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re: Is one major cause of wealth disparity a poor rate of return on social security?
Posted on 5/29/14 at 8:43 am to NC_Tigah
Posted on 5/29/14 at 8:43 am to NC_Tigah
quote:
There was an earlier one regarding personal income vs inflation.
Do you not understand that I was responding to TA's hypothetical?
quote:quote:
In short, total compensation has not kept pace with increases in productivity.
Why should it?
TA's contending that IF compensation hasn't kept pace with increased productivity, why should it? He's questioning whether or not that would even be a bad thing. I respond that IF it were a good thing, then you would have to conclude wealth disparity is a good thing.
Even if, as you say, it is not the cause of our current disparity, that is not to say it wouldn't cause disparity if it existed.
I'm still not convinced by your response that compensation HAS kept up with inflation. But that's besides the point of TA's response.
3
Posted on 5/29/14 at 8:47 am to WildTchoupitoulas
quote:Umm. Those numbers are from the census. They are already inflation adjusted.
I'm still not convinced by your response that compensation HAS kept up with inflation.
Posted on 5/29/14 at 8:58 am to WildTchoupitoulas
quote:I thought your contention was that wage-growth commensurate with inflation-rate had not taken place. Was that not the basis for TA's response?
TA's contending that IF compensation
Posted on 5/29/14 at 9:01 am to WildTchoupitoulas
quote:Source of those numbers was the U.S. Department of Commerce, Bureau of Economic Analysis, Survey of Current Business.
I'm still not convinced by your response that compensation HAS kept up with inflation.
Do you have another?
Posted on 5/29/14 at 9:04 am to NC_Tigah
quote:No. My response was to the assertion that worker pay increases have not kept up with worker productivity increases.
I thought your contention was that wage-growth commensurate with inflation-rate had not taken place. Was that not the basis for TA's response?
And they haven't. But automation and mechanization play a wry significant role there.
Posted on 5/29/14 at 9:33 am to NC_Tigah
quote:
Do you have another?
You can't simply look at prices for inflation, you have to look at value.
It used to be that 'durable goods' were durable. Not so much any more.
So a refrigerator that may have gone for $100 in 1970 may have lasted you a lifetime, whereas a refrigerator you buy today for $1,000 may only last 20 years so that you end up having to buy two refrigerators these days for $2,000 rather than 1 for $100.
Value isn't considered in inflation numbers.
And that's just one example of how inflation numbers don't tell the whole story about price increases. The numbers can also be kept down by skewing the total with a bunch of cheap consumer crap that no one needs, while necessities may be increasing at a rate above the average. Health care for example.
Posted on 5/29/14 at 9:41 am to WildTchoupitoulas
quote:I fully agree with this. I firmly believe poor quality has been a very effective way to hide inflation.
It used to be that 'durable goods' were durable. Not so much any more. .... Value isn't considered in inflation numbers.
That said, many goods that were once unattainable, are now widely available. And that has the opposite skew to the numbers. A simple calculator was several hundred dollars in 1970. Now.. 79 cents.
Having a car with automatic xmission and power windows meant you were a high roller in 1970. Today, you can't hardly buy a car with a stick and roll up windows.
I'm old enough to remember the mid 70s. I see the argument that we aren't generally much wealthier as unsupportable.
Posted on 5/29/14 at 10:10 am to Taxing Authority
quote:
I'm old enough to remember the mid 70s. I see the argument that we aren't generally much wealthier as unsupportable.
The mid 70's sucked. I was living but not old enough to understand.
That being said, would you be in agreement that the base expenses that one needs to have have skyrocketed to the point where we are unable to save the same % of income that we used to do?
I mean yes, calculators costed more, computers were for the wealthy, and the car example you mentioned.
I can't remember what it was, but I threw together an excel spreadsheet showing the average college graduate earnings in the 80's, 90's, 00's, and today and the payment on a mortgage, student loan, and car payment.
The net/net was we're basically at the same level we were at in the 80's. The 80's were way better than the 70's though.
Posted on 5/29/14 at 11:36 am to ironsides
dp
This post was edited on 5/29/14 at 11:56 am
Posted on 5/29/14 at 11:52 am to ironsides
quote:I'm not sure how one would answer that. Disposable income is largely a function of lifestyle choices. Hard to measure that across groups.
That being said, would you be in agreement that the base expenses that one needs to have have skyrocketed to the point where we are unable to save the same % of income that we used to do?
One of the things that seem constant is that no matter how much one makes--you can find a way to spend it. There have been huge shifts in spending habits since the 1970s.
Take spending on homes. Let's look at the average home size..
While simultaneously, household size has decreased
decreased...
quote:Interestingly... I looked for data on student loan amounts going back to 1970. Can't find any. It essentially didn't exist before the 1990s in any significant amount. Given the reduction in discretionary income as a result of student loan payments-- it seem reasonable that debt service influences the common perception that we are poorer today, when the opposite is true.
today and the payment on a mortgage, student loan, and car payment.
Posted on 5/29/14 at 11:53 am to Taxing Authority
I guess it depends on your age. I graduated college in 97, somehow found a way to sock away $10k a year off of a $40k salary and NY taxes. I feel sorry for today's college graduate. I probably graduated at the right time though.
I compare this with my parents who graduated in in the early '60's and they found a way to save a lot of dough, as did my siblings that graduated in the late '80's.
Lucky if they can find a job, and even if they can, don't see how it's possible to save jack shite.
I feel like discretionary income + Savings as a % of total income is less now certainly than it was at the end of the 80's but that's my frame of reference.
I compare this with my parents who graduated in in the early '60's and they found a way to save a lot of dough, as did my siblings that graduated in the late '80's.
Lucky if they can find a job, and even if they can, don't see how it's possible to save jack shite.
I feel like discretionary income + Savings as a % of total income is less now certainly than it was at the end of the 80's but that's my frame of reference.
Posted on 5/29/14 at 12:05 pm to ironsides
quote:I certainly understand the perception! I suppose it depends on how we define "discretionary". This will make me sound like an old fogey, but... if a 1600sf house was good enough for a family in 1970, it should be good enough today. So... I'd consider the cost difference between a 1600sf house and a 2400sf house part of discretionary spending.
I feel like discretionary income + Savings as a % of total income is less now certainly than it was at the end of the 80's but that's my frame of reference.
But... if you ask the average homeowner if 50% of their mortgage is "discretionary" they'd likely say no. They consider their home a "necessity".
Given that housing is such a large portion of one's income... think how much "wealthier", how much more discretionary income those people would have, and how much more they could save by reducing their home mortgage by 50%.
This post was edited on 5/29/14 at 12:07 pm
Posted on 5/29/14 at 1:21 pm to Taxing Authority
quote:
I'm old enough to remember the mid 70s.
As am I.
quote:
I see the argument that we aren't generally much wealthier as unsupportable.
That's not the argument. The argument is increasing disparity.
It doesn't matter if the lower classes are increasing in wealth, staying the same or decreasing in wealth. The point is that the disparity, that is the increase in wealth for the wealthy and the lower classes comparatively.
I still say that the working class's income hasn't increased at the same rate as the wealthier classes (whether it's stagnant or increasing is academic). That is the reason for the growth in wealth disparity imo, not the rate of return on Social Security.
Posted on 5/29/14 at 1:39 pm to WildTchoupitoulas
quote:Of course it does.
It doesn't matter if the lower classes are increasing in wealth
However your described perception is EXACTLY emblematic of leftist redistributional idiocy.
EXACTLY!
Doubling SOL for lowerclass/middleclass should stand on its own as a significant accomplishment. But IAW the above construct, it does not. If middleclass income/SOL doubles, but upperclass income triples, then somehow that is unfair to the middleclass.
OTOH if middleclass income remains stagnant, but upperlevel income/wealth/SOL is cut in half,
THAT CONSTITUTES GREAT SUCCESS according to neosocialists!
Posted on 5/29/14 at 1:58 pm to NC_Tigah
quote:
Of course it does.
No, it quite obviously doesn't.
If we are talking about an increasing wealth disparity between two classes, both could be falling, with the lower class falling faster than the other would lead to an increasing wealth disparity, just as both could be increasing, with the higher class increasing faster leading to increased wealth disparity.
quote:
If middleclass income/SOL doubles, but upperclass income triples, then somehow that is unfair to the middleclass
I don't know if it's fair or not to anyone, but it would, necessarily, lead to an increasing wealth disparity which is what I thought the thread was about. I could be wrong.
quote:
However your described perception is EXACTLY emblematic of leftist redistributional idiocy.
EXACTLY!
...THAT CONSTITUTES GREAT SUCCESS according to neosocialists!
I think you're becoming hysterical.
I'm trying to describe a phenomenon without injecting a value judgment. Basically TA was saying that there's nothing wrong with an increasing wealth disparity, I happen to think that if taken to extremes it can be dangerous for a society. That is my value judgment.
Posted on 5/29/14 at 2:53 pm to WildTchoupitoulas
quote:Then its a silly argument. Disparity isn't a measure of increasing/declining wealth, nor the ability to attain wealth.
That's not the argument. The argument is increasing disparity.
The clear implication of the OP is that those of lower and middle classes would have the opportunity to be better off without SS.
Seemingly, giving the "lower class" more opportunity to earn more wealth is a better "solution" to disparity than making "the rich" poorer.
quote:The rich have a far greater capacity to generate wealth. Of course they will get richer, faster. It's inevitable when the money supply is constantly increasing.
The point is that the disparity, that is the increase in wealth for the wealthy and the lower classes comparatively.
So what?
It doesn't mean the "lower classes" are poorer. Nor does it mean they are poorer than they would be, if the rich were made poorer.
quote:I agree. When people make more money than others - the disparity increases. Seems like a trivial observation, more than a causal relationship.
I still say that the working class's income hasn't increased at the same rate as the wealthier classes (whether it's stagnant or increasing is academic). That is the reason for the growth in wealth disparity imo
quote:Consider that payroll taxes start at the first dollar earned. If you're saying giving "the poor" an across the board 12.4% pay increase over their entire lifetime wouldn't have the potential to significantly increase their net worth... I don't know what to say.
That is the reason for the growth in wealth disparity imo, not the rate of return on Social Security.
Seems obvious. Opportunity costs are real.
Given the time value of money most retirees could have more money, and better quality of life had they had the chance.
This post was edited on 5/29/14 at 3:07 pm
Posted on 5/29/14 at 2:57 pm to WildTchoupitoulas
quote:Which is why disparity is a NOT a measure of wealth. It's a tool of propagandists trying to convince those that are actually getting richer--they are somehow getting poorer.
If we are talking about an increasing wealth disparity between two classes, both could be falling, with the lower class falling faster than the other would lead to an increasing wealth disparity, just as both could be increasing, with the higher class increasing faster leading to increased wealth disparity.
This post was edited on 5/29/14 at 2:58 pm
Posted on 5/29/14 at 3:00 pm to Taxing Authority
Is the disparity getting larger? The rich get richer and the poor have the safety net while the rich convince the middle class that the poor want their jobs.
If people don;t these con artists out who are bought and paid by the rich, people get the shaft they deserve.
If people don;t these con artists out who are bought and paid by the rich, people get the shaft they deserve.
Posted on 5/29/14 at 3:06 pm to Taxing Authority
quote:
Then its a silly argument.
Right, and that would make this entire thread silly because it's examining causes of wealth disparity and blaming it on SS 'returns'.
quote:
The rich have a far greater capacity to generate wealth. Of course they will get richer, faster.
I already covered that on page 3:
"Hell, you could say, 'The wealthy invest more wisely than the poor' as a better explanation for the wealth disparity than the OP."
quote:
I agree. When people make more money than others - the disparity increases. Seems like a trivial observation, more than a causal relationship.
And all I was saying was that this is how I see it happening, and not how it's described in the OP.
I didn't exactly read the OP all that closely, but now I'm suspecting you didn't read it at all.
You could have just cut right to where I said:
quote:
Basically TA was saying that there's nothing wrong with an increasing wealth disparity
And simply replied with a "yep".
[BTW, you missed the opportunity to discuss individuals moving between classes and how this affects any definition of 'wealth disparity' - just fyi.]
Posted on 5/29/14 at 3:24 pm to WildTchoupitoulas
Wild tchoupitoulas, is it your assertion that disparity of wealth makes the poor worse off? Some of the most equal countries on this earth also have the least disparity. Everyone in chad or NK, for example, has the same amount of wealth as a neighbor. Disparity of wealth is a byproduct of economic growth
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