Friday, October 28, 2011

Income Mobility is Much More Important Than Rising Income Inequality or Stagnating Household Income, and We Have a Lot of It (Mobility)

We hear a lot these days about "increasing income inequality" and "stagnating household income," but those discussions rarely include what is probably the most important factor when it comes to income over time: income mobility.  In fact, even if: a) income inequality was increasing over time, and b) median household income was stagnant over time, those outcomes wouldn't necessarily be a problem if there was significant income mobility.  Reason? If there is substantial movement of households over time from lower-income to higher-income quintiles, households may only be earning the median household income for a short period of time on their way up to a higher quintile.  

In other words, it's more likely that most households are "typical" or at the "median" level" only temporarily on their way to a higher income group.  The fact that median household income might be stagnant over time seems far less important than what happens as households exceed median income and move up to a higher-income category.  In the case of significant income mobility over time, wouldn't households actually benefit from increasing income inequality over time if that allowed them to earn higher incomes relative to the median or low-income quintiles once they arrived at one of the top two quintiles?  

Most of those complaining about income inequality and stagnating income seem to statically assume that households or individuals stay in the same income group (by quintile, or the "top 1%," "top 10%," bottom 50%, median income, etc.) forever, with no movement over time.  If we assume that you're stuck in the bottom income quintile for life, or even earn the median household income for life (both highly unrealistic), then the concerns about rising income inequality or stagnating median household income have greater strength.  But with dynamic movement over time in the income of households and individuals, the "problems" of income inequality and stagnating income seem much less important, and might even be "non-problems."

Thomas Sowell offers this key insight (emphasis added):

“Only by focusing on the income brackets, instead of the actual people moving between those brackets, have the intelligentsia been able to verbally create a "problem" for which a "solution" is necessary. They have created a powerful vision of "classes" with "disparities" and "inequities" in income, caused by "barriers" created by "society." But the routine rise of millions of people out of the lowest quintile over time makes a mockery of the "barriers" assumed by many, if not most, of the intelligentsia.”
                      
Contrary to prevailing public opinion that households get stuck at a given income level for decades or generations, there is strong empirical evidence that households actually move up and down the economic ladder over even very short periods of time.

For example, recent research from the Federal Reserve Bank of Minneapolis is summarized in the table above, based on income data from the Panel Study of Income Dynamics that followed the same households from 2001 to 2007.  The empirical results answer the question: For households that started in a given earnings quintile (20 percent group) in 2001, what percentage of those households moved to a different income quintile over the next six years? Short answer: a lot. 

Read more here at The Enterprise Blog.

158 Comments:

At 10/28/2011 2:12 PM, Blogger Marko said...

This post is brilliant - too bad more people don't understand this. Much of the anger in the country (particularly in the OWS crowd) is based on sheer ignorance.

We need to keep using this information every time anyone uses the term "class" in any context for a group of people. There is no middle class if every five years or so half of the members of that "class" move out of that class. The 1% changes all the time. Stop talking like a Marxist and don't let people get away with it - when someone says class, remind them that class is a marxist concept and that we don't have permanent classes in a capitalist system.

By the way, I believe that the ignorance we see about economics is intentional - leftists in the media-education complex have convinced a nation of people that capitalism is bad. The internet is making it hard for them to sell this message to everyone anymore though - long live Carpe Diem!

 
At 10/28/2011 2:15 PM, Blogger Marko said...

Another way of putting the problem with focusing on income inequality - when I was young, I was earning 20k a year. Now I am earning way more than that - I guess I should be angry at myself for my income inequality. It isn't fair!

 
At 10/28/2011 2:22 PM, Blogger Hydra said...

How does this make any difference if the quintile isn't getting bigger?

ity. Reason? If there is substantial movement of households over time from lower-income to higher-income quintiles, households may only be earning the median household income for a short period of time on their way up to a higher quintile.

This seems statistically impossible.

Fact remains, whoever is in the highest quintile today makes a lot more compared to the others than 20 years ago.

Mobility does not change that. If we continue recent trends, in another 30 years the top 20% will have virtually all the income and wealth.

That is probably unsustainable, so the question is how the trend will change, not if it will change.

 
At 10/28/2011 2:30 PM, Blogger Marko said...

LOL, what doesn't make sense is that you think a quintile can get bigger! You seem to need to look up what "percent" means.

What is interesting about the chart is that 27% of people in the middle quintile moved to a higher quintile from 2001-2007. When people are saying that capitalism (meaning free markets) has failed because median wages were stagnant over this period while the rich got richer, they are not realizing that one quarter of the people that started in the middle moved up. Income wasn't stagnant for them, they got a big raise!

 
At 10/28/2011 2:32 PM, Blogger Benjamin said...

Of course, unless you drill down into the numbers, you are not sure what is going on. People might be on the edge of one bracket and earn or lose a few more dollars, and enter the next quintile down or up. They are thought to be "mobile."

A rich person (such as McCourt, owner of the L.A. Dodgers) might report huge losses for several years in a row, as revealed in divorce papers. The guy has not paid federal income taxes in years.

Eventually (I suppose) McCourt has to report some income, and then he will be recorded as rocketing through the income quintiles.

In general I prefer classic economics. It is sad to see half-baked thinking murking up the right-wing these days.

In general, the tax bite should be as small as possible. We need to scale back military outlays and rural subsidies, and trim back entitlements, regardless of how many dunce-studies are released, by either the right or left wing.

 
At 10/28/2011 2:33 PM, Blogger Ironman said...

Speaking of upward mobility....

In looking at those at the very bottom for the period covering 2004 through 2006, the U.S. Census found that only 2.8% of the entire adult U.S. population were counted as being continuously in poverty during that time (despite 12.7-13.3% of the entire U.S. population being counted as being below the poverty line during that period.) For most people, it's a very temporary condition.

 
At 10/28/2011 2:54 PM, Blogger Hydra said...

It is sad to see half-baked thinking murking up the right-wing these days.


Yup.

==============================

For most people, it's a very temporary condition.


For somee it is a permanent condition, and we should not hold that against them. But to hear those who rail aganst the safety net, assistance is a permanent condition for all poor people because they are gaming the system.

What this shows is that idea is not true: poor people are mobile too. And they probably have more incentive than the wealthy, who can drop out of the top 5 or 10% in income and still live pretty well.

 
At 10/28/2011 3:00 PM, Blogger Hydra said...

I have thre dogs. In the dog world thee is fery little clas mobility, so If I don't apply some management, the alpha dog will get all the food and the others will waste away.

But lets assume there is dog mobility, and the alpha dog changes from day to day. What this says is that over time, the food still gets shared, same as if I managed (governed) it.

Except under this system, whoever is hungriest will be the meanest and aspire to be top dog for a day, with a lot of snarling and biting ensuing.

Basically this is a huge waste of energy and resources, which can be easily managed by making sure the top dog does not get everything.

 
At 10/28/2011 3:05 PM, Blogger Marko said...

Hydra, do you think we should permanently destroy the economy for everyone else just trying to help that couple percentage points of the population that is permanently poor? If you think I am being too extreme, look to Greece for what happens when you go down that slippery slope. Because as you hurt the economy to help the poorest, there are more poor because of the bad ecomony. This snowballs until it is unsustainable. Every other heavily socialist developed economy has been trying to scale back their social welfare for decades. Why go that way? Ever heard of charity? That is how you handle those that are too disabled or too lazy to improve their lot. A rising tide lifts almost all boats, and lets you give a ride to those whose boats have holes in them.

 
At 10/28/2011 3:05 PM, Blogger Hydra said...

We need to scale back rural subsidies.

=============================

Why pick on one group or area? Some subsidies turn out well and some don't. We should work on the process that ensures good results, and not worry about which group benefits.

If there is such a thing, a million dollar subsidy that produces a $100,000 return is just as good an investment whether it happens in urban or rural areas.

 
At 10/28/2011 3:07 PM, Blogger morganovich said...

hydra-

it's just a career cycle.

what about this is so difficult to understand?

you start off earning little. you gain skills and experience, you get paid more. you move up. you reach your peak earning years late in a career.

then you retire, and you drop down.

the fact that peak earnings for everyone has gone up is a good thing, not a bad one.

you seem to be incapable of understanding this argument.

it's also completely rational.

the productivity of a brand new employee has not changed that much. unskilled is still unskilled.

the productivity of an experienced employee has soared. thus, so has pay.

the top 20% is not some exclusive club. most find their way into it at some point in a career.

maybe you earn $25k when you start.

10 years later you are making 50.

10 years after that, 75.

then you push into the top 20%, then you retire.

it's not income inequality for people, just a reflection that skills are better compensated relative to unskilled labor. that's a modern economy for you. the world's best ditch digger is not that much better than a new guy. a salesman or a programmer with 20 years of experience is.

your comment on statistical impossibility makes no sense at all. i cannot even figure out what you are talking about.

 
At 10/28/2011 3:09 PM, Blogger Marko said...

Hydra, your snarling dog analogy is telling. You believe there is a static pie that we are all fighting over. In fact, the pie can grow if you allow the best to produce and invest, and this helps all the dogs get more.

Income inequality is a funny thing. If you double everyone's pay, you increase inequality. Think about it - if you make 10k, and Bob makes 100k and you both double your pay, you also dramatically increased the inequality, but everyone is better off. If I was the 10k guy, I would want the double pay even if the rich guy also doubles.

We are not fighting over a static pie!

 
At 10/28/2011 3:10 PM, Blogger morganovich said...

also:

this trend is much more pronounced over longer periods.

75% of the bottom 20% move into the top 3 quintiles in 16 years and only 5% are still in the bottom quintile.

half the top 20% drops out every decade.

The authors analyzed University of Michigan Panel Study of Income Dynamics data that tracked more than 50,000 individual families since 1968. Cox and Alms found: Only five percent of families in the bottom income quintile (lowest 20 percent) in 1975 were still there in 1991. Three-quarters of these families had moved into the three highest income quintiles. During the same period, 70 percent of those in the second lowest income quintile moved to a higher quintile, with 25 percent of them moving to the top income quintile. When the Bureau of Census reports, for example, that the poverty rate in 1980 was 15 percent and a decade later still 15 percent, for the most part they are referring to different people.

Cox and Alm's findings were supported by a U.S. Treasury Department study that used an entirely different data base, income tax returns. The U.S. Treasury found that 85.8 percent of tax filers in the bottom income quintile in 1979 had moved on to a higher quintile by 1988 -- 66 percent to second and third quintiles and 15 percent to the top quintile. Income mobility goes in the other direction as well. Of the people who were in the top one percent of income earners in 1979, over half, or 52.7 percent, were gone by 1988. Throughout history and probably in most places today, there are whole classes of people

 
At 10/28/2011 3:10 PM, Blogger Hydra said...

Hydra, do you think we should permanently destroy the economy for everyone else just trying to help that couple percentage points of the population that is permanently poor?

=================================

I made no suggestion as to what should be done. I just pointed out that I don't think the mobility argument is a very good one, insofar as it relates or doesn't to income inequality.

On the other hand, if the data is correct, then we should stop making disparaging comments about those who are said to sponge off of entitlements indefinitely.


What is your suggestion, that we should let the poor be permanently poor, the way my alpha dog would treat the others?

 
At 10/28/2011 3:14 PM, Blogger Hydra said...

the fact that peak earnings for everyone has gone up is a good thing, not a bad one.

you seem to be incapable of understanding this argument.

==============================

That would be a good argument if it happened to everyone, but I think that is a false premise, so the argument fails.



Again, what you are suggesting is that income is shared over time.

That may be the case, but it isn't proven that one method of sharing is more efficient than another.

 
At 10/28/2011 3:17 PM, Blogger Marko said...

Hydra, since you asked, I think we should dramatically reduce the influence the federal government has on the markets. That would mean much less regulation (other than to keep the market free through rule of law such as contract enforcement), much lower taxes and no subsidies for anyone. This would allow much more growth than currently, and everyone would be better off.

I have a dream where only the disabled and lazy would be poor, and the former would be helped by the charity of those more fortunate and hard working. Not sure what to do about the lazy, I suppose those more charitable than me could help them too.

 
At 10/28/2011 3:22 PM, Blogger Hydra said...

Hydra, your snarling dog analogy is telling. You believe there is a static pie that we are all fighting over.

===============================

No, I do not believe that. It does not matter how much food I put down, the Alpah dog will take it all, even if it kills her.


Here is what I believe. If the top twenty percent get 70% of the pie today, and 75% next year, and 80% the following year, then after six years they will have all the pie, no matter how big it is. If they are all alpha dogs, they will keep it all whether they need it or not.

I doubt we can continue a trend like that, so we should consider how it is likely to change.

 
At 10/28/2011 3:40 PM, Blogger Hydra said...

your comment on statistical impossibility makes no sense at all.

===============================

Neither does the comment that income inequality does not matter because the middle class is all moving into the top quintile, or able to move into the top quintile.


You support that argument by pointing out that some people must also leave that quintile.



Suppose that income inequality does not matter, and the top quintile eventually is allowed to get ALL the income and all the wealth. Then your argument would fail, because no one will live long enough or have enough resources to work with to ever make it to the top.

That is a ridiculous scenario: it cannot happen. Theefore the present TREND towards that condition has to stop. The only question is how that change happens.

 
At 10/28/2011 3:41 PM, Blogger juandos said...

hydra whines: "Fact remains, whoever is in the highest quintile today makes a lot more compared to the others than 20 years ago"...

So what? Your reasoning for your boo! hoo! is at best vague demonstrably silly...

 
At 10/28/2011 3:44 PM, Blogger Hydra said...

Hydra, since you asked, I think we should dramatically reduce the influence the federal government has on the markets.

================================

I did not ask you about the markets or government interference in it.

In my dog analogy I am the governemnt,regulating the dogs access to food.

I could reduce my influence and just put the food down and walk away, but there would still be two dogs tha are poor and one that is very rich and fat.


My question is not about government or the markets, it is wha do we do about the poor. Do we feed them or not, and if so, how much?

 
At 10/28/2011 3:56 PM, Blogger Ed R said...

These rationalizations of income 'mobility' are a contrived distraction from questions about the degree of income inequality and the fact that it has greatly increased over the past 15 years or so.

 
At 10/28/2011 4:50 PM, Blogger juandos said...

"it is wha do we do about the poor. Do we feed them or not, and if so, how much?"...

Let's feed the poor you supposedly care about with as much of YOUR money as possible...

In fact spend, spend, spend YOUR last red cent feeding the poor...

 
At 10/28/2011 5:22 PM, Blogger Marko said...

Hydra began : "If the top twenty percent get 70% of the pie today,"

Got to stop you right there - again, it is not a static pie. The top twenty percent are MAKING 70% of the pie, not taking it from others. In your sort of cartoon socialist (actually marxist) vision, you have the government trying to regulate pie distribution fairly, but have you asked yourself where the pie comes from? Who made the pie? It sure wasn't the government. In this system anyway, the government just take pie away from the bakers that made the pie and throws it to the snarling dogs. And now you want to protest the bakers. Talk about biting the hand that feeds you!

 
At 10/28/2011 5:27 PM, Blogger Marko said...

Ok, let me put this another way - income inequality isn't a problem if everyone has a chance to make more money. It IS a problem in countries without income mobility, like India, say, that really has classes. If you are in a lower class, you can't go to school and become an engineer or doctor or whatever. That is unfair.

Here in the U.S., when you talk income inequality you are just saying that for most folks, when they are starting their careers they make much less than later in their careers. That probably doesn't explain all the spread of incomes, but you need to show much more to show a problem than just that when people are poor they make much less than when they are rich!

 
At 10/28/2011 7:12 PM, Blogger Hydra said...

Ok, let me put this another way - income inequality isn't a problem if everyone has a chance to make more money.

===============================

I don't disagree with that.

Although it is an open question of whether the cards are stacked in favor of those with money and better access to government. Everyone may have "some" chance to make money, but even considering differences in skills and ability, the chances may be way skewed.


I don't think anyone has a problem with rich people being rich. What seems to aggravate people is the relative rate of change.

Over some period of time, even though the pie is bigger, the wealthy have been getting and keeping ever larger percentages of the larger pie.

I this continues it leaves the lower classes with nothing, which is going to make it hard as hell to be upwardly mobile.

It is not income inequality that is the issue, it is income inequality that increases without end.

Too much of anything can't be a good thing.

 
At 10/28/2011 7:50 PM, Blogger Hydra said...

you need to show much more to show a problem than just that when people are poor they make much less than when they are rich!

===============================

Again, that does not seem to be the problem. It is that when they are poor they are now much poorer compared to the rich.

Lets accept your argument that total lifetime earnings are the area under a curve, where the x axis is time and the Y axis is the probability you will spend that time increment in a certain quintile times the income of that quintile.

I think youget families of curves: some people start off at the bottom of the first quintile and struggle to get very high, before falling back in old age.

Most people don't start of wth such handicaps and spend less time at the bottom, more tme in the middle, and a little bit more at the top.

Some people are more successful, or start off with a head start, and spend more time near the top. But, by definition, not everyone gets to spend even a ltile time in the top ten%.

Therefore, it is clear that even with mobility taken into account, most people will not be in that top ten, ever. It follws that most people will be worse off as income inequality increases, because they will spend more and more of their lifetime at (relatively, because the pie is growing)) lower levels of income.

If income inequality continues to increase, those relatively lower levels of income will eventually become absolutel levels of declining income.

For a few people, rising income inequality represents a chance to make a LOT of money. But for everyone else it means the large pobability is hat their life will be worse off.

Their "chance" to make money as you call it will be highly circumscribed. Despites some mobility the result of high income inequality will be that some people are fabulously wealthy and most are not.

Apparently, Muammar Khaddaffi had a high degree of income inequality compared to most Libyans. I doubt you would claim Libya was better off because of it.

There must be some level of income inequality that acts as an incentive, and some other level that acts as a drag on society.

Therefore it is silly to say that income inequality just does not matter; that those who complain about it are simply ignorant leftists. Probably within some range of valuesincome inequality does not matter so much, but either too high or too low will result in problems.

 
At 10/28/2011 8:04 PM, Blogger Hydra said...

Got to stop you right there - again, it is not a static pie.


================================

What part of this is it you do not get. I already agreed it is not a static pie. I agree the pie has been growwing for the last 20 years.

But even with a growing pie, a few people are taking home more and more of it. If this trend continues they will (eventually) have the whole pie, no matter how big it is.

The pie starts off at 100 and grows 10% a year, after six years it is 161. the top ten% get 70% of the pie the first year, so their take is 70, leaving 30 for everyone else. Their take increases 5% every year and after six years they get 100% of the larger pie: their take is 161, leaving nothing for anyone else.

You can pick different rates of growth, but the eventual result is always the same.

 
At 10/28/2011 8:08 PM, Blogger Hydra said...

but have you asked yourself where the pie comes from? Who made the pie?

===========================

It does not matter who makes the pie. If the wealthy keep getting more and more of it, this eventually leaves everyone else with nothing.


Even if you think the rich people made ALL of the pie and they are entitled to keep it ALL, that still leaves everyone else with nothing.


Are you seriously suggesting pobricide?

 
At 10/28/2011 10:09 PM, OpenID Sprewell said...

Hydra, you keep repeating the canard that the rich will eventually have all of the pie, when I have already pointed out to you the opposite is happening. The last time that the newly rich kept getting so much more of the growing pie, it was during the intense technological change of 1900-1920, when electricity and mechanization were first spreading through the US. Well, that was followed by 50 years where the income share of the rich went down, as the new tech became more widespread and the early entrepreneurs couldn't make as big windfalls simply by using the new tech. You have to have an argument for why that falling trend won't repeat itself today, not stupidly arguing that the current rising trend will somehow magically keep rising forever, particularly given rampant examples of how the new tech this time around, the PC and the internet, is also putting millionaires out of business and introducing new competition that lessens inequality, for example all the millionaire radio jockeys currently losing their jobs to middle class podcasters.

 
At 10/28/2011 10:38 PM, Blogger Don Culo said...

Let me see if I understand this.

There might be many poor people now but due to this mobility thing, they will all be part of the 1% of the very wealthy in the very near future.

Does Mercedes Benz have a lay-away plan?

 
At 10/28/2011 10:44 PM, Blogger Hydra said...

The opposite is happening on what planet? Ample evidence shows that for the past 30 years the rich have obtained an increasing share of an admittedly larger pie.

What you are doing is changing the argument, since the original one won't hold water.

Why would Mark Perry keep bringing it up if increasing income inequality was not an established fact?

 
At 10/28/2011 10:54 PM, Blogger Hydra said...

You do not read very well. I never said the rich would have everything. Just the opposite. What I said was that it is impossible and unsustainable for the rich to have everything, therefore the current trend of increasing wealth disparity cannot continue.

Now the only question is how it comes to an end.

If anything it is MP who is suggesting that it would be ok for the rich to own everything by arguing there is nothing wrong with increasing income inequality.

 
At 10/28/2011 11:02 PM, Blogger Hydra said...

Juandos does not read very well either. No place did I make any suggestion about what we do with the poor. All I did was ask a question.

 
At 10/28/2011 11:08 PM, Blogger Hydra said...

After 16 years only 5% remain in the bottom quintile.......

Really? Now there is some voodoo economics.

Where do the other 15% of the bottom quintile come from?

And if they are so mobile, what is all the whining about permanently supporting the poor with money from juandos?

 
At 10/28/2011 11:11 PM, OpenID Sprewell said...

Hydra, my second link clearly shows that the income share of the top .1-1% fell by 20-30% from their peaks during the current recession. That's on this planet, what planet are you getting your data from? How am I changing the argument? I'm directly addressing your argument about supposedly growing income inequality. Let's look at your quotes:

"If this trend continues they will (eventually) have the whole pie, no matter how big it is."

"I never said the rich would have everything."

"Their take increases 5% every year and after six years they get 100% of the larger pie: their take is 161, leaving nothing for anyone else.

You can pick different rates of growth, but the eventual result is always the same."

All quotes taken directly from your comments: who doesn't read very well? You do sometimes say that the trend is unsustainable, but since other times you dumbly extrapolate it to the extreme where the rich own everything, you contradict that. Everyone knows the trend is unsustainable forever, so you are merely stating the obvious there, and as the data I linked to shows, the income share of the rich has already been falling, just like it did during the 20s busts. And Mark saying that income mobility is more important suggests nothing of the sort that it'd be okay if the rich owned everything: that's just your silly exaggeration.

 
At 10/28/2011 11:16 PM, Blogger Hydra said...

If the population is growing faster than the pie is growing, then the top quintile could get more of the pie, and yet each person might still get less than last year. Port rich folks have it tough, competing just to stay even.


Everyone else is also increasing in population, and now they have to compete for a smaller slice of the pie, so their year over year losses are greater than the losses borne by the wealthy.

 
At 10/28/2011 11:25 PM, Blogger Hydra said...

Again, you are changing the argument, first to limit it to the newly rich, and then to the current recession.

In fact, I think you are incorrect and the wealthy have increased their income share. Certainly I have more now than before the recession.

 
At 10/28/2011 11:26 PM, OpenID Sprewell said...

Ultimately, I could care less if the top 1% owned 20% of the wealth or 80%, what I care about is that they earned it. I think they largely do earn it today and while there are no doubt unfairnesses and inefficiencies in the current market, the "solution" of govt redistribution is far worse than the problem. Even worse, we are on the verge of a trend where the technology spreads even more widely to the masses and the market is about to "redistribute" far more from the rich to everybody else, by replacing a few millionaire radio jockeys with thousands of middle-class podcasters or billionaire financiers with p2p investor pools of normal people. Crying about "inequality" when the 1% are already under assault by the market and entrepreneurs is just ignorant, or pure envy that you are incapable of directly effecting the same change. Well, whether you are incapable or not, other entrepreneurs are doing it and the same trend of lowered income inequality that we saw from 1930-1980 will likely repeat itself.

 
At 10/28/2011 11:35 PM, OpenID Sprewell said...

Huh, I limited it to the newly rich? My charts include everyone who paid income taxes, I'm merely pointing out that the rise of income inequality was because the newly rich were able to pull down more through better using new tech. I don't "limit" it to the current recession, I point out that the current recession changed the rising trend of income inequality, that had been growing over decades. I also repeatedly explain why the falling trend is likely to continue, but it appears that you do not even look at the linked data nor understand any of the arguments about fundamental causes. If you believe that it's incorrect that the wealthy have lost income share, your argument is not with me but with the IRS and the data that Megan McArdle charts in the link I gave. Have fun arguing with the data. :) If you have more now than before the recession and you're in the top groups, maybe those in the bottom groups increased their share by even more than you? ;) Or it could be you are the exception since you don't have a lot of financial wealth, unlike most of the rich who went down with the stock market.

 
At 10/28/2011 11:36 PM, Blogger Hydra said...

Ultimately, I could care less if the top 1% owned 20% of the wealth or 80%, what I care about is that they earned it.

++++++++++++

So, if they earned it you would be ok with the rich having more than 80%?

At what point would you begin to have a problem, as they approach 100% and everyone else approaches zero?

 
At 10/28/2011 11:46 PM, OpenID Sprewell said...

Hydra, if I'm in the bottom 20% making $20k and the top 20% get 40% of income, I'd rather be in the bottom 20% making $40k and the top 20% get 80% of income. I don't begrudge them their riches because they grew the pie for everyone. You are apparently jealous and keep trying to use "the poor" as an excuse for your jealousy and perhaps frustration at your own relative incompetence, when we all know that the govt is not about helping "the poor," it's about redistributing income from the rich to the middle class, with the govt bureaucracy taking a big cut of the haul for their thieving services rendered. Well, eventually you get so much thieving going on that a society collapses, which is what you see in shitholes like Venezuela or Greece, and which the US is on the road towards.

 
At 10/28/2011 11:49 PM, Blogger Hydra said...

The Atlantic article only points out that earned income for the wealthy has a lot farther to fall than for the Guy without a job. It is a cute statistical trick, but it ignores the issue of increasing disparity in wealth. As the article points out the Guy who loses half of a 500k income is still a lot better off than the Guy who loses 10% of his 20k job, and the Guy who has no loss in income because he has no job.

And that Guy earning 250k is snapping up bargain stocks and real estate.

Even if his income is not as high as it was and the income inequity has temporarily decreased, the difference in accumulated wealth has increased.

 
At 10/29/2011 12:04 AM, Blogger Hydra said...

I'm not jealous of anyone.

I just don't find the argument that the possibility of income mobility outweighs the fact that a relatively small group of people are earning more and keeping more at an increasing rate.

If that continues a few will eventually own most everything. As you point out, that is a canard.

One person, like khaddafi, or a group like the politburo can never control and own every thing. Therefore the pattern of the last 30 years has to change.


Whether it happens by taxes or charity or jobs or income mobility over time the wealthy will wind up supporting the poor. The only question is, to what extent.

 
At 10/29/2011 12:05 AM, OpenID Sprewell said...

Umm, if income share fell for the wealthy, it directly contradicts your claim of "increasing disparity in wealth." You can't increase "the difference in accumulated wealth" if your income share is going down. Yes, you may still be in a better bargaining position for distressed properties, but you earned that position by being more prudent and you actually don't see the "bargain" stuff going up in price yet: maybe the current price is the real price, not the inflated bubble price? Even if the difference in accumulated wealth increases through a market process, I have no problem with it, as that's the result of voluntary transactions and earned competence. For all the whining about the bailouts by the OWS crowd, Wall Street received a pittance compared to the hundreds of billions put into Fannie/Freddie so far, the govt-sponspored enterprises that helped start this whole mess by inflating the housing bubble. The real problem is with the govt "solutions" you prefer, not the rich scapegoats that you and the lefties are trying to pawn it off on.

 
At 10/29/2011 12:25 AM, Blogger Hydra said...

with the govt bureaucracy taking a big cut of the haul for their thieving services rendered.

++++++++

They rendered services and they got paid.

I guess they earned it, then, and they should be entitled to keep it, no?

Or are you now suggesting that some people do not earn as much as they get and should not be allowed to keep it?

 
At 10/29/2011 12:42 AM, OpenID Sprewell said...

I'm saying that thieves should have their heads chopped off, not quibbling about how much they're allowed to keep. And for every one Madoff that stole billions, there are thousands of govt crooks stealing hundreds of billions and funneling it to their backers, whether teachers' unions or Solyndra "investors." As you yourself admit, the only time when one person like Qaddafi or a small group like the politburo controls almost everything is because they use govt to do so, whether by installing themselves as a dictator or communist bureaucracy. So it is quite peculiar that you want more of that govt power, to affect the 1% earning $1.3 trillion when the govt is already stealing trillions more every year. The govt crooks don't want to stop stealing so they say, "Let's just steal more from the rich." The fact that you go along with these govt crooks marks you as hopelessly deluded.

 
At 10/29/2011 12:48 AM, Blogger Hydra said...

The discussion here is not whether the government steals, or whether income inequality is increasing. The discussion is whether increasing income inequality is trumped by income mobility.

I don't think so, and you have not convinced me otherwise by digressing.

You seem to be convinced that society as a whole will be better off if we allow a few wealthy job creators to get and keep as much of the gdp as they care to.

At the same time you seem to argue that they are gaining wealth at a slower rate because of the recession. That they are not even really job creators, because they are constantly cycling through the top tier.

Let's suppose they are not creating jobs because they are afraid of increased taxes and regulation.

Isn't losing enough to drop out of the top 10% a far bigger tax? What are these alpha citizens afraid of, really? That some lettuce picker will take their job?

 
At 10/29/2011 12:54 AM, Blogger Hydra said...

So it is quite peculiar that you want more of that govt power, to affect the 1% earning $1.3 trillion when the govt is already........

+++++++

Where did I remotely say anything like that? I don't think I suggested the government do anything.

All I said was that I don't buy MPs argument that mobility trumps increasing income inequality.

 
At 10/29/2011 12:58 AM, Blogger Hydra said...

Sorry, but I don't believe that only 5% of the poor are in the bottom quintile, or that 90% are in the top 10% at some point.

And, if you convince me on those points, you would still have to explain why such a system is better than any other.

 
At 10/29/2011 1:00 AM, Blogger Hydra said...

If the govt. Is stealing trillions every year you would think they could pay the bills.

 
At 10/29/2011 2:27 AM, Blogger juandos said...

"No place did I make any suggestion about what we do with the poor. All I did was ask a question"...

Yet silly hydra doesn't like the answer to a question he puts out there time and again...

Your incessant whining about the supposedly 'victimized poor' ignores the realities of how many poor in this country have enhanced their financial positions...

 
At 10/29/2011 2:52 AM, Blogger juandos said...

"I made no suggestion as to what should be done. I just pointed out that I don't think the mobility argument is a very good one, insofar as it relates or doesn't to income inequality"...

Typical hydra whine...

Yet another thoroughly stupid statement since there is NO such thing as 'income inequality' in a free market system...

People get paid what the market will bear for their skills or services in a free market system...

So if hydra perceives some yet to be described 'income inequality' he should look to external forces (usually government actions) for an explanation if he can't understand the mobility construct...

 
At 10/29/2011 8:47 AM, Blogger Itchy said...

Here is a link from The NY Times showing income mobility from 1988 to 1998:

http://www.nytimes.com/packages/html/national/20050515_CLASS_GRAPHIC/index_03.html

It is interesting that the numbers haven't changed much from decade, except that it appears easier to stay in the top 20% once you get there today. For both sets of data, starting in the middle quintile gives you the approximately the same likelihood of moving up or down. It seems like this is "perfect" income mobility

I've been meaning to post about this in my crappy blog sometime ... procrastination.

 
At 10/29/2011 9:19 AM, Blogger Les Johnson said...

This reminds me of study done of the world’s poorest nations, who it was claimed, were getting poorer.

Technically it was true, if one went by the average wealth of each quintile.

But, looking at the data, one could see that the wealthiest nations in each of the two poorest quintiles, had left the poorer one for the next richest. Of course, this reduced the average in both quintiles, as nations involved were the richest in the poor quintile the previous year, then the poorest in the richer quintile the next year.

In a similar vein, I had a cousin who claimed that by immigrating to the US, he raised the average IQ in both countries.

 
At 10/29/2011 9:34 AM, Blogger Auntie Ann said...

We have also imported millions of uneducated, low-productivity workers in the last decade who can't read, can't speak English, and can't legally hold jobs in this country. They are among the least likely to move into higher income groups; though their children might do so.

 
At 10/29/2011 10:43 AM, Blogger Hydra said...

. For both sets of data, starting in the middle quintile gives you the approximately the same likelihood of moving up or down. It seems like this is.....

+++++++++++

Isn't that another piece of data that refutes MP's theory?


If you are equally likely to move up or down AND income inequality is increasing, then mobility cannot counteract the problem, if there is one.

 
At 10/29/2011 11:00 AM, Blogger Hydra said...

How is that whining? I merely stated a well documented fact, without commenting either way on the desireability of said condition. Juandos offers gratuitous insults and lies, but offers little in the way of ideas.

 
At 10/29/2011 11:15 AM, Blogger Hydra said...

if income share fell for the wealthy, it directly contradicts your claim of "increasing disparity in wealth." You can't increase "the difference in accumulated wealth" if your income share is going down. Yes, you may still be in a better barg.....

Of course you can. Don't confuse the thirty year issue by pointing out short term fluctuations. The trend is and has been increasing income disparity, otherwise MP and others would not keep bringing it up.

Even so, assume income disparity as a percent went down during the recession because the wealthy had a lot farther to fall.


A Guy making $40k might be able to put something aside, and thereby increase his wealth, eventually. But if he is out of work, he can accumulate zero or less than zero.

Compared to someone who is only making $250 k in the recession, the unemployed person's accumulation of wealth has fallen dramatically, in dollars and in percent.

 
At 10/29/2011 11:20 AM, Blogger Hydra said...

Juandos is a liar. Nowhere in this post did I whine about the victimized poor.

 
At 10/29/2011 11:29 AM, Blogger juandos said...

Speaking of gratious comments, hydra offers up the following: "How is that whining? I merely stated a well documented fact, without commenting either way on the desireability of said condition"...

No you offered up an often repeated lie as a comment...

There weren't any facts involved...

"Juandos offers gratuitous insults and lies, but offers little in the way of ideas"...

You mean besides the suggestion that YOU pay for your own inane ideas instead of expecting the government to steal from your fellow citizens and financing them?

 
At 10/29/2011 11:30 AM, Blogger Hydra said...

Income mobility is nice, but it does not change the fact that both income and wealth inequality have been increasing. The fact that the size of the pie is increasing is irrelevant, and it does not guarantee better conditions for those that get increasingly smaller portions of that larger pie.

As described here, income mobility is just another way to share the pie over time. Seth agrees that the wealthy cannot own everything, so one way or another, the pie will be shared.

Why would we choose an inefficient method?

 
At 10/29/2011 11:34 AM, Blogger juandos said...

So now hydra can't remember or understand his own comments: "Juandos is a liar. Nowhere in this post did I whine about the victimized poor"...

You're always whining about the victimized poor regardless of the way you try to word it...

With you rich people are rich because someone else was victimized by the rich or the system or some other baloney you dream up...

 
At 10/29/2011 11:38 AM, Blogger juandos said...

"The fact that the size of the pie is increasing is irrelevant, and it does not guarantee better conditions for those that get increasingly smaller portions of that larger pie"...

Oh dear! boo! hoo!

LMAO! There he goes again...

 
At 10/29/2011 1:33 PM, Blogger Zachriel said...

Mark J. Perry: Contrary to prevailing public opinion that households get stuck at a given income level for decades or generations, there is strong empirical evidence that households actually move up and down the economic ladder over even very short periods of time.

Apples and oranges. The first half of your statement concerns long periods, the latter half short periods.

The short term trend is dominated by young-to-old transitions. For instance, someone born in the upper classes, may start out with low income, but then begins the climb up the ladder, building on the family and school network of relationships.

As for the long term trend, "Both the United States and the United Kingdom stand out as having higher associations between fathers’ and sons’ earnings—and therefore less economic mobility—than do seven other industrialized countries"

Isaacs, International Comparisons of Economic Mobility, Pew Foundation

 
At 10/29/2011 2:59 PM, Blogger juandos said...

Re: 'Isaacs, International Comparisons of Economic Mobility, Pew Foundation'...

Oh yeah! Just what I would consider a credible source, the 'keynesian clowns' from the Brookings Institute...

 
At 10/29/2011 3:06 PM, Blogger Zachriel said...

juandos: Oh yeah! Just what I would consider a credible source, the 'keynesian clowns' from the Brookings Institute...

Look at the underlying data, then respond to our comment.

 
At 10/29/2011 3:08 PM, Blogger juandos said...

"Look at the underlying data, then respond to our comment"...

I learned long ago that looking at anything the Brookings puts out was a waste of time...

 
At 10/29/2011 3:13 PM, Blogger Itchy said...

RE: "Isaacs, International Comparisons of Economic Mobility, Pew Foundation"

Can you provide a link to that. I don't think the burden of googleing should fall on me if you are using this data to support your position.

Thanks

 
At 10/29/2011 3:33 PM, Blogger juandos said...

"Can you provide a link to that. I don't think the burden of googleing should fall on me if you are using this data to support your position"...

Help yourself: Link

Keep in mind though After World War II, the Brookings Institute fostered Republican support for the Marshall Plan, which the Institute helped to develop. By the 1960s, Brookings was linked to the establishment wing of the Democratic Party, backing Keynesian economics. The Institutes influence on the operations of the federal government, at times, has been substantial. In the 1920s, Brookings was largely responsible for the creation of the federal budge, hardly something to base credibility on...

 
At 10/29/2011 4:19 PM, Blogger Hydra said...

"The fact that the size of the pie is increasing is irrelevant, and it does not guarantee better conditions for those that get increasingly smaller portions of that larger pie"...

Oh dear! boo! hoo!

+++++++++++++++++++++++++++


I don't understand what makes you think I am sobbing over this, or even care one way or the other.

I simply stated a fact, which will remain a fact however I feel about it.

 
At 10/29/2011 4:22 PM, Blogger Hydra said...

You mean besides the suggestion that YOU pay for your own inane ideas instead of expecting the government to steal from your fellow citizens and financing them?

+++++++++++++++++++++++++++

Juandos is a liar. I never suggested any such thing, nor do I expect such behavior from my government.

 
At 10/29/2011 5:15 PM, Blogger Hydra said...

Marko, obviously the quintile does not get bigger, so how can the bottom 80% move into the top quintile? They cannot. except as you point out they might move in and out and spend some time there.

But, whoever is in that top quintile, over time, has been earning a gradually increasing portion of the total GDP.

Obviously, there CAN be a situation in which the total GDP increases, the top quintile gets a bigger share of it, but everyone in the lower quintiles is still better off, dollarwise if not percentwise.

But there is no guarantee that is the case. Anyone can put together a little model that increases GDP and Population and the share% the top quitile gets and see the conditions (over time) under which the bigger pie makes everyone better off, or only the top quintile.

 
At 10/29/2011 5:17 PM, Blogger Hydra said...

"I learned long ago that looking at anything the Brookings puts out was a waste of time..."

++++++++++++++++++++++++++++

Juandos: Looking at anything is a waste of time if your mind is made up ahead of time.

 
At 10/29/2011 5:20 PM, Blogger Hydra said...

You're always whining about the victimized poor regardless of the way you try to word it...

============================

Actually, I am not, but you are always reading into other people's comments anything you choose to, and then beating them up for things they never said.

Basically, this makes you a liar, and no comment you make can be taken seriously.

 
At 10/29/2011 5:28 PM, Blogger Hydra said...

"With you rich people are rich because someone else was victimized by the rich or the system or some other baloney you dream up..."

===============================

I never said any such thing, and if you are attributing such baloney to my mouth, then you are a liar.


But let's be clear, SOME rich people got that way by victimizing others. They may even have gotten that way wih the help of government. But just because government allows something, is no reason to act unethically.

 
At 10/29/2011 5:39 PM, Blogger Hydra said...

One more time, this has nothing to do with what I think about rich and poor, or what I think about government. It is only about the headline on this string.


Income mobility can help SOME people beat stagnating household income, but it cannot solve the problem, cannot boost the income of most people and it cannot improve the average income in a stagnant environment.

 
At 10/29/2011 5:48 PM, Blogger Hydra said...

"Income inequality is a funny thing. If you double everyone's pay, you increase inequality."

++++++++++++++++++++++++++++

That is true, but it is not so funny if you ae in a stagnant group and the upper income is doubled and yours is not.


In the case you describe, we probably would not be hearing about income inequality, but that is not the case we have.

 
At 10/29/2011 5:57 PM, Blogger Hydra said...

"When the Bureau of Census reports, for example, that the poverty rate in 1980 was 15 percent and a decade later still 15 percent, for the most part they are referring to different people. "


But at least society as a whole is better off, because those who were previously poor moved to higher quintiles, displacing others in the process, right?

Maybe 15% poor is the bottom line: its the best we can expect of the system we have. But It sure puts the hurt on the idea that EVERYONE is better off because the pie is getting bigger.

 
At 10/29/2011 7:33 PM, Blogger Zachriel said...

juandos: Keep in mind though ...

Again, we raised a specific issue. The short term trend is dominated by young-to-old transitions. Long term gives a much better indication of economic mobility. Not only does the U.S. have higher income inequality, but there is a higher correlation of economic status between generations when compared to many other developed economies.

 
At 10/29/2011 7:37 PM, Blogger Zachriel said...

Itchy: Can you provide a link to that.

http://www.economicmobility.org/assets/pdfs/EMP_InternationalComparisons_ChapterIII.pdf

 
At 10/30/2011 4:27 AM, OpenID Sprewell said...

Hydra, yes, you're right, the discussion isn't whether income inequality is increasing, because I linked stats that clearly show that it has been decreasing recently. Nobody here is trying to convince you, I know you can't be convinced to ditch your leftie religion. I'm just firing facts at you and watching you twist yourself into a pretzel and contradict yourself, all so you can run away from reality. The way a free market works, the only way a few can get a big share is if everyone else values their work a lot. Unlike the politburo, who just hold a gun to everyone's head and make them do what they want, no billionaire can force you to go to Wal-Mart or buy GEICO insurance. So the inevitable result is that they are successful and super-rich because they made everybody else better off. The fact that I have to explain this to you and 70% of the populace just goes to show how economically ignorant you and most people are. It is a tautology to say the rich are gaining wealth slower because of the recession, they are one and the same phenomenon. What I said, and which you apparently didn't understand, is that you can only get windfalls from new tech for so long, just like in the 20s. Cycling through the top tier implies nothing about being a job creator, another one of your fantasy connections. Who said the top 10% are dropping out of their top tier because they're not creating jobs? Everyone is pretty much frozen because of all the dumb regulations and debt that Obama's putting on the books, with the exception of a few brave, risk-taking souls like Bezos or Jobs before he passed. Even the rest of the rich are not afraid of anything, they're just waiting till the morons in govt now are replaced with the Tea Party and they can start getting back to work. You specifically suggested taxes as a possible way to reduce inequality, "Whether it happens by taxes," so stop with the idiotic backtracking. If you don't want the govt to do anything, why are we even talking about this issue? It will just work itself out, like it always does. The govt can't pay the bills despite stealing trillions because they try to trick people by borrowing some of it now and stealing more back later to cover their debts.

 
At 10/30/2011 4:29 AM, OpenID Sprewell said...

And now the trend is falling income disparity, which you just try to run away from. Saying disparity went down because the rich had farther to fall makes no sense, so I'll take that for another idiotic proclamation and move on. Of course someone who's jobless can't accumulate wealth, but that's irrelevant when compared to the obvious fact that the wealth disparity can only go down when the income share of the top 1% is going down. Who is Seth, one of your imaginary friends? I see no Seth in this thread. I have no idea what you mean with your non sequitur about inefficient methods so I'll ignore another nonsensical remark on your part. 15% poor where the poor changes every year is not only the best we can have, it's something no other country can even dream of attaining.

That means all you have to do is enter this country from some third-world shithole and you almost always get on an escalator up the quintiles, assuming you actually want to work. EVERYONE is better off because we're making the poor richer every year and allowing new poor to come in and take their place, so they can take the same elevator up. For you to whine that the poor entering aren't less than 15%- how would we do that? Close the borders so nobody could get in?- or make up shit about how everybody isn't doing better is beyond idiotic, when that 15% is largely moving up and being replaced by the huddled masses from some new third-world shithole every year. If anything we should open the borders and grow that poor 15%, so we can move more people up the ladder and grow our economy even more.

 
At 10/30/2011 4:37 AM, OpenID Sprewell said...

Zach, your linked study looks at only one measure of mobility, how much fathers' earnings correlate with their sons. As far as I'm concerned, it is good that they're more highly correlated here, as the apple normally doesn't fall far from the tree, unless you live in those socialist countries that they use for comparison, that have the more capable tie one hand behind their back so that everyone is made "equal," equally poor.

 
At 10/30/2011 5:37 AM, Blogger juandos said...

zach says: "Not only does the U.S. have higher income inequality..."...

I repeat in a 'free market' system there is NO income inequality...

NONE! People get well paid in this country for skill sets in demand...

No one is being forced to work for less than he or she thinks they're worth...

 
At 10/30/2011 6:06 AM, Blogger juandos said...

"Juandos: Looking at anything is a waste of time if your mind is made up ahead of time"...

Gee hydra, its apparent you either agree with the fraud of Keynesian economics or you don't know what it is...

Again the hydra attempts to divert attention away from his previous comments on similer subjects: "I never said any such thing, and if you are attributing such baloney to my mouth, then you are a liar"...

No as usual hydra you're lying (but then again its expected of liberals since the facts never fit their template) because you've implied it to often in past comments so I thought I'd just cut to the chase...

"But let's be clear, SOME rich people got that way by victimizing others"...

Again long on whine and short on credible substance...

Did these rich people go out and steal their wealth with a gun?

 
At 10/30/2011 8:15 AM, Blogger Zachriel said...

Sprewell: Zach{riel}, your linked study looks at only one measure of mobility, how much fathers' earnings correlate with their sons.

Yes, precisely. That's because the original post conflated short term and long term changes in income disparity, which have different causes. It was an apples to oranges comparison. Our reply was specifically addressed to that.

Sprewell: As far as I'm concerned, it is good that they're more highly correlated here, as the apple normally doesn't fall far from the tree, ...

That's irrelevant to the point. The original post made a claim about economic mobility. In any case, most people consider economic mobility to be a good thing.

Sprewell: ... unless you live in those socialist countries that they use for comparison, that have the more capable tie one hand behind their back so that everyone is made "equal," equally poor.

What you're saying is that there is no entrenched economic power structure in 'socialist' countries, but that everyone has a chance to succeed.

juandos: I repeat in a 'free market' system there is NO income inequality...

Of course there's income inequality. Maybe you're saying there's no income inequity, meaning that people are paid according the economic value of their work. That's not true either, as it assumes markets work perfectly, which they don't.

Sprewell: And now the trend is falling income disparity, which you just try to run away from.

As income inequality was quite exaggerated leading up to the financial meltdown, we would expect it to begin a decline, as it did after the Crash of '29. Do you have a citation for that? Gini Index? Year by year history?

Sprewell: For all the whining about the bailouts by the OWS crowd, Wall Street received a pittance compared to the hundreds of billions put into Fannie/Freddie so far, the govt-sponspored enterprises that helped start this whole mess by inflating the housing bubble.

Bailing out Fannie Mae and Freddie Mac IS bailing out the banks. That's very basic economics. It certainly didn't bail out mortgagers.

 
At 10/30/2011 8:34 AM, Blogger Itchy said...

Zachriel,

Itchy: Can you provide a link to that.

http://www.economicmobility.org/assets/pdfs/EMP_InternationalComparisons_ChapterIII.pdf


The study focuses on two things:

1) Intergenerational Mobility. The difference between the United States and Western European Countries is only on mobility from the bottom quintile. The authors offer no explanation for this. The responsibility probably falls on the parents and the education system and not some underlying repressive power of the rich.

2) Short Term Mobility, which seems consistent with the number that Mark and I showed for 2001-2007 and 1988-1998. This short term mobility supports the claim made in the initial post that people transition from one quintile to others throughout their careers and are not a static block of the population

 
At 10/30/2011 8:47 AM, Blogger Jon said...

Paul Krugman has commentary on Mark's source (James Pethokoukis) here. He calls it "flat out lies". For those interested in facts, take a look. For those with their mind made up, I don't know, maybe call Krugman some names.

 
At 10/30/2011 10:45 AM, Blogger Zachriel said...

Itchy: The difference between the United States and Western European Countries is only on mobility from the bottom quintile.

That is incorrect. It is the percentage of correlation of relative income between fathers and sons. In the United States, a son's income is more closely tied to their father's than in other developed countries.

Itchy: The responsibility probably falls on the parents and the education system and not some underlying repressive power of the rich.

It makes sense that parents would instill their children with the vocational education, work ethic and network of connections that lead to success. It's not direct repression, but more akin to the family business, and the old boy network.

Itchy: This short term mobility supports the claim made in the initial post that people transition from one quintile to others throughout their careers and are not a static block of the population.

Of course not. The young of the well-to-do go to the best colleges, start their careers with less debt, and have a network of associations that lead to success. However, they are measured as being within the lower quintile, quickly rising to the upper quintile. Children of the well-to-do achieving success isn't what most people mean by economic mobility.

The question is whether the children of the poor can rise through merit. Certainly, the U.S. has economic mobility, but not as much as comparable European countries.

 
At 10/30/2011 1:21 PM, Blogger Ron H. said...

"But lets assume there is dog mobility, and the alpha dog changes from day to day. What this says is that over time, the food still gets shared, same as if I managed (governed) it. "

This is a great example of your worldview: You and those who know what is best, managing life for the rest of us dogs. LOL

It is likely a failure of government (you) that allows the alpha dog to get all the food in the first place, so you try corrective actions (regulations) for the problem you caused.

If you doubt that, ask yourself why, in a free market (wild) dog world, lesser dogs continue to prosper.

 
At 10/30/2011 1:23 PM, Blogger Hydra said...

Which spiel are we to believe?

1) Income inequality is not a real problem because it is more than compensated for by income mobility: most poor people do not stay poor.

2) As dependence upon welfare state institutions increase, the work ethic declines… and dependency increases. Redistributionist schemes only perpetuate the culture of dependency and poverty.

 
At 10/30/2011 1:33 PM, Blogger Ron H. said...

"What is your suggestion, that we should let the poor be permanently poor, the way my alpha dog would treat the others?"

If you didn't manage your dogs' lives so closely, your alpha dog would probably hunt, and provide plenty for the lesser dogs. Your insistence on managing their lives is what causes the "fixed pie" lesser dog poverty you find so troublesome.

 
At 10/30/2011 1:35 PM, Blogger Ron H. said...

"I made no suggestion as to what should be done"

You suggested that some really smart person like you should manage the lives of others (dogs) to correct the evils of income inequality.

 
At 10/30/2011 2:00 PM, Blogger Hydra said...

This is a great example of your worldview: You and those who know what is best, managing life for the rest of us dogs.

++++++++++++++++++++++++++++

Give me a break. If you are going to extrapolate my world view from a simple analogy then you are going down the same path as Juandos, in putting words in my mouth I never said.


Aside from that, I accept your extension of the analogy.

If you doubt that, ask yourself why, in a free market (wild) dog world, lesser dogs continue to prosper.


In the wild dog world the lesser dogs do not survive, and over time the evolve to become meaner and more aggressive dogs.

Except that, even in the (captive) wolf world, lesser dogs that offer obeisance to the alpha dogs though a kind of bowing or curtsey will be cared for at some level.

In the wild, wolf packs are almost exclusively breeding groups - families. In such families the parents are doninant and caring for the young is a natural condition.

African wild dog packs comprise multiple males and and fewer or single females. African dogs hunt cooperatively and care for the injured sick and young cooperatively. I imagine that at some level they have to abandon those they cannot care for, and some calculation of "cost to the group" is made.

Humans seem to have a problem with the idea that at some level care for the incapacitated is good for the group, and at some other level one has to cut the losses.

 
At 10/30/2011 2:06 PM, Blogger juandos said...

"Paul Krugman has commentary on Mark's source (James Pethokoukis) here. He calls it "flat out lies""...

Krugman calling someone else a liar is the epitome of both hubris built on abysmal ignorance and hilarity built on hypocrisy...

Good one jon!

 
At 10/30/2011 2:08 PM, Blogger juandos said...

"In the United States, a son's income is more closely tied to their father's than in other developed countrie"...

Noit isn't...

 
At 10/30/2011 2:15 PM, Blogger juandos said...

Just can't get over that socialist hump you're perched on can you zach?

"Of course there's income inequality. Maybe you're saying there's no income inequity, meaning that people are paid according the economic value of their work. That's not true either, as it assumes markets work perfectly, which they don't"...

Income differences do not mean income inequality zach even from one person to the next in the same job field or same skill set...

According to whom (as in which socialist hero) makes the credible claim that the market doesn't work perfectly?

Markets work as perfectly as the unfettered human condition allows...

 
At 10/30/2011 2:17 PM, Blogger juandos said...

"If you are going to extrapolate my world view from a simple analogy then you are going down the same path as Juandos, in putting words in my mouth I never said"...

LMAO!

Hey hydra, 'De-nial' is NOT a river in Egypt regardless of what you may have heard...

 
At 10/30/2011 2:21 PM, Blogger Hydra said...

You suggested that some really smart person like you should manage the lives of others (dogs) to correct the evils of income inequality.

==============================

I made no suggestion as to hwo the situation might be changed, I merely described the situation as it is. Again I submit I made no recommendations as to how dogs should be governed, but at least in my house, the dogs don't get to make the rules.

Are you seriously suggesting that my dogs lives and the household would be better off if I just put down the food and let them fight over it?

In any case this is an attempt to change the conversation. The ppoint of the dog analogy was to point out that income mobility (cycling through the alpha dog) only amounts to another way of sharing and distributing the wealth.

The question I asked ( without making any suggestion one way or another) is whether sharing and redistributing the wealth through competition (snarling and snapping in the dog world) is the best way, or whether the group and everyone in it could be better off with some other system.

Obviously, humans have tried some other systems that did not work, but that does not mean we have the best one.

Some people might claim there is a certain problem with sociopaths who refuse to cooperate with anyone on anything and regard any such activity as an attempt to steal from them and an affront to their (own percieved) alpha status. They might claim that without 100% cooperation there is no cooperation and therefore competition is the default best available method.

 
At 10/30/2011 2:25 PM, Blogger Hydra said...

Hey hydra, 'De-nial' is NOT a river in Egypt regardless of what you may have heard...


==============================
Typical Juandos. Gratuitous insult with no refernce to content.


Look in the mirror Juandos. As far as I am concerned you have confirmed yourself as a liar, and nothing you say can be taken seriously. Deny that all you like, it won't change the fact.

By the way, is your last name McCarthy?

 
At 10/30/2011 2:36 PM, Blogger Hydra said...

Markets work as perfectly as the unfettered human condition allows...

===========================

Give me a break. Are you seriously suggestiong we should unfetter humans just so we can have perfect markets, as you define them - regardless of the effect that might have on the human consition?

Aren't yuo just trading one constraint on the human condition (fetters) for another constraint (whatever the market dishes out)?

There is nothing in a perfect market that guarantees the best outcome for the human condition you suddenly seem to care so socialistically about.

 
At 10/30/2011 2:39 PM, Blogger Hydra said...

"In the United States, a son's income is more closely tied to their father's than in other developed countrie"...

==============================

Maybe maybe not, but it does appear that at some level in most countries a sons eventual income is closely tied to the parents.

At least in the US, one of the best predictors of future academic achievement is the income of the parents.

 
At 10/30/2011 2:41 PM, Blogger Hydra said...

Krugman calling someone else a liar is the epitome of both hubris built on abysmal ignorance and hilarity built on hypocrisy...

===========================

Ever consider taking lessons on how to dish out credible insults?

 
At 10/30/2011 2:44 PM, Blogger Hydra said...

If you didn't manage your dogs' lives so closely, your alpha dog would probably hunt, and provide plenty for the lesser dogs.

================================

Actually, no. see my comments on dog behavior. In the wolf world the "alpha dogs" are the parents, and the only lesser dogs they care for are their offspring.

In the Africn wild dog world they hunt and care for others cooperatively, and the alph dog concept does not apply.

 
At 10/30/2011 2:53 PM, Blogger juandos said...

"Are you seriously suggestiong we should unfetter humans just so we can have perfect markets, as you define them - regardless of the effect that might have on the human consition?"...

Abso-damn-lutely! You 'progressotards' have a perfectly dispicable track record of trying to impose conditions on the human condition...

History is replete with your bloody failures...

BTW I'm not defining the market condition, the market does...

"Aren't yuo just trading one constraint on the human condition (fetters) for another constraint (whatever the market dishes out)?"...

Nope! Now I see your problem hydra you don't understand what the free flow of goods and services among free market equals are and you seem scared of the proposition...

A 'free market' in and of itself imposes no restraints...

"There is nothing in a perfect market that guarantees the best outcome for the human condition you suddenly seem to care so socialistically about"...

According to whom hydra?

"Ever consider taking lessons on how to dish out credible insults?"...

Ever consider taking lessons in basic economics?

 
At 10/30/2011 6:05 PM, Blogger Zachriel said...

Jon: For those with their mind made up, I don't know, maybe call Krugman some names.

juandos: Krugman calling someone else a liar is the epitome of both hubris built on abysmal ignorance and hilarity built on hypocrisy...

Heh.

juandos: No it isn't...

Not an argument.

juandos: Income differences do not mean income inequality zach even from one person to the next in the same job field or same skill set...

Um, if one person makes $1 and the other person makes $2, well, $1 ≠ $2. We suggested above that you may have meant inequitable, but you ignored that possible clarification.

juandos: According to whom (as in which socialist hero) makes the credible claim that the market doesn't work perfectly?

A simple example is nepotism. The boss keeps his incompetent brother-in-law on the payroll because it keeps peace in the family.

 
At 10/30/2011 6:50 PM, OpenID Sprewell said...

Zach, the original post said nothing about disparity, only mobility, and long-term changes show the same patterns. Your reply brought in a completely different measure of mobility, how much a son's earnings differ from his dad's, which is an extremely weak and dumb way to measure mobility, because there are obvious genetic and teachable traits passed from father to son, which you would expect to cause a correlation in earnings. I'm not sure why you think that's irrelevant, other than your wishing it was. :) Economic mobility between quintiles is good: your assertion that a kid's earnings should show basically no correlation to the father's earnings is silly. You completely missed my point about the more socialist countries: it's that their entrenched economic power structure tries to enforce "equality" by taxing the more capable disproportionately, thus shrinking the economy and making everybody in their society poorer. If they're so stupid and choose such a lot, fine with me, but I certainly wouldn't want to copy them here.

If you already know that inequality is declining, why do I need to source it? I already gave a link earlier in this thread, which even Hydra eventually found. Bailing out the formerly publicly owned Fannie and Freddie was largely about bailing out the Chinese and other creditors. You're right that as a secondary effect it did also help out the banks and the "mortgagers" who would otherwise be foreclosed on. If we were to follow your logic to all the secondary effects, then the only people complaining about the bailouts would be the taxpayers, because all parties to the mortgage mess also benefited from every bailout to some degree. Not sure what you think basic economics has to do with any of these contractual distributionary results.

 
At 10/30/2011 6:52 PM, OpenID Sprewell said...

Even your beloved generational mobility study showed basically no difference between the US and the other countries in how many of the rich kids made less than their dads. As Itchy points out, the only mild difference in mobility was that the poor kids who stayed poor was slightly more in the US. As for income, it found that about 50% of a kid's income was probably related to their father's income in the US, as compared to 15-20% in some other countries. Frankly, 50% seems perfectly reasonable to me, perhaps even a bit low, 15-20% seems unnatural and is likely only the result of extensive interference by the govt into the economy, making everyone poorer in the process. As for the incompetent brother-in-law, is nepotism illegal in Canada or Denmark? Cuz they don't have a magic "solution" to that problem either.

Jon, your response is a perfect case study in how hilariously dumb your and your fellow lefties' responses are. Mark's post is about mobility, which has nothing to do with the inequality figures and commentary you link to. Krugman calls those separate inequality figures "lies" and makes a hilarious analogy to global warming, which we all know is another scam. There are no "facts" anywhere in his post, all he does is link to another claimed takedown. The fact that you can make so many glaring mistakes in a single paragraph really goes to show what we're dealing with here.

 
At 10/30/2011 7:45 PM, Blogger Itchy said...

Re: Zachriel

Itchy: The difference between the United States and Western European Countries is only on mobility from the bottom quintile.

That is incorrect. It is the percentage of correlation of relative income between fathers and sons. In the United States, a son's income is more closely tied to their father's than in other developed countries.


No you are incorrect. Table 1 of the source that you provided clearly shows that having a top 20% father results in the same likelihood of a top 20% son in the the United States as anywhere else in the study. As I conceded, the data do show some "stickiness" for intergenerational mobility for the bottom 20% in the United States.

The study's authors point out that "little is known about immigrants ..." These would be the key data for showing the level of a country's economic mobility

 
At 10/30/2011 9:21 PM, Blogger Ron H. said...

"Give me a break. If you are going to extrapolate my world view from a simple analogy then you are going down the same path as Juandos, in putting words in my mouth I never said."

That isn't all I know about your worldview, and it's a perfect example of your notion that someone should manage the lives of others.

1. "In the wild dog world the lesser dogs do not survive, and over time the evolve to become meaner and more aggressive dogs."

2. "African wild dog packs comprise multiple males and and fewer or single females. African dogs hunt cooperatively and care for the injured sick and young cooperatively."

Which is it? Do wild dogs care for less capable members of the group, or don't they? You can't have it both ways.

"I imagine that at some level they have to abandon those they cannot care for, and some calculation of "cost to the group" is made."

Yes, I imagine them pondering at great length, then taking a vote.

"Humans seem to have a problem with the idea that at some level care for the incapacitated is good for the group, and at some other level one has to cut the losses."

No, humans are very good at this, and are very willing to help incapacitated members within their family and group.

Unlike your view, however, that umbrella of care doesn't extend to 300 million people.

 
At 10/30/2011 9:29 PM, Blogger Ron H. said...

"Suppose that income inequality does not matter, and the top quintile eventually is allowed to get ALL the income and all the wealth. Then your argument would fail, because no one will live long enough or have enough resources to work with to ever make it to the top."

Do you understand the word quintile? It appears that you don't.

"That is a ridiculous scenario: it cannot happen. "

I'll say!

 
At 10/30/2011 9:31 PM, Blogger Ron H. said...

"That would be a good argument if it happened to everyone, but I think that is a false premise, so the argument fails."

You have made morganovich's point for him. You are incapable of understanding this argument.

 
At 10/30/2011 9:37 PM, Blogger Itchy said...

No, humans are very good at this, and are very willing to help incapacitated members within their family and group.

Unlike your view, however, that umbrella of care doesn't extend to 300 million people.


Some of us are also very willing to care for dogs in our group too.

I for one would not hesitate to care for my dog, who is a trusty, loyal companion, over anyone commenting on this blog because I don't know you nor do I feel any sort of emotional attachment towards any of you.

 
At 10/30/2011 11:47 PM, Blogger Ron H. said...

1. "Again I submit I made no recommendations as to how dogs should be governed, but at least in my house, the dogs don't get to make the rules."

2. " I have thre dogs. In the dog world thee is fery little clas mobility, so If I don't apply some management, the alpha dog will get all the food and the others will waste away.

Basically this is a huge waste of energy and resources, which can be easily managed by making sure the top dog does not get everything.
"

Which is it? Do you apply some management to ensure food equality for your dogs, or don't you?

"In any case this is an attempt to change the conversation. The ppoint of the dog analogy was to point out that income mobility (cycling through the alpha dog) only amounts to another way of sharing and distributing the wealth."

Not at all. you presented the dog analogy, and suggested that what you see as a problem in your dogs' world, was best solved by you intervening to insure income equality.

This is very similar to your view that in the human world, someone should assume that they have the right and the authority to force rules and regulations on others for their own good.

You profess your impartiality on these issues, but your biases are obvious.

 
At 10/30/2011 11:49 PM, Blogger Ron H. said...

Itchy: "I for one would not hesitate to care for my dog, who is a trusty, loyal companion, over anyone commenting on this blog because I don't know you nor do I feel any sort of emotional attachment towards any of you."

My point exactly.

 
At 10/31/2011 12:31 AM, Blogger Hydra said...

Ron, you are so intent on ramming your preconceptions down my throat you have ignored my true argument completely.

This is not about who manages the dogs or whether some kinds of dogs are naturally socialists.

All I said was that, as described here, income mobility is just a wealth distribution method.

It might not be the most efficient method.

 
At 10/31/2011 12:49 AM, Blogger Hydra said...

Not at all. you presented the dog analogy, and suggested that what you see as a problem in your dogs' world, was best solved by you intervening to insure income equality.


++++++++++++

Really, where do you get this stuff? I said no such thing, and nowhere did I suggest this situation is best. All I described was what exists in my house. If you have a better plan, try it with your dogs in your house, and tell me how it goes. I'm eager to learn new facts.


The dogs of course are free to leave any time they think they would have a better job in the wild. Unlike Darwinian economists, dogs are smart enough to see what cooperation buys, in exchange for a freedom that is not actually all it is cracked up to be. They figured out around 12,000 years ago that a truly free existence in an unfettered market was likely to be nasty, brutish, and short.


Just like juandos.

 
At 10/31/2011 1:16 AM, Blogger Hydra said...

You clowns really are amusing. I could come in here and say that it appears to me the sky is more blue than red, and someone here would claim this proves I'm part of a Democratic conspiracy to steal the sky from hardworking patriotic conservatives. Others would redefine blue as being on the warm end of the spectrum. Others would change the subject, claiming the best skies are the red ones at dawn and sunset.

Juandos would add his two cents to this learned debate over the color of the sky by bringing in a quote from a study by the heritage foundation proving that most people who believe he sky is blue are socialist libtard morons who have been brainwashed inti believing in blue by the overly liberal mass media.

 
At 10/31/2011 1:23 AM, Blogger Hydra said...

This is very similar to your view that in the human world, someone should assume that they have the right and the authority to force rules and regulations on others for their own good.

+++++++++++++++++++++

That is an outright fabrication, and I defy you to find a quote where I actually said anything like that.

 
At 10/31/2011 1:32 AM, Blogger Hydra said...

The funny thing about this is that you are so intent on impressing your world view of what constitutes true freedom on others, that you will stoop to lying about what they said, before you will consider what it was.

You claim to promote freedom, but only so long as it exactly mimics your vision of what freedom is.

 
At 10/31/2011 1:40 AM, Blogger Hydra said...

Which is it? Do you apply some management to ensure food equality for your dogs, or don't you

+++++++++++++++++

Which is what?

You listed three quotes that are not mutually exclusive and then ask which is real?

 
At 10/31/2011 2:32 AM, Blogger juandos said...

"They figured out around 12,000 years ago that a truly free existence in an unfettered market was likely to be nasty, brutish, and short"...

Still making it up (and whining at the sametime) as you go along, eh hydra?

Will the delusional whining by you ever stop hydra?

"Juandos would add his two cents to this learned debate over the color of the sky by bringing in a quote from a study by the heritage foundation proving that most people who believe he sky is blue are socialist libtard morons who have been brainwashed inti believing in blue by the overly liberal mass medi"...

The Heritage Foundation would tell you the sky is blue due to Rayleigh scattering if they thought you were smart enough to understand it...

 
At 10/31/2011 2:49 AM, Blogger juandos said...

"Um, if one person makes $1 and the other person makes $2, well, $1 ≠ $2. We suggested above that you may have meant inequitable, but you ignored that possible clarification"...

Unbelievable! zach the difference in pay from person to person for the same job could be for a myriad of reasons...

The person paying for the work is free to make the choice (in a free market system) on what to pay an individual that can be based on work quality to hair color... The person paying makes the choice...

Now if the person getting less for the same work as someone making more then the lesser paid person can leave and seek to sell his/her services at a better rate...

'Inequitable' has nothing to do with it...

"A simple example is nepotism. The boss keeps his incompetent brother-in-law on the payroll because it keeps peace in the family"...

Which is the bosses right since its his/her wealth the makes the payments for work done...

Still to much nepotism or the inability to keep good workers and then the boss finds him/her self without that one time source of income, the business...

In a free market people don't intentionally part with their wealth for shoddy goods and services when there might be better choices around...

 
At 10/31/2011 4:04 AM, Blogger Ron H. said...

"Really, where do you get this stuff? I said no such thing, and nowhere did I suggest this situation is best. All I described was what exists in my house."

I get this stuff from you. You described a problem with your alpha dog eating all the food, and claimed your intervention was required to make sure the other two survived.

"I have thre dogs. In the dog world thee is fery little clas mobility, so If I don't apply some management, the alpha dog will get all the food and the others will waste away.


"The dogs of course are free to leave any time they think they would have a better job in the wild. Unlike Darwinian economists, dogs are smart enough to see what cooperation buys..."

But you just explained that your dogs don't cooperate, so you have to enforce income redistribution.

Actually dogs aren't that smart. your other two dogs don't realize they might be better off somewhere else. Instinct forces them to stay on despite the abuse.

"...in exchange for a freedom that is not actually all it is cracked up to be."

Dogs aren't people. Freedom isn't an issue with dogs.

" They figured out around 12,000 years ago that a truly free existence in an unfettered market was likely to be nasty, brutish, and short."

As it was for all people until very recently. "Figuring out" isn't something I'd attribute to dogs. Dependence on a welfare system has been the attraction for domestic dogs, even though only recently, and mostly among rich people, have dogs been anything other than slaves or dinner. I'm not sure the trade-off has been a good one.

 
At 10/31/2011 4:11 AM, Blogger Ron H. said...

"This is not about who manages the dogs or whether some kinds of dogs are naturally socialists."

You used the dog analogy.

"All I said was that, as described here, income mobility is just a wealth distribution method.

It might not be the most efficient method.
"

I didn't see anything about your comments worth responding to, other than the dog analogy.

What possible method of income distribution can you imagine being more efficient or equitable than those that earn it getting it?

 
At 10/31/2011 4:25 AM, Blogger Ron H. said...

"That is an outright fabrication, and I defy you to find a quote where I actually said anything like that."

Are you claiming that you don't believe in rules and regulations that force people to do or not do things? Who do you believe should decide on what the rules should be?

Is your memory that short?

 
At 10/31/2011 4:30 AM, Blogger Ron H. said...

"You claim to promote freedom, but only so long as it exactly mimics your vision of what freedom is."

And what is that?

 
At 10/31/2011 4:35 AM, Blogger Ron H. said...

"Which is it? Do you apply some management to ensure food equality for your dogs, or don't you

+++++++++++++++++

Which is what?

You listed three quotes that are not mutually exclusive and then ask which is real?
"

I listed 2 quotes. You said you made no recommendation for how dogs should be managed, after explaining how you managed your dogs food income to avoid conflict. are you being deliberately obtuse? are you going to start arguing against yourself like Larry?

 
At 10/31/2011 7:00 AM, Blogger Zachriel said...

Sprewell: the original post said nothing about disparity, only mobility, and long-term changes show the same patterns.

Let's look at the exact statement we took issue with:

Mark J. Perry: Contrary to prevailing public opinion that households get stuck at a given income level for decades or generations, there is strong empirical evidence that households actually move up and down the economic ladder over even very short periods of time.

Notice how it elides between household income level *over generations* with short term changes. Perry takes it as evidence, when the correlations are quite different. Again, people don't consider the children of the well-to-do quickly advancing in society to be a sign of economic mobility. Quite the contrary.

Sprewell: If you already know that inequality is declining, why do I need to source it?

Um, so we can examine the data. If you already provided it, we apologize, but we don't see where you cited a primary source for your claim.

Sprewell: Bailing out the formerly publicly owned Fannie and Freddie was largely about bailing out the Chinese and other creditors.

So your previous statement about Wall Street investment banks (the creditors) receiving a pittance was in error.

Sprewell: You're right that as a secondary effect it did also help out the banks and the "mortgagers" who would otherwise be foreclosed on.

GSE bailouts did little for existing mortgagers. Those contracts were largely left intact. The bailouts were to help stabilize the banking system.

Sprewell: Even your beloved generational mobility study
...


Data is data. If the data or analysis is in error, then that should be your argument.

Sprewell: As Itchy points out, the only mild difference in mobility was that the poor kids who stayed poor was slightly more in the US.

Not only isn't the difference mild, 42% compared to 25%-30%, but it wasn't the only difference.

Sprewell: As for the incompetent brother-in-law, is nepotism illegal in Canada or Denmark? Cuz they don't have a magic "solution" to that problem either.

It's important that you address the arguments that are actually made, rather than making up new ones. The claim was that markets were somehow perfectly capable of allocating resources according to economic contribution. We provided a simple example.

Sprewell: Mark's post is about mobility, which has nothing to do with the inequality figures and commentary you link to.

In fact, Mark J. Perry's post makes a claim about intergenerational mobility, but points to data concerning much shorter time periods. We cited a relevant study. Yes, there is intergenerational mobility in the U.S., but it is not unique, nor even the highest.

Itchy: No you are incorrect.

You had said "The difference between the United States and Western European Countries is only on mobility from the bottom quintile." The bottom quintile is not sufficient to account for the difference in correlation, which is 47% in the U.S, but only 19% in Canada.

Ron H: Do you understand the word quintile? It appears that you don't.

There's nothing inherently contradictory in saying that the top quintile has all the income, as quintiles are usually fifths of the population, not fifths of the income. Maybe we missed something.

Ron H: This is very similar to your view that in the human world, someone should assume that they have the right and the authority to force rules and regulations on others for their own good.

As you reject even democratic forms of governance, it's not clear that your repeated objection is particularly relevant. Yes, we heard you. Making you stop when the light is red is tyranny!

 
At 10/31/2011 11:48 AM, Blogger Ron H. said...

Z: "There's nothing inherently contradictory in saying that the top quintile has all the income, as quintiles are usually fifths of the population, not fifths of the income. Maybe we missed something. "

Yes, it seems you did.

 
At 10/31/2011 12:03 PM, Blogger Ron H. said...

Z: "As you reject even democratic forms of governance, it's not clear that your repeated objection is particularly relevant. Yes, we heard you. Making you stop when the light is red is tyranny!"

Our objection is relevant in view of the fact that you have repeatedly failed to explain why it's better to force a peaceful person than to leave them alone.

Perhaps you reject the concept of self ownership.

 
At 10/31/2011 8:44 PM, Blogger Hydra said...

listed 2 quotes. You said you made no recommendation for how dogs should be managed, after explaining how you managed your dogs food income to avoid conflict. are you being deliberately obtuse?

++++

No, you are being obtuse. The purpose of the dog analogy was to illustrate that the argument that income mobility trumps inequality amounts to an argument for income mobility as a method of redistributing income - over time.


An observation of how things are says absolutely nothing about how I think things should be, and you make a falsehood by reading in something that was neither said or intended.

You have invented what you think is a character flaw on my part by twisting my words, and then using it to attack me rather than confront the argument presented.

It is a clumsy and obvious attempt to turn the conversation away from a losing argument.

 
At 10/31/2011 9:00 PM, Blogger Hydra said...

What possible method of income distribution can you imagine being more efficient or equitable than those that earn it getting it.

+++++++++++

The difference between you and I is that I can accept that there might be a more efficient method, even if I do not know what it is. You deny even the possibility. And you deny it as if it were an article of faith, attacking anyone and any idea that might lead to a conclusion you cannot accept.

 
At 10/31/2011 9:10 PM, Blogger Hydra said...

"But let's be clear, SOME rich people got that way by victimizing others"... Again long on whine and short on credible substance...

++++++++++++

You are either deliberately contrarian or you have taken leave of reality.

Surely you don't believe that there are not some rich people who got that way through fraud, deception, malpractice, and other forms of thievery.

 
At 10/31/2011 9:45 PM, Blogger Hydra said...

I get this stuff from you.

++++++

No you don't. You make this stuff up by taking the introductory or set up sentence out of context and reading into it something that is senseless if the accompanying sentences are infused as a single argument.

The argument being that I could put the food in a single bowl and let the dogs compete for it. Under the income mobility thesis, different dogs would get more at different times, but each dog would get what he "earned"..

I argue that, given this limited system, everyone is better off: me and the dogs if we have a cooperative agreement rather than a competitive situation.

Either mode will work. And there are others not described here that will work.

I take a thermodynamic view of this little system: whatever takes the least total energy is the most efficient.


Perhaps you can explain how the system is any more efficient with the animals competing over food.

 
At 10/31/2011 9:49 PM, Blogger Hydra said...

How is a working dog a slave?

 
At 10/31/2011 10:29 PM, Blogger Hydra said...

How is the dog different from any other employee? They can stay or they can leave, but either way, they don't get to decide how I distribute the pay.

I am not managing the dogs after all, only the food. The food is my property and I can spend it any way I like. The dogs can accept the deal or not.

I give them food and they chase the bears away, and tell me when someone arrives. Seems like a fair trade to me.

 
At 11/01/2011 2:24 AM, Blogger Ron H. said...

"How is a working dog a slave?"

Well, that one seemed pretty obvious. Working animals don't chose their job, the hours they work, their housing, when or what they are fed, or anything else except when to shit. They do what they are told, own nothing, and everything they need to subsist is provided for them by the massa.

 
At 11/01/2011 2:29 AM, Blogger Ron H. said...

"The food is my property and I can spend it any way I like. The dogs can accept the deal or not. "

You surprise me with that kind of talk! Self ownership, and property rights in the same thread!

Keep up the good work.

 
At 11/01/2011 2:31 AM, Blogger Ron H. said...

"No, you are being obtuse. The purpose of the dog analogy was to illustrate that the argument that income mobility trumps inequality amounts to an argument for income mobility as a method of redistributing income - over time. "

??? OK, if you say so.

 
At 11/01/2011 2:34 AM, Blogger Ron H. said...

"It is a clumsy and obvious attempt to turn the conversation away from a losing argument."

I'm sorry my presentations aren't smoother, I try hard to steer you away from those losing arguments, but I'm seldom successful. I'll try harder.

 
At 11/01/2011 2:43 AM, Blogger Ron H. said...

"The difference between you and I is that I can accept that there might be a more efficient method, even if I do not know what it is. You deny even the possibility. And you deny it as if it were an article of faith, attacking anyone and any idea that might lead to a conclusion you cannot accept."

I asked you what method you could imagine, and you haven't offered anything. It's certainly an article of faith to believe something exists when you can't see it, or even describe it. I certainly can't accept that there's a better way if I can't imagine it.

Do you not agree that those who earn it should get it?

You have already stated "The food is my property and I can spend it any way I like".

You could as easily say "I earned that income, it's my property, and I'll spend it as I wish."

 
At 11/01/2011 2:51 AM, Blogger Ron H. said...

"The difference between you and I (sic)..."

Actually the difference between you and me is that you think it's OK to force other people to do things against their will, and I don't.

 
At 11/01/2011 5:31 AM, OpenID Sprewell said...

Zach, if you believe long-term mobility doesn't exist, why do you link to a generational mobility study that only measured income over a six-year period in the US? If you look at mobility over a 10-year period or longer, you see the same high mobility we're talking about (link to study referenced). In fact, it is misleading to only look at the top and lowest quintiles, as your generational study does, because the data shows the most mobility in the middle three quintiles. This makes intuitive sense, as those in the top have their shit together and the bottom is often stuck in their own varied quagmires, but the middle are the ones who could do even better and are trying to climb up. I linked to my data about inequality in my first comment above, not sure why you can't find it.

You claim that it was Wall Street investment banks who were Fannie and Freddie's creditors, but do you have some evidence for that claim? Given the low returns from Fannie/Freddie's loans, the investment banks likely weren't their creditors and you are the one in error. The investment banks and "mortgagers" might have benefited secondarily from Fannie/Freddie making good on their insurance guarantee on their mortgages, as I already pointed out, but those aren't creditors, they're customers. If the bailouts hadn't stabilized the banking system, do you think those mortgage contracts would even be left "intact?" Not likely, there would have been a lot more foreclosures of "mortgagers," particularly those who are now squatting in their homes and paying nothing. I have already pointed out how your beloved generational mobility study is flawed, not sure why you don't like me calling it your "beloved." ;)

I do think 42% compared to 25-30% is not that substantial, but the bigger issue is how they achieved it. Likely they were just taxing the well-off to redistribute to the bottom group and move 12-17% more of the bottom up the ladder, which is not real mobility. If that isn't the only difference in mobility, by all means point out another: you can't so you don't. :) You raised the issue of nepotism, so I pointed out that nobody has solved that problem. In fact, it is much worse in the more socialist countries you prefer, because the govt bureaucrats inevitably favor their families with their greater power. As for addressing the claim that was made, juandos actually said that "Markets work as perfectly as the unfettered human condition allows," and as we all know the human condition has many flaws. Nobody's saying nepotism doesn't exist in markets- that would be silly- only that it happens much less than in your favored socialist bureaucracies because competition weeds a lot of it out in the market. Not sure why you responded to my reply to Jon about how his inequality figures have nothing to do with Mark's mobility figures, as your mobility claims have nothing to do with his inequality figures either. :)

 
At 11/01/2011 7:12 AM, Blogger Zachriel said...

Sprewell: if you believe long-term mobility doesn't exist, ...

Zachriel: Certainly, the U.S. has economic mobility, but not as much as comparable European countries.

It would be helpful if you didn't argue against strawmen.

Sprewell: why do you link to a generational mobility study that only measured income over a six-year period in the US?

The intergenerational study concerned the economic position of sons at age 40 (born about 1958, estimated income for about 1998), compared to their father's economic position when he was about 40.

Sprewell: If you look at mobility over a 10-year period or longer, you see the same high mobility we're talking about (link to study referenced).

Of course. That's primarily due to the young-to-old transition. Again, rich kids moving up in daddy's business is not what people consider to be economic mobility.

Sprewell: In fact, it is misleading to only look at the top and lowest quintiles, as your generational study does, because the data shows the most mobility in the middle three quintiles.

This was corrected above. The correlation between father and son of 47% for the U.S., and 15% for Denmark concerns the entire population—and is far from being close.

Sprewell: You claim that it was Wall Street investment banks who were Fannie and Freddie's creditors, but do you have some evidence for that claim?

What we said was "Bailing out Fannie Mae and Freddie Mac IS bailing out the banks," and "GSE bailouts did little for existing mortgagers. Those contracts were largely left intact. The bailouts were to help stabilize the banking system." Nor did Wall Street receive a "pittance," but direct assistance and guarantees for more than a trillion dollars.
Bloomberg: http://tinyurl.com/3d6s7s8

Sprewell: If the bailouts hadn't stabilized the banking system, do you think those mortgage contracts would even be left "intact?"

Yes, though the rate of default would have been much higher.

Sprewell: Not likely, there would have been a lot more foreclosures of "mortgagers," particularly those who are now squatting in their homes and paying nothing.

Foreclosure is part of the contract process. The equivalent would be to allow the megacorporations to fail under the then existing rules. Instead the government bailed out the megacorporations, but largely allowed the mortgages themselves to remain intact.

It's not a fair or just situation, but frankly, there is just no simple way to undo the millions of contracts, mortgages, as well as the sale and resale of securities, involved. Rather, a few people greatly profited who didn't deserve to, and many people suffered who played by the rules, worked hard, saved, and made their payments only to see their savings and equity evaporate.

 
At 11/01/2011 7:21 AM, Blogger Zachriel said...

Zachriel: The intergenerational study concerned the economic position of sons at age 40 (born about 1958, estimated income for about 1998), compared to their father's economic position when he was about 40.

Again, the study concerned whether the father's economic position is a predictor of the son's economic position. In the U.S. and the U.K., the correlation is significantly higher than in many other developed countries. In defense of the U.S., the poor may be better off in these other developed countries, but the rich are far better off in America.

 
At 11/01/2011 9:27 PM, OpenID Sprewell said...

Zach, I summarized your mobility claims compactly while getting to my point about another flaw in your favored study. If you're going to seize on every such summation as a "strawman," when it wasn't even the point I was making, it's clear that you've decided you can't argue the point, so you're going to distract with silly asides. :) Even worse, I already caught you trying to actively erect a strawman by selectively quoting Juandos, which of course you now run away from, so the irony here is deep. Not sure why you repeat your spiel about ages and years of your favored study, when you do not address my point, that they only took data over a six-year period. As such, it is simply a snapshot of the kid's earnings when he's around 40, without looking at lifetime earnings or other changes over the years. Even worse, such a generational mobility measure is severely flawed because it somehow views the fact that fathers and sons tend to have a 50% correlation in earnings as somehow a bad thing, when they simply have very similar genetics and the parent teaches the kid good or bad habits. The fact that you keep pushing a single deeply flawed measure of mobility speaks to how weak your case is. As for the study I linked to, you keep repeating that it is only short-term mobility, which you magically claim to know isn't persistent or is only because rich kids are moving up, without any data to back that up. My linked study notes that the 10-year rates were the same for the previous decade, so that's 20 years of similar income mobility. No doubt you'll claim that they didn't track the same people over the 20 years, but you don't have that data either. When we do track the kids over 30 years, we see that they're almost always better off, particularly in the bottom quintiles. In fact, it is misleading to even look at quintiles, as the quintiles now are much higher and larger than they were for our parents, so you can be "stuck" in the same quintile and still be much better off, as the last link points out. Repeating your claim about correlation of parental earnings "corrects" nothing about your misleading look at only the lowest-mobility quintiles, particularly when your bias against such a correlation is laughable in the first place.

As for Fannie/Freddie, your earlier claims are irrelevant to your current claim that investment banks were big Fannie/Freddie creditors, which as usual you cannot back up. Your bloomberg link is laughable: those were very short-term loans done by the Fed, a private institution, and which were quickly paid back. Those were not "guarantees" but an attempt by the Fed to help prop up banks during a time of incredible instability, the 2008 financial collapse. Why you think that has anything to do with govt bailouts, which all taxpayers have to pay for and number in the hundreds of billions for GSEs like Fannie/Freddie, that will never be paid back like short-term loans, who knows. If you admit that the rate of default would have been much higher on mortgages if not for the bailouts, then you agree me with that many more mortgages wouldn't have been left "intact." You claim that "the government bailed out the megacorporations," but where was the Lehman bailout? Countrywide? Shareholders of Bear, Washington Mutual, Wachovia? All those firms failed or were forced to merge with other firms, with their shareholders mostly wiped out. As I pointed out, there were bailouts to a fairly small group of creditors, ie those who lent money to those failing companies and who were a diverse group of small and big lenders, and the dollar amounts were insubstantial compared to GSEs like Fannie/Freddie.

 
At 11/01/2011 9:32 PM, OpenID Sprewell said...

And why do you think the Fed or the govt even did any of this stuff? They could give a shit about the large companies, as proven with Lehman, they were interested in helping out the mortgagers and those insured by AIG and other such customers because they would also be hurt by a financial collapse. We'll never know the true intentions of the people doing the bailouts, as it is impossible to look inside their minds, but an honest accounting shows that those helped were largely the middle class that you profess to care so much about and certainly not all the "megacorporations" that either failed or were quickly merged. You claim to prefer bankruptcy to the forced mergers or creditor bailouts, well guess what, that would have led to a lot more foreclosures, something you seem ignorant of. I don't know why you decry the fact that mortgagers weren't helped with their contracts, then admit the truth that doing so to millions of contracts would have been too difficult anyway.

Wait, who "greatly profited?" The small handful of people who "profited" in this whole mess were those isolated loners and outsiders who were yelling about these problems for years, and they certainly weren't helped by bailouts, more usually hurt instead. The people who you think "played by the rules, worked hard, saved, and made their payments only to see their savings and equity evaporate" were the ones taking out liar loans on too-big houses so they can flip them in a year or two and buy SUVS, HDTVs, and granite countertops with HELOCs or invested in an inflated housing market. I have little sympathy for such speculators, just like I have little sympathy for the Wall Street executives whose firms went bust and lost most of their net worth. Your fantasy of a few who profited at the expense of the many doesn't stand up to the evidence.

Your claim that your study shows that "the correlation is significantly higher than in many other developed countries" is obviously wrong, because your study only looks at a few other countries. You're wrong about who benefits the most in the US, when the poor here are better off than the rich most everywhere else. The rich are also no doubt better off in a freer market like the US, because rich and poor alike benefit in the US from the govt not stealing as much as they do in Europe, but your own study shows that their rich kids have the same mobility as in the US, so congrats, your favored policies made everyone poorer while not affecting how much rich kids stay rich at all, great job!

 
At 11/02/2011 7:31 AM, Blogger Zachriel said...

Sprewell: I summarized your mobility claims compactly while getting to my point about another flaw in your favored study.

No. You misrepresented it. If there were no multigenerational mobility, then the correlation would be 100%.

Sprewell: Even worse, I already caught you trying to actively erect a strawman by selectively quoting Juandos, which of course you now run away from, so the irony here is deep.

Juandos was making inconsistent claims.

juandos: I repeat in a 'free market' system there is NO income inequality...

This is clearly false by any reasonable definition of income inequality. We suggested he meant inequity, but he insisted on inequality. Hours later,

juandos: Markets work as perfectly as the unfettered human condition allows ...

Perhaps, but that isn't what we took issue with, and is, in any case, inconsistent with a claim that there is "NO" income inequality.

Sprewell: As such, it is simply a snapshot of the kid's earnings when he's around 40, without looking at lifetime earnings or other changes over the years.

No. It's a comparison of the relative earnings of a father and son at a comparable age during the period of generally highest earnings.

Sprewell: Even worse, such a generational mobility measure is severely flawed because it somehow views the fact that fathers and sons tend to have a 50% correlation in earnings as somehow a bad thing, when they simply have very similar genetics and the parent teaches the kid good or bad habits.

Whether or not there should be income inequality, or how much is irrelevant to the measure of inequality.

Zachriel: It makes sense that parents would instill their children with the vocational education, work ethic and network of connections that lead to success.

Sprewell: The fact that you keep pushing a single deeply flawed measure of mobility speaks to how weak your case is.

No, we mentioned this study because it reveals flaws in the original post.

Mark J. Perry: Contrary to prevailing public opinion that households get stuck at a given income level for decades or generations, there is strong empirical evidence that households actually move up and down the economic ladder over even very short periods of time.

Sprewell: My linked study notes that the 10-year rates were the same for the previous decade, so that's 20 years of similar income mobility.

That, of course, just repeats the original error.

Sprewell: When we do track the kids over 30 years, we see that they're almost always better off, particularly in the bottom quintiles.

Of course people who are 48 tend to make more than when they were 18! The question is whether or not their children will do better. That's what most people mean by economic mobility.

 
At 11/02/2011 7:58 AM, Blogger Zachriel said...

Sprewell: As for Fannie/Freddie, your earlier claims are irrelevant to your current claim that investment banks were big Fannie/Freddie creditors, which as usual you cannot back up.

We thought we corrected this above. If you wish to dispute a statement of ours, it would help if you provided a quote. (More adept use of paragraphing would also be helpful.)

Sprewell: Your bloomberg link is laughable: those were very short-term loans done by the Fed, a private institution, and which were quickly paid back.

If the free market had been allowed for 'work', nearly all of those banks would have defaulted. Instead, the government stepped in to prop up the banking system, unlike mortgagers.

Sprewell: You claim that "the government bailed out the megacorporations," but where was the Lehman bailout? Countrywide? Shareholders of Bear, Washington Mutual, Wachovia?

Lehman couldn't be salvaged, but its failure precipitated the meltdown. Countrywide was absorbed by Citigroup, Bear was absorbed by JP Morgan, Wachovia by Wells Fargo—all recipients of federal largesse.

Sprewell: They could give a shit about the large companies, as proven with Lehman, they were interested in helping out the mortgagers and those insured by AIG and other such customers because they would also be hurt by a financial collapse.

It didn't help the mortgagers, except in directly by preventing a collapse of the economy. The mortgagers still had the same contracts they started with, while the banks were given immediate cash assistance when they otherwise would have gone into default.

Sprewell: You claim to prefer bankruptcy to the forced mergers or creditor bailouts,

Indeed not! You don't read very carefully.

Sprewell: Wait, who "greatly profited?" The small handful of people who "profited" in this whole mess were those isolated loners and outsiders who were yelling about these problems for years, and they certainly weren't helped by bailouts, more usually hurt instead.

Most of the top executives of the firms which would have failed, even those firms that were creating the toxic securities, made millions.

Sprewell: Your fantasy of a few who profited at the expense of the many doesn't stand up to the evidence.

Vikram Pandit of Citigroup, $10 million in 2008
Ken Lewis of Bank of America, $145 million from 2001-2007, $10 million in 2008
Jamie Dimon of JP Morgan, $96 million from 2005-2007, $20 million in 2008
Lloyd Blankfein of Goldman Sachs, $114 million in 2006-2007, $43 million in 2008
John G. Stumpf of Wells Fargo, $14 million in 2008
John J. Mack of Morgan Stanley, $79 million from 2005-2008
John Thain of Merrill Lynch, $83 million in 2007.

To name a few recipients of corporate welfare. Nice work, if you can find it.

 
At 11/02/2011 8:17 AM, Blogger Zachriel said...

Oh, we mustn't forget Richard S. Fuld, Jr., Chairman and CEO of Lehman Brothers. $72 million in 2008, 5-year total $354.03 million.

 
At 11/02/2011 10:37 PM, OpenID Sprewell said...

Wow, you are stupid. Instead of saying "if you believe long-term mobility is much lower in the US than elsewhere, why do you link to a generational mobility study," I said "if you believe long-term mobility doesn't exist, why do you link to a ..." The latter is shorter because I left out all the qualifiers, which weren't pertinent to the question. The fact that you keep seizing on such an aside just goes to show you can't address the actual question, so you simply try to distract with worthless asides. I don't care about your semantic quibbles with Juandos, but the quote you misrepresented him on had nothing to do with income inequality, merely your cherry-picking of his quotes to make your dumb nepotism point. Yes, your study compares father-son earnings but it only measures the son's earnings over a six-year period, a much smaller time period than the ones you are criticizing other studies for having, not to mention the idiocy of believing that a 50% correlation in earnings is somehow bad.

Haha, I love how your response to my statement that your generational mobility measure is dumb completely ignores mobility and instead consists of nonsense about income inequality, followed by a restatement of the obvious ways in which parents might pass on a work ethic or whatever to their kids. You seem to have trouble even understanding what is written, either that or you are cutting and pasting randomly. Right, because your highly flawed generational mobility study
"reveals flaws" in this post, keep dreaming. What does the obvious fact that 48 year-olds make more than 18 year-olds have to do with anything? The study I linked compares parents and kids income when they're at the same ages, only it actually followed them over 30 years, so it actually does address economic mobility, unlike your blather simply defining mobility yet again. Haha, now you conveniently don't know which Fannie/Freddie quote I'm disputing, nice, just run away from your own quotes like always. :) If you know how to read english, which may not be a given, it is obvious which quote I'm referring to, figure it out for yourself. Haha, I love how you quote me pointing out that the Fed is a private institution then you repeat your drivel that "the government stepped in" and stopped banks from defaulting in the free market. Those who stepped in, whether the Fed or the govt, did so because they knew that mortgagers would be kicked out of their houses in droves if the banks collapsed. Of course, you are too stupid to know this.

 
At 11/02/2011 10:42 PM, OpenID Sprewell said...

Haha, now Lehman's failure "precipitated the meltdown." So do you want bailouts or not, which is it? Countrywide, Bear, and Wachovia were absorbed because the govt forced the takeovers to happen: the companies absorbing them didn't want them, but the Fed and the govt felt that a merger would be better for the economy than the long, drawn-out process of a bankruptcy. As for your unsourced claim of "federal largesse," don't make me laugh, your accusations are hilariously loopy. Of course stopping a financial crisis helps the mortgagers by "preventing a collapse of the economy," that's the whole point. The only reason they even had the same contracts is because of the bailouts, as a collapse would have led to many more of them getting foreclosed on. Right, I don't read carefully, you said that the "equivalent would be to allow the megacorporations to fail under the then existing rules" and given that you are against any loans or bailouts, that's what would have happened. So obviously, you do "claim to prefer bankruptcy to the forced mergers or creditor bailouts." I already pointed out a top executive that lost essentially his entire stake in Bear because of a forced merger. Of course there are top executives at other firms still making millions, just like there always are. Your ridiculous assertion that the Fed making short-term loans to some of those firms means that nobody should ever have a fat salary again is just blatantly stupid.

Vikram Pandit didn't take over Citigroup till Dec. 2007, long after the big mistakes had been made, so you are fundamentally stupid if you think he should have lost his pay because of mistakes others made. Ken Lewis was pushed out in 2009, a year after the crisis. Dimon is the real star to come out of this crisis: he brought Chase out of this mess intact and with the largest value by getting out of housing early and needed no govt assistance. You are a moron if you think he wasn't worth every penny. Blankfein, Stumpf, and the rest all ran their firms well enough that they came through the crisis fine, without needing basically any help. The fact that you list them shows your great ignorance of these issues. Funny how you just list some high salaries and then say they got "corporate welfare" with zero evidence of such welfare. Must be nice to live in your imaginary world where simply having a high salary means you got corporate welfare. And the topper is your listing of Fuld, whose company went bankrupt because Lehman received no loan or bailout. Yeah, great example of corporate welfare! It is obvious that you are deeply ignorant of the issues here, so it is a waste of time to engage you any further. I thought I'd just poke gaping holes in all your ridiculous assertions one last time, but now I'm out. Have fun stewing in your ignorance and envy, it's not a pretty picture.

 
At 11/02/2011 10:53 PM, OpenID Sprewell said...

One last note that I forgot to mention, Countrywide, Bear, and Wachovia shareholders were all basically wiped out in the forced mergers, as I first noted. So your response to those failures is merely to state the obvious that the Fed and the govt forced other firms to take over those firms, which addresses nothing about my original point that their shareholders were not bailed out. This is the typical response by you, completely ignore the point and state some basically unrelated fact.

 
At 11/03/2011 7:47 AM, Blogger Zachriel said...

Sprewell: Yes, your study compares father-son earnings but it only measures the son's earnings over a six-year period, ...

Yes, during middle life when earnings are typically at their highest. It's a reasonable measure of relative economic position.

Sprewell: a much smaller time period than the ones you are criticizing other studies for having, ...

The studies cited in the original post don't measure intergenerational economic mobility.

Sprewell: ... not to mention the idiocy of believing that a 50% correlation in earnings is somehow bad.

We're still grappling with the data. Some income inequality is important to the operation of markets.

Sprewell: What does the obvious fact that 48 year-olds make more than 18 year-olds have to do with anything?

Because studies, as cited in the original post, that measure income mobility over a single decade largely measure intragenerational trends, not intergenerational trends, and do not answer the question about households getting stuck in the same relative economic position for "generations."

If you are referring to the Economic Mobility Project study, which we also cited above, then yes, the current generation of U.S. adults is better off than the previous one but their incomes are more unevenly distributed, and contrary to American beliefs about equality of opportunity, a child’s
economic position is heavily influenced by that of his or her parents.

Sprewell: So do you want bailouts or not, which is it?

The bailouts were essential to limiting the economic damage.

Sprewell: Countrywide, Bear, and Wachovia were absorbed because the govt forced the takeovers to happen: the companies absorbing them didn't want them, but the Fed and the govt felt that a merger would be better for the economy than the long, drawn-out process of a bankruptcy.

That's correct also. The megabanks needed federal money to avoid default, and in return they were required to absorb weaker institutions.

Sprewell: The only reason they even had the same contracts is because of the bailouts, as a collapse would have led to many more of them getting foreclosed on.

Mortgagees were bailed out. Mortgagers were not. In a free market the banks would have defaulted. It benefited the mortgagers by preventing an economic collapse, but most were not given direct assistance. They were stuck with whatever contractual obligations they had.

Sprewell: Right, I don't read carefully, you said that the "equivalent would be to allow the megacorporations to fail under the then existing rules" and given that you are against any loans or bailouts, that's what would have happened.

That's right. You don't read carefully. The bailouts were essential.

Sprewell: Ken Lewis was pushed out in 2009, a year after the crisis.

You can't seem to keep track of your claims. You said, "Your fantasy of a few who profited at the expense of the many doesn't stand up to the evidence."

Ken Lewis of Bank of America, $145 million from 2001-2007, $10 million in 2008.

Sprewell: Dimon ...Blankfein, Stumpf,

Their firms all received billions in bailout money.

Sprewell: Countrywide, Bear, and Wachovia shareholders were all basically wiped out in the forced mergers, as I first noted.

They would have been completely wiped out were it not for government intervention.

 
At 11/03/2011 7:59 AM, Blogger Zachriel said...

With bailout:

$10 per share of Bear Stearns; $7 per share of Wachovia; $18 per share of Countrywide.

Without bailout.

$0 per share of Bear Stearns; $0 per share of Wachovia; $0 per share of Countrywide.

 
At 11/03/2011 11:05 AM, OpenID Sprewell said...

Wow, you really are a blithering idiot. First you whine about "megacorporations" receiving bailouts, now you say they were essential. Must be nice to just constantly change your argument whenever you feel like it, then feign ignorance of your previous nonsensical claims. I shouldn't respond to your nonsense anymore but your claims are so easily debunked that I can't help one last time.

The original Bear offer during the forced merger was $2 per share, which the shareholders revolted against and demanded $10 per share, which they got. That's because even if Bear had gone bankrupt, they would have received something after all the assets were liquidated, and they felt $10/share was what they should have gotten. Of course, you are ignorant of how bankruptcy actually works, so you come up with your nonsensical figure of $0/share, proving yet again how ignorant you are of these matters. As for Wachovia, turns out there was a forced merger of $1/share planned with Citigroup, but I now read that yet again shareholders revolted and got a better deal of $7/share with Wells Fargo, which they got on their own and required no forced merger by the FDIC or Fed.

As for your crap about "megabanks" receiving bailout money, presumably you're referring to TARP, where money was forced on good banks and bad, so that short-sellers wouldn't know who really needed the money and then short those bad banks. For you to assert that Chase and others needed that money, when they and other good banks protested that they didn't want those "loans" and quickly paid that money back, is leftie lying at its most breath-taking: force banks to take TARP money that they don't want because of the crisis, then lie after the fact that they all got "bailed out." Hugo Chavez would be proud of the lies that you repeat.

 
At 11/03/2011 12:13 PM, Blogger Zachriel said...

Sprewell: First you whine about "megacorporations" receiving bailouts, now you say they were essential.

The dissonance you are experiencing is due to your allowing your presumptions to color your reading, and refusal to revise your position as evidence warrants.

The Bush Administration was correct to intervene to prop up the banking system. This had the perverse result of rewarding failure, but the alternative was far worse.

 

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