market is still pretty horrid out there; there are record numbers of people unemployed or underemployed. And much of that is due to the policies of the current administration.


Hasn't the unemployment rate been dropping steadily since 2008?


The unemployment rate only counts people who have an active claim in the system. If they leave the system, either because their time has expired or they've simply given up and not longer meet the requirements, they are no longer counted. The recent drop in the rate is due in most part to people leaving the system.

The actual number of people unemployed or underemployed is at a historical high, and is rising. Any politician who touts the drop of the unemployment rate as a sign that things are good right now is being dishonest.

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Re: US Government Stopped Inequality From Rising

Postby cphite » Wed Feb 25, 2015 7:18 pm UTC

Tyndmyr wrote:
cphite wrote:
Tyndmyr wrote:
cphite wrote:Yes, technically if you look purely at taxable income, the really wealthy have gone down and the really poor have gone up; but for most people the change is meaningless. In terms of actual wealth, the rich have gotten richer, and the poor have remained poor. If you factor in the cost of living, the poor are actually worse off than before - because stuff costs a lot more.


Strictly speaking, you could get the same result by handing rich people a law that reduces their taxable income.


Sure; my point was simply that if you only look at taxable income, the picture you get is very misleading. The truly rich can generally afford to take a large hit to taxable income, in large part because there are so many ways to make money from money you already have.


That's true, of course.

It's just amusing, at least to me, that one can use "results" to claim victory when those same results could obviously have been achevied by taking what would be a clearly undesirable action to those same people. It's just so very obviously a post-hoc rationalization


Definitely. Basically, they're trying to spin a drop in wages and an increase in welfare as being positive. Sorry, but no... having more and more people depend on welfare every year is not a good thing.

The very rich took the biggest hits in terms of personal wealth and taxable income; of course they did because that's math. There are more people getting (and dependent on getting) assistance than ever before. The author of the article seems to believe that these are things to be thankful for - I don't agree.

Yes, it's good that people who need assistance are getting assistance; but it's bad that so many more people need assistance. The job market is still pretty horrid out there; there are record numbers of people unemployed or underemployed. And much of that is due to the policies of the current administration.


The job participation rate remaining low is worrying. Unemployment going down because people are employed is economically pretty good, but it going down because folks are giving up on finding a job at all is...markedly less so.


Exactly. It's incredibly disingenuous to tout the unemployment rate dropping under these conditions as being a positive; it's clearly not a positive in the current environment. And, as you mention, it's the same as when they keep bragging up the fact that the DJIA is at record highs, and imply that it means the overall economy is great. It's dishonest, and deliberately so.

It's not really anything so extreme as "Obama killed the job market" or anything. The recession was already incoming before he took office, surely. But neither has there been a fantastic turnaround. Both sides are trying to spin this in a crazy way. It's more as if the bubble bust, and things have been puttering since. Stock market recovery? Sure. Which is great for stock owners, but stocks vs jobs...stocks are more important to rich folks, jobs are more essential for poor.


Obama didn't kill the job market; but he (and the government as a whole) has done a very poor job on fostering recovery.

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Re: US Government Stopped Inequality From Rising

Postby Tyndmyr » Wed Feb 25, 2015 7:29 pm UTC

True. Plenty of blame to go around, as it certainly isn't all Obama's decision for...pretty much anything. Getting too locked into blaming everything bad on the other guys can prevent actual discussion of the issue. Everything becomes labels, and actual desires other than factionalism are obscured.

Now, I don't necessarily want equality for it's own sake. Not equality of outcome, anyway. That's got little value to me. Just sort of an equalish shot in life. A motivated genius gets born to poor parents, he should have a good shot at success. That's useful. Even if there is correlation between generations thanks to genetics or what have you, it seems wasteful not to utilize all the potential talent out there. So, things that pursue those ends, I'm generally okay with. Making public school a little less dysfunctional, sure, that's a useful safety net for giving those folks a chance.

But I have absolutely no problem with a very, very wide gap between people based on what they actually do. I think that's a philosophical thing that people want to build something around and justify. Or justify believing the opposite. As for WHY we believe that, *shrug*. It just seems innate. Part of nature. Cannot possibly remove all selection pressure.

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Re: US Government Stopped Inequality From Rising

Postby Chen » Wed Feb 25, 2015 8:02 pm UTC

cphite wrote:The unemployment rate only counts people who have an active claim in the system. If they leave the system, either because their time has expired or they've simply given up and not longer meet the requirements, they are no longer counted. The recent drop in the rate is due in most part to people leaving the system.

The actual number of people unemployed or underemployed is at a historical high, and is rising. Any politician who touts the drop of the unemployment rate as a sign that things are good right now is being dishonest.


Ok an interesting distinction I wasn't really aware of. Thanks.

So what is the metric used to determine who is working vs who is not? Job participation rate?

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Re: US Government Stopped Inequality From Rising

Postby Tyndmyr » Wed Feb 25, 2015 8:27 pm UTC

Labor Force Participation Rate, yeah, good metric. For a while now, it's been hovering between 62.7 and 62.9% which is a little rough.

http://static3.businessinsider.com/image/542eec70eab8ea39105c0cbd-1200-900/cotd-lfpr-1.jpg
Edit: Linked, because as an inline image, it was way too large.

http://data.bls.gov/timeseries/LNS11300000

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Re: US Government Stopped Inequality From Rising

Postby Sizik » Wed Feb 25, 2015 8:30 pm UTC

I'm guessing a lot of that rise (and current fall) are baby boomers.
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Re: US Government Stopped Inequality From Rising

Postby Tyndmyr » Wed Feb 25, 2015 8:34 pm UTC

Sizik wrote:I'm guessing a lot of that rise (and current fall) are baby boomers.


Demographics do affect that, yeah. A high ratio of retirees to working population will get you a weaker participation rate.

Regardless of the reason, though, the effect is going to be fairly similar. The lower the participation rate, the more people living off the productivity of each worker. That's gonna affect economic well being. Doesn't mean that non-participants are bad people or anything, but the overall rate is still an important metric.

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Re: US Government Stopped Inequality From Rising

Postby cphite » Thu Feb 26, 2015 2:21 pm UTC

Tyndmyr wrote:True. Plenty of blame to go around, as it certainly isn't all Obama's decision for...pretty much anything. Getting too locked into blaming everything bad on the other guys can prevent actual discussion of the issue. Everything becomes labels, and actual desires other than factionalism are obscured.


All true. Obama inherited a mess; so did Bush. The housing bubble, which was one of the key causes of the recession, was a result of government interference in the housing market that began in the early 90's. There is plenty of blame to go around. Under Bush, we pissed away a trillion dollars on a misguided and poorly executed war. Obama and the democrats passed legislation - in the midst of what should have been a recovery - that effectively stifles job creation.

Now, I don't necessarily want equality for it's own sake. Not equality of outcome, anyway. That's got little value to me. Just sort of an equalish shot in life. A motivated genius gets born to poor parents, he should have a good shot at success. That's useful. Even if there is correlation between generations thanks to genetics or what have you, it seems wasteful not to utilize all the potential talent out there. So, things that pursue those ends, I'm generally okay with. Making public school a little less dysfunctional, sure, that's a useful safety net for giving those folks a chance.


Well, that's the whole idea behind "All men are created equal"... you're supposed to get a fair shot at life. A fair beginning - not necessarily a fair outcome. There will always be people who thrive and people who don't thrive. There will always be people who do ridiculously well, and people who need help.

As a society, we can certainly do a lot better at giving everyone an equal shot. We still have racism, sexism, and all manner of other ism's that we need to eliminate.

But I have absolutely no problem with a very, very wide gap between people based on what they actually do. I think that's a philosophical thing that people want to build something around and justify. Or justify believing the opposite. As for WHY we believe that, *shrug*. It just seems innate. Part of nature. Cannot possibly remove all selection pressure.


I completely agree - as long as the starting point is fair. People should have the opportunity to achieve their potential.

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Re: US Government Stopped Inequality From Rising

Postby sardia » Sun Mar 01, 2015 6:10 pm UTC

You can't expect people doing whatever they want to lead to great outcomes. Since people are self-interested, they'll put resources into whatever benefits them the most, even if it hurts the economy to do so.
http://www.nytimes.com/2015/03/01/busin ... f=business
The raw data here.
http://www.bis.org/publ/work490.htm
"They found that financial booms were especially harmful to certain industries. Bankers, they say, act in predictable ways. They tend to lend money to projects with assets that can be pledged as collateral, such as those in real estate or construction. This is understandable — bankers want to be able to seize assets if a borrower gets into trouble on a loan, and they prefer those assets to be tangible.

But these industries are also among the least productive, and that leaves fewer dollars for more promising research-and-development start-ups that may have only intangibles, such as knowledge and ideas, to offer a banker as collateral. "

When finance is ascendant in an economy, it attracts an inordinate number of highly skilled workers who might otherwise take their productivity and brains to nonfinancial industries.

Without some societal pressure guiding, you're left with your best and brightest flocking to increasingly marginal returns in Finance industry. Remember, this isn't marginal returns for the people in the industry, this is marginal returns for GDP.

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Re: US Government Stopped Inequality From Rising

Postby Tyndmyr » Mon Mar 02, 2015 5:24 pm UTC

sardia wrote:You can't expect people doing whatever they want to lead to great outcomes. Since people are self-interested, they'll put resources into whatever benefits them the most, even if it hurts the economy to do so.


Yes. People do that regardless. And sometimes it does lead to great outcomes, and sometimes it doesn't. People are ALWAYS self interested, regardless of system. That's just a given.

And that whole "failing industry leaves nothing behind" is a significant problem. The nineties had a nice boom in funding for knowledge industries, and we had rather a lot of ventures that cratered hard once the funding ran out. That's a dead loss. If a construction industry goes bankrupt, well, at least the hard assets still have value. Yeah, maybe they sell them for pennies on the dollar, but someone else is buying and using them. That is worth something, and it's not unreasonable for it to be taken into account.


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