Winship on Inequality
Scott Winship has an interesting, but slightly bizarre, post about inequality trends in the United States. He writes as if he’s debunking liberal claims about growing inequality. But, in fact, his post seems to me to support the liberal position. In particular, he pretends not to realize that an important school of right-of-center thought holds that there’s been no increase in inequality whatsoever. Winship shows that this is wrong.
In particular, he shows that while there’s room for disagreement about exactly how large the magnitude has been, there’s been a substantial increase in the share of national income going to the top one percent. The growth in inequality in the United States is often—usually by centrist sorts—exclusively attributed to college preparation issues or graduation rates, but the concentration in the top one percent is hard to understand in those terms. My read of this data, which I think is a pretty conventional liberal understanding, is that increased taxes on high-income individuals can make most people better off by either paying for more and better public services or else reducing the need to cut Medicare benefits in the future.
At any rate, Winship is very good with numbers but always seems overwhelmingly more interested in annoying liberals than in rectifying social problems. But what he’s shown here is that even a pretty serious effort to debunk the Pittkey-Saez inequality data that liberals like to cite shows that their main conclusions are pretty unassailable. There’s a separate issue of should we care (Will Wilkinson makes the case that we shouldn’t here) or should we care as much as some liberal say we should. But the basic facts seem pretty clear.
32 Responses to “Winship on Inequality”
Register
RSSLogin
Topic Cloud
ArchivesBlog RollAbout Matt YglesiasContact Me
Donate
November 12th, 2009 at 4:01 pm
Baww baww baww. Who cares. They earned it.
November 12th, 2009 at 4:04 pm
Property is theft.
November 12th, 2009 at 4:05 pm
That’s right — everyone gets paid EXACTLY what they deserve. If you are born to a poor single mother or to Warren Buffett, your income will reflect your ability and worth ethic entirely.
MY, why can’t someone propose a “tax equality” bill, where all forms of income (cap gains, inheritances, etc.) are taxed the same as those of us idiots only smart enough to earn $40k? I.e., everything is subject to FICA, progressive tax rates, etc.
November 12th, 2009 at 4:06 pm
When has that ever stopped them?
The more wealth is consolidated, the less it is earned.
November 12th, 2009 at 4:21 pm
Everyone earns at least very very near what they deserve.
ITT: No one knows what the hell market equilibrium is. (Granted, it is a leftist blog… so lack of understanding of basic economic principles is sort of a given)
November 12th, 2009 at 4:27 pm
So, SuperCapitalist, have the rich gotten better or the poor worse over the past couple of decades?
Honestly, I am very interested to hear your thoughts on this.
November 12th, 2009 at 4:30 pm
Economics is politics by another name. Taking developed nations the level of inequality measured any way you want to but the Gini coefficient, which is the best probably, is determined by political power. It probably has not escaped the attention of most that the power of financial interests in the US is vast and thus they have been able to deliver income and assets to themselves by political means. It is purely about power. The concept of the free market must include the market for political power. In fact the free market is all about political power.
The great trick of conservatives is to imagine the exact opposite. While everyone now knows down to their bones that GS has stupendous political power most conservatives would fight to the death to defend the proposition that their success has nothing to do with politics. Go figure.
November 12th, 2009 at 4:35 pm
So, SuperCapitalist, have the rich gotten better or the poor worse over the past couple of decades?
Honestly, I am very interested to hear your thoughts on this.
Again, who the hell cares? When you find examples of fraud or coercion, then I will start to care. No one distribution of wealth is just or unjust, the only thing that matters is how it was obtained. I would be willing to bet that most of it is through voluntary agreements.
Excepting companies that receive federal subsidies. They can rot.
November 12th, 2009 at 4:39 pm
an important school of right-of-center thought holds that there’s been no increase in inequality whatsoever. Winship shows that this is wrong.
Matthew obviously has not read the cited articles.
Reynolds says that there has been an increase in inequality, but that it is due to the stock market run-up.
Similarly, Winship also finds that “the post-1994 trend closely follows the ups and downs of the stock market”.
In both cases, the available evidence appears to show that, after adjusting for tax changes, inequality has not increased much since about 1987 (i.e., after the 1986 tax reform) except as a result of the increase in the stock market.
November 12th, 2009 at 4:39 pm
Folks, “SuperCapitalist” and “SuperSocialist” should be understood as satire. Appreciated? I don’t know about that, but at least understood.
November 12th, 2009 at 4:39 pm
‘Inequality’ is a euphemism; it’s simply robbery, legalized robbery.
November 12th, 2009 at 4:43 pm
Lolz at Cato. Dumbasses.
November 12th, 2009 at 4:46 pm
Al’s really on to something:
IF you ignore the effect of the stock market (where wealthy people derive a significant portion of their income), and
IF you ignore the value of previously accumulated wealth (ie, look only at income), and
IF you ignore the Reagan years, and
IF you assume the existence of progressive taxation (and don’t, say, try to eliminate it or call it “socialist”)
then, good news! There is only a small increase in the share of national wealth held by the wealthiest few – they used to make about 3 times as much as the average person, and now they ONLY make about 4 times as much!
Whew. That’s a great relief to those of us concerned about rising inequality.
November 12th, 2009 at 4:51 pm
Per Al (#9): “inequality has not increased much since about 1987 [...] except as a result of the increase in the stock market.”
It doesn’t matter how inequality has increased, it is that it has. This leads to too much capital chasing assets (leading to our current situation), and the power to distort markets and politics to increase inequality… or pursue other policies whose costs weigh heaviest on those further down the SE scale.
Per Wilkinson abstract: “Income inequality is a dangerous distraction from the real problems: poverty, lack of economic opportunity, and systemic injustice.”
Mr. Wilkinson ignores the fact poverty is a relative term, and that the latter two are a natural consequence of growing inequality.
November 12th, 2009 at 4:52 pm
To further your point, Mr. Winship’s broadly, misstated generalization doesn’t take into account capital gains, but this is not all his fault since neither do Piketty and Saez:
When you add to this the fact that capital gains taxes are already 30% lower than the tax rate for the highest income bracket and the fact that many corporate CEO’s have been getting paid handsomely in stock options and the picture of inequality quickly becomes even more striking. It is my opinion that Mr. Winship should be disqualified from further commenting on this topic due to mental defect!
November 12th, 2009 at 5:00 pm
why is the share of income held by the top 1% a good proxy for general inequality? it seems incredibly meaningless outside of context. for instance, if the top 1% increased their wealth at the expense of the next 4%, do we really care?
November 12th, 2009 at 5:00 pm
Never mind. The Mental defect might be mine as I looked at the wrong graph from Mr. Winship. His data doesn’t support his point but he does mention capital gains later on in his piece.
November 12th, 2009 at 5:07 pm
“When you find examples of fraud or coercion, then I will start to care.”
Taxation is coercion. And the tax loopholes for the top 1% have been expanded. They now pay lower effective taxes than the middle class. Think that might have something to do with it? They now have a greater incentive to pay themselves more. But that’s not really the real reason. The real reason is the expansion of the financial sector relative to the rest of the economy. Not surprising, they are taxed less. People who move money around make far more money than those who make the money in the first place. So an expansion of their sector would lead to an expansion of their profits. And we’ve seen this pattern before. The British Empire before their collapse, the Dutch Empire before their collapse, and the Spanish Empire before their collapse. See a pattern here? Empires collapse when they just start pushing money around instead of making products. And they always seem to push money around in order to finance foreign wars. Any of this sound familiar? Maybe a little too familiar? Empires are built and sustained on technology, and fail through financial gimmicks and warfare. So which kind of empire do we want to be? Apparently, the latter. And that makes China smile.
November 12th, 2009 at 5:08 pm
Inequality is robbery. Uh huh.
Doesn’t take much to bring the loony left out, does it.
November 12th, 2009 at 5:14 pm
“and fail through financial gimmicks and warfare.”
To be clear empires are rarely even beaten in warfare, it’s just that their wars start to cost too much and their creditors stop loaning them money. They become to broke to fight their wars. So they pull out of them become a regular country like England, Spain, or the Netherlands. But the rest of the Empire collapses. War isn’t profitable, except to those who sell the equipment.
November 12th, 2009 at 5:39 pm
Luke 12:48
November 12th, 2009 at 5:44 pm
Right, someone certainly is a lunatic here. Where 1% of the population has accumulated more wealth than 95% combined, I don’t see how defending the status quo and pretending that it’s anything but robbery is not a lunacy.
November 12th, 2009 at 6:33 pm
“War isn’t profitable, except to those who sell the equipment.”
Nobody ever lost money selling gunpowder. And if you can sell it to both sides, you can manipulate supplies so that nobody ever wins. And if they can’t win, they have to keep buying your gunpowder. Only cocaine has a better business model. But even they need gunpowder.
November 12th, 2009 at 6:42 pm
Where 1% of the population has accumulated more wealth than 95% combined
What planet do you live on? Have you not noticed that the vast majority of people are lazy, ignorant and foolish?
November 12th, 2009 at 7:50 pm
Per jmo (#24): “What planet do you live on? Have you not noticed that the vast majority of people are lazy, ignorant and foolish?”
On the off chance that this was a serious reply: these are assumptions not backed up by even anecdotal evidence.
My experience has been that blue, white, and gold collar participants put in around about the same amount of effort… the blue collar a lot more sweat. The differences seem to arise from what opportunities they had/made available to themselves from high school through their early twenties. After that, it’s mostly inertia.
November 12th, 2009 at 8:43 pm
So the top 1% of the population actually produced 95% of the wealth? Impressive.
November 12th, 2009 at 8:52 pm
Why do these charts, posted about once a month, never show the last two years?
November 13th, 2009 at 12:36 am
Good stuff from SuperCapitalist, SuperSocialist, and SuperChristian.
I always was suspicious of Luke 12:14 and other similar passages in the Gospels. How did they sneak in there? I swear to God, sometimes I think half the fucking New Testament is poor man’s Communist Manifesto. Someone needs to do something about this. Pronto.
As for the Top 1%, they’re not the big problem. The big problem is the Top 15%. You know, just add on that much larger group of Americans residing between 2% and 15% that is equally adept at robbing the American people blind as the Top 1%.
And remember, when the Top 15 owns 85, and the Bottom 85 only owns a pathetic 15, YOU ARE COOKED, especially when you add in the fact that the Bottom 85 also owns 85% of the nation’s private debt.
Quantitive easing and tightening, fiscal stimulus, tax breaks and subsidies, begging Goldman Sachs to loan to small business, NONE OF IT will make one iota of difference in the long run. There is simply no way to overcome this incredible and unique American wealth disparity without a complete restructuring of our economy. No way, no sir, no how.
November 13th, 2009 at 2:10 am
…or, if you look at the income distribution, a well-paid American CEO makes in one week more than you will be payed in your whole lifetime. And, while your lifetime income is taxed at about 40%, his will be taxed at 15% at most.
Is this loony or what.
November 13th, 2009 at 8:03 am
Wealth, and wealth growth is more unequal then income.
November 13th, 2009 at 10:27 am
Again, who the hell cares? When you find examples of fraud or coercion, then I will start to care. No one distribution of wealth is just or unjust, the only thing that matters is how it was obtained. I would be willing to bet that most of it is through voluntary agreements.
Define “voluntary”. How much coercion needs to be present before an agreement is no longer truly “voluntary”?
November 13th, 2009 at 11:50 am
A hereditary aristocracy has eventually turned out to be a very bad idea in every society in which it has been tried, which is pretty much all of them.