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The real redistribution of wealth


TexasTiger

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19 hours ago, SaltyTiger said:

Are you promoting Equal Starting Place?  Equal Opportunity has failed miserably  according to you and Brother Homer?

Great opportunity is alive and well for anyone in America of any color, sex, Etc. etc etc.

If you look at the outcomes, it has indeed failed. I would add that it failed for more than one reason. Many did not know how to successfully navigate the process. Some were unfamiliar with the process. Some didnt trust the process, and guess what? Some people are humans and actually dont execute every single thing in their lives successfully. People make mistakes. 

You add in the undeniably higher odds for blacks, females, latinos, asians, etc and the opportunities are not the same at all.

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6 hours ago, DKW 86 said:

If you look at the outcomes, it has indeed failed. I would add that it failed for more than one reason. Many did not know how to successfully navigate the process. Some were unfamiliar with the process. Some didnt trust the process, and guess what? Some people are humans and actually dont execute every single thing in their lives successfully. People make mistakes. 

You add in the undeniably higher odds for blacks, females, latinos, asians, etc and the opportunities are not the same at all.

I thought all people are human. You avoided my first question David. 

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1 hour ago, SaltyTiger said:

I thought all people are human. You avoided my first question David. 

Then we disagree. I do think we can far more equalize the opportunity.

 

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1 minute ago, SaltyTiger said:

Disagree about what?

I think i answered it as well as I could. We have failed at opportunity equality. We can do better.

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3 minutes ago, DKW 86 said:

I think i answered it as well as I could. We have failed at opportunity equality. We can do better.

I asked you if you are promoting an equal starting gate. 

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9 hours ago, DKW 86 said:

I think i answered it as well as I could. We have failed at opportunity equality. We can do better.

Who is the "we"......the failure I see all over the place is by people failing to take advantage of the opportunities they have.....

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1 hour ago, AU64 said:

Who is the "we"......the failure I see all over the place is by people failing to take advantage of the opportunities they have.....

While many others lack those opportunities in the first place. :-\

The statistics don't lie.  Highlighting a success here or a failure there does not change the overall statistics.  Our democracy is ultimately threatened by the continuing polarization of wealth.

https://www.washingtonpost.com/opinions/concentrated-wealth-is-a-long-term-threat-to-america/2012/03/27/gIQAMJt1eS_story.html?utm_term=.d04ea41eb278

https://www.ft.com/content/47e3e014-e3ea-11e7-97e2-916d4fbac0da

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2 hours ago, AU64 said:

Who is the "we"......the failure I see all over the place is by people failing to take advantage of the opportunities they have.....

I see two failures. People do fail to take advantage of opportunities and Society fails to mkae opportunity more equal for all. 

Our school systems alone just make a mockery of equality of opportunity. 

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1 minute ago, homersapien said:

While many others lack those opportunities in the first place. :-\

The statistics don't lie.  Highlighting a success here or a failure there does not change the overall statistics.  Our democracy is ultimately threatened by the continuing polarization of wealth.

https://www.washingtonpost.com/opinions/concentrated-wealth-is-a-long-term-threat-to-america/2012/03/27/gIQAMJt1eS_story.html?utm_term=.d04ea41eb278

https://www.ft.com/content/47e3e014-e3ea-11e7-97e2-916d4fbac0da

Good ole moral superior Homey is at is again. Homey, you want to bemoan the outcomes and do nothing to fix the what causes it:  

  • At an individual level, make good choices; get an education, work your ass off, get married ... do this and the outcomes are the same without regard to race, creed, color, sexual orientation.....  Make bad choices, don't get an education (or get a gender studies degree), don't get married (and have kids out of wedlock), do drugs and be Homer Simpson....surprise, you're a loser and better expect to be at the bottom of every income distribution, ever....and it's 100% equal opportunity...you are a loser without regard to race, creed, color or sexual orientation. 
    • Oh, and also, don't expect the half of America that plays by the rules and pays all the taxes to give a s***. 
    • What we need is a good ole concepts like shame to re-enter the lexicon so that young folks are held accountable for their actions and get the s*** kicked out of them when they screw up (by schools and parents) and young girls are taught to keep their knees together.   
    • Call a loser a loser; a bum a bum; a whore a whore and drop the Bill-and-Ted-lovable-stoner image and replace it with the meth-addled-toothless-mulleted loser image; oh, that's not an image... that is reality.  
    • Stop romanticizing "gangsta-culture" and call it what it is ... they are criminals and they exploit (I mean rape and degrade) young girls and victimize their neighborhoods.  Ostracize "artists" who promote it.  
  • For government, promote all the above;  don't export the US middle class to the rest of the world (which is when the widening income gaps exploded) and don't import, illegally I would add; more poor thus ensuring the gap widens. 
  • When it became impossible for someone with a high school education to work hard and get ahead because our own government betrayed them; we doomed "average" Americans. 
  • Get the Fed the hell out of the education market; it's ****** up every thing it has touched in that regard; we have fallen behind the rest of the world in spite of spending $$hundreds of billions; we don't even teach history or social studies anymore to inform the young how we became who we are.  And in the process, good old government gave us exploding costs while producing a generation so bereft of math skills they couldn't understand that the loans they were taking out for a meaningless degree would leave them with crushing debt. 
  • Keep the economy strong; to the exclusion of all else; create jobs in industries where we can and should win; and every American wins.  

The safety net is already in place.  We have full employment today ... the opportunity is there.  Bemoaning that we had slavery once or that you "good-white-folk" in Bham oppressed blacks once will solve nothing; and it doesn't make you morally superior; it makes you an old racist drug addled loser who won't face reality.  You only seek to blame someone else for what can only be dealt with in the present.  And it won't be painless.  But it's a hell of a lot better than the fairy tale your peddling.         

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59 minutes ago, japantiger said:

Good ole moral superior Homey is at is again. Homey, you want to bemoan the outcomes and do nothing to fix the what causes it:  

  • At an individual level, make good choices; get an education, (YOU ASSUME THAT SCHOOLS AND EDUCATION IS A COMMODITY, IS IS IN NO WAY A GIVEN.) work your ass off, get married ... do this and the outcomes are the same without regard to race, creed, color, sexual orientation.....  Make bad choices, don't get an education (or get a gender studies degree), don't get married (and have kids out of wedlock), do drugs and be Homer Simpson....surprise, you're a loser and better expect to be at the bottom of every income distribution, ever....and it's 100% equal opportunity...you are a loser without regard to race, creed, color or sexual orientation. (I think most would agree with you.)
    • Oh, and also, don't expect the half of America that plays by the rules and pays all the taxes to give a s***. (Some of us do pay taxes and do give a damn.) 
    • What we need is a good ole concepts like shame to re-enter the lexicon so that young folks are held accountable for their actions and get the s*** kicked out of them when they screw up (by schools and parents) and young girls are taught to keep their knees together.   
    • Call a loser a loser; a bum a bum; a whore a whore and drop the Bill-and-Ted-lovable-stoner image and replace it with the meth-addled-toothless-mulleted loser image; oh, that's not an image... that is reality.  (For some it is, no doubt.)
    • Stop romanticizing "gangsta-culture" and call it what it is ... they are criminals and they exploit (I mean rape and degrade) young girls and victimize their neighborhoods.  Ostracize "artists" who promote it.  (I agree with this.)
  • For government, promote all the above;  don't export the US middle class to the rest of the world (which is when the widening income gaps exploded) and don't import, illegally I would add; more poor thus ensuring the gap widens. 
  • When it became impossible for someone with a high school education to work hard and get ahead because our own government betrayed them; we doomed "average" Americans. (This I agree with, if not the mechanics. Global Industrialization has destroyed much of our middle class.)
  • Get the Fed the hell out of the education market; it's ****** up every thing it has touched in that regard; we have fallen behind the rest of the world in spite of spending $$hundreds of billions; we don't even teach history or social studies anymore to inform the young how we became who we are.  And in the process, good old government gave us exploding costs while producing a generation so bereft of math skills they couldn't understand that the loans they were taking out for a meaningless degree would leave them with crushing debt. 
  • Keep the economy strong; to the exclusion of all else; create jobs in industries where we can and should win; and every American wins.  ( A little shortsided here.)

The safety net is already in place.  We have full employment today ... the opportunity is there.  Bemoaning that we had slavery once or that you "good-white-folk" in Bham oppressed blacks once will solve nothing; and it doesn't make you morally superior; it makes you an old racist drug addled loser who won't face reality.  You only seek to blame someone else for what can only be dealt with in the present.  And it won't be painless.  But it's a hell of a lot better than the fairy tale your peddling.         

This is a muli-part issue. We need to address all the parts. It is not as simple as you portray, nor as complicated as others would make it. 

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2 hours ago, DKW 86 said:

I see two failures. People do fail to take advantage of opportunities and Society fails to mkae opportunity more equal for all. 

Our school systems alone just make a mockery of equality of opportunity. 

I accept that educational equality is not there....but with probably a million schools run by local communities and states, it's inconceivable that all would be equal in funding, quality of facilities and teachers...….and if you are expecting that to occur you are just looking for failure.    

Seems that most of the failures causing income disparity are the result of social issues that frequently begin with the absence of parental responsibility ...not the availability of opportunity from local or state governments.  

So why is it that the graduation rate of Asians and Hispanics is substantially higher in cities like Chicago?    And when something like a third of black teens drop out of school before they graduate, how are they going find employment even at an entry level?   The government of the city of Chicago is about as liberal as any I expect, so why have they not solved the problem?....certainly not because they are not trying.

JMO but the inequality of school systems across the county is probably one of the least significant causes of income inequality. 

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Here's three takes on the subject:.

The Causes of Economic Inequality

https://sevenpillarsinstitute.org/causes-economic-inequality/

Difference in income plays a role

One important factor contributing to different levels of wealth is people are paid different wages. There are several reasons why some people are paid millions while some merely earn minimum wage.

(i) Wages are determined by labor market

Wages are a function of the market price of skills required for a job [1]. In a free market, the “market price of a skill” is determined by market demand and market supply. The market price of a skill, and hence the wage for the job that requires the skill, is low if a large number of workers (high supply) are willing and able to offer that skill but only a few employers need it (low demand). On the contrary, when there is low supply but high demand for a skill, the wage for a job requiring the skill goes up.

(ii) Education affects wages

Individuals with different levels of education often earn different wages [2]. This is probably related to reason one: the level of education is often proportional to the level of skill. With a higher level of education, a person often has more advanced skills that few workers are able to offer, justifying a higher wage.

The impact of education on economic inequality is still profound in developed countries and cities [3]. Although there are usually policies of free education in developed nations, levels of education received by each individual still differ, not because of financial ability but innate qualities like intelligence, drive and personal ability. For example, in Hong Kong, 12 years of free education are provided for each citizen, not covering tertiary education, offered only when students receive certain results on public exams.

Moreover, receiving the same level of education does not mean receiving education of the same quality. This accounts for the difference in abilities and hence wages for individuals all receiving, for example, 12 years of education. Therefore, it seems no matter how good the social welfare policy of a country is at preventing denial of education due to financial difficulties, differences in education, in terms of levels and quality, still play a prominent role in economic inequality.

(iii) Growth in technology widens income gap

Growth in technology arguably renders joblessness at all skill levels [3]. For unskilled workers, computers and machinery perform a lot of tasks these workers used to be do. In many jobs, such as packaging and manufacturing, machinery works even more effectively and efficiently. Hence, jobs involving repetitive tasks have largely been eliminated. Skilled workers are not immune to the nightmare of losing jobs. The rapid development in artificial intelligence may ultimately allow computers and robots to perform knowledge-based jobs [3].

The impact of increasing unemployment is stagnant or decreasing wages for most workers, as there is a low demand for but high supply of labor. A small portion of society, usually the owners of capital, controls an ever-increasing fraction of the economy [3]. The income gap between workers who earn by their skills and owners who earn by investing in capital has widened.

Although both skilled and unskilled workers are adversely affected by the technological advance, it seems unskilled workers are subject to worse outcomes [3]. This is because the labor market may still need skilled workers to use computers and operate the advanced machines. The rightward shift in the demand for skilled labor creates an increase in the relative wages of the skilled compared to the unskilled workers. Hence, the income gap among workers also has widened.

(iv) Gender does matter

In many countries, there is a gender income gap in the labor market [3]. For example, in America, the median full-time salary for women is 77 percent of that of men [4]. However, women who work part time make more on average than men who work part-time [4]. Additionally, among people who never marry or have children, women make more than men [4].

It may be difficult to justify such differences. According to a U.S. Census report [4], the wage gap is not fully explained even after accounting for key factors that affect earnings, such as discrimination and the tendency of women to consider factors other than pay when looking for work. The only thing we know for sure is that gender does contribute to a difference in wages in society and hence economic inequality.

(v) Personal factors

It is generally believed that innate abilities play a part in determining the wealth of an individual. Hence, individuals possessing different sets of abilities may have different levels of wealth, leading to economic inequality [3]. For example, more determined individuals may keep improving themselves and striving for better achievements, which justifies a higher wage.

Another example is intelligence [3]. A lot of people believe that smarter people tend to have higher income and hence more wealth. This is debatable. In the book IQ and the Wealth of Nations, Dr. Richard Lynn opined that there is a correlation of 0.82 between average IQ and GDP. However, Stephen Jay Gould, in the book The Mismeasure of Man, criticized it for employing the wrong methods of evaluation.

In addition to innate abilities, diversity of preferences, within a society or among different societies, contributes to the difference in wealth [3]. When it comes to working harder or having fun, equally capable individuals may have totally different priorities, resulting in a difference in their incomes. Their saving patterns may also differ, leading to different levels of accumulated wealth.

Inequality is a vicious cycle

“The rich get richer, the poor get poorer” is not just a cliche. The concept behind it is a theoretical process called “wealth concentration.” Under certain conditions, newly created wealth is concentrated in the possession of already-wealthy individuals [5]. The reason is simple: People who already hold wealth have the resources to invest or to leverage the accumulation of wealth, which creates new wealth. The process of wealth concentration arguably makes economic inequality a vicious cycle.

The effects of wealth concentration may extend to future generations [3]. Children born in a rich family have an economic advantage, because of wealth inherited and possibly education, which may increase their chances of earning a higher income than their peers. These advantages create another round of the vicious cycle.

The French economist Thomas Picketty recently published a book, Capital in the Twenty-First Century [6]. Picketty’s thesis supports the previous proposition. It is a 700-page book on the topic of income inequality. The rich collection of statistics in the book shows that in almost every country (examined by Picketty), the wealth gap has widened since 1980. Picketty holds the view that inequality will remain as long as the aforementioned wealth concentration process persists through generations. However, Picketty argued that global inequality has probably decreased, as there has been rapid growth in Asia partly at the expense of lower-to-middle income earners in developed countries. The statistics show economic inequality is not just the top 10 percent of the population is richer than the bottom 20 percent. Rather, it is “1 percent versus the remaining 99 percent,” i.e. the top 1 percent of the population has the vast majority of wealth in the economy and control of financial markets.

 

chart1

Chart 1

 

There is both support and criticism for Picketty’s argument inequality has been a persistent phenomenon. World Bank researchers Christoph Lakner and Milanovic Branko agree that inequality in rich countries has been worsening significantly since 1988 [7]. In Oxfam’s Working Paper [8], statistics show that in 24 of 26 countries researched, indeed the richest 1 percent increased their share of income between 1980 and 2012 (see Chart 1). The share of national wealth owned by the wealthiest 1 percent in the U.S. greatly increased after 2008 (see Chart 2), meaning the top 1 percent has captured 95 percent of post-financial crisis growth since 2009, whereas the low-income population became poorer. These statistics further support the proposition in Picketty’s book that inequality is persistent and is getting worse.

 

 

chart2

Chart 2

 

Critics of Picketty’s book, such as Michael Hudson, a distinguished research professor of economics at the University of Missouri, mainly focus on the solutions proposed by Picketty [9]. Hudson even supplemented Picketty’s theory in an interview by saying that another reason for the persistence of economic inequality is the top 1 percent exploiting the remaining population and making the latter “in debt” to the former.

It should be noted, however, some sociologists, such as Charles Murray, disagree with the proposition that wealth accumulation is a main cause of economic inequality. They argue factors like innate ability instead of a better starting point are the most important determining factors in the wealth accumulated by a person.

From a broader perspective: Economic policies and structure

(i) Economic neoliberalism

Economic neoliberalism is defined as a form of economic liberalism that supports “free market and minimum barriers to the flow of goods, services and capital” [10]. There are four pillars to this approach, namely capital account liberalization, trade liberalization, domestic liberalization, and privatization [10]. The economy is liberalized in different ways. Countries like the U.S. adopt economic policies promoting neoliberalism (called the “Anglo-American model”) [11].

Advocates of neoliberalism often argue their ideology is helpful in reducing absolute inequality [12]. Some opine neoliberalism itself does not directly generate inequality. Rather, it promotes a free system, which aims to foster economic prosperity. It is the operation of neoliberalism, not the theory itself, which contributes to inequality [13]. Yet, numerous scholars argue that economic neoliberalism is itself a cause of inequality. While it may somehow reduce absolute inequality, it increases relative inequality [12]. According to the economists Howell and Diallo (2007), neoliberal policies in the U.S. led to low wages (30 percent of the working-age population) and inadequate employment (60 percent of the working-age population) [14]. The wealth discrepancy between the rich and the poor, usually the working class, hence widens.

John Schmitt and Ben Zipperer (2006) of the CEPR hold similar views. They claim that economic liberalism, where reduction of business regulations and decline of union membership are inevitable, is a cause of economic inequality [15]. In their analysis of the effects of Anglo-American neoliberal policies, their conclusion is that “the U.S. economic and social model is associated with substantial levels of social exclusion, including high levels of income inequality. At the same time, the available evidence provides little support for the view that U.S.-style labor-market flexibility dramatically improves labor-market outcomes” [15]. So it seems that economic neoliberalism is worsening rather than improving the problem of income inequality.

(ii) Globalization

The great umbrella of globalization, a product of trade liberalization, now covers every corner in the world. The extent of its effects on economic inequality is debatable. Trade economist Paul Krugman supports the proposition that globalization is an important cause of inequality. Because of increasing trade among countries, workers in richer countries face a higher level of competition from those in poorer countries, especially in jobs that do not require a high level of skill. Wages for low-skilled work in richer countries are decline as a result.

Other experts think the effects of globalization on inequality are minor when compared to other causes. For example, Lawrence Katz estimates globalization accounts only for 5 to 15 percent of rising inequality. Robert Lawrence, an economist, disputes any such relationship. Instead, technological innovation causes low-skilled jobs to be replaced by machinery in wealthy nations. Rich nations no longer have significant numbers of low-skilled workers that can be affected by competition from poor nations.

(iii) A Kuznets curve – Phases of development

Nobel laureate economist Simon Kuznets argues that as an economy develops, a natural cycle of economic inequality occurs, represented by an inverted U-shape curve called the Kuznets curve (see Fig. 1). From the curve, we observe as the economy develops, inequality first increases, then decreases after a certain level of average income is attained. In early development, investment opportunities for those who already have wealth multiply so owners of capital can accumulate wealth. At the same time, there is an influx of cheap rural labor to the developing cities, which drives down wages. Therefore, in early development, inequality increases.

 

Fig1_Kuznets_curve

Figure 1: Kuznets Curve

 

When the economy becomes mature, there is democratization and various redistribution mechanisms such as social welfare programs. According to Kuznets, countries move back to a lower level of inequality.

As with any theory, there are criticisms. First, the data set used is said to be prejudiced. Many of the middle-income countries used in Kuznets’ data set are in Latin America, a region with a historically high level of inequality. According to Deininger and Squire (1998), the shape of Kuznets curve tends to disappear after this variable is controlled. Moreover, Kuznets demonstrates his theory by using cross-sectional data. But through using data from large panels of countries, Fields (2001) demonstrates that hypothesis put forward by Kuznets is flawed.

The second criticism is the East Asian miracle (EAM). Basically, EAM describes the rapid economic growth between 1965 and 1990 of eight East Asian countries – South Korea, Hong Kong, Taiwan, Singapore (also known as Four Asian Tigers), Japan, Indonesia, Thailand, and Malaysia. EAM deviates from the Kuznets curve in the sense that the early development economy, particularly manufacturing and exports, grew powerfully, while the population living in absolute poverty decreased, i.e. inequality “surprisingly” decreased.

Many studies have been conducted to identify reasons why the EAM successfully distributes the benefits of rapid economic growth broadly among the population, preventing an initial increase in inequality. Joseph Stiglitz proposed EAM occurred through the immediate reinvestment of initial benefits into land reform increasing the rural productivity and income, as well as universal education and government policies such as increasing wages and limiting price increase in commodities. Hence, there was no significant initial increase in inequality. Average citizens could then have more financial ability to consume and invest in the economy, furthering economic growth. Simply put, what Stiglitz suggests is high economic growth provides resources to promote equality, which then provides positive feedback for growth. This is contrary to the Kuznets curve theory, which insists that economic growth inevitably creates inequality, which then promotes overall growth.

Inequality is not doomed to happen when a country starts developing. If there are sufficient government policies and economic planning, a high growth rate can coexist with low economic inequality at any stage of development.

A free-market society without statutory protection on wages may have unfairly low wages for certain types of work, usually those involving repetitive tasks and low skills, which widens the wealth gap. Likewise, economic neoliberalism, which promotes minimum trade barriers, may also lead to labor exploitation in the form of unfairly low wages. Looking at EAM in a reverse way, if there had not been policies and regulations to distribute the benefits of rapid economic growth broadly among the population, those eight countries might have had totally different fates – economic inequality would have increased in their early stages of development.

 

 

The Causes of Rising Income Inequality

https://www.nber.org/digest/dec08/w13982.html

It's one of the biggest socioeconomic questions in America today: Why is income inequality rising in the United States, especially between the top 10 percent of workers and everybody else? In Controversies about the Rise of American Inequality: A Survey (NBER Working Paper No. 13982) , authors Robert J. Gordon and Ian Dew-Becker provide a comprehensive survey of seven aspects of rising inequality that are usually discussed separately: changes in labor's share of income; inequality at the bottom of the income distribution, including labor mobility; skill-biased technical change; inequality among high income groups; consumption inequality; geographical inequality; and international differences in the income distribution, particularly at the top.

They conclude that changes in labor's share of income play no role in rising inequality of labor income: by one measure, labor's income share was almost the same in 2007 as in 1950.

However, there are gender differences in income inequality: between 1979 and 2005, for example, the income gap between women working for the median wage (the 50th percentile) and low-earning women (at the 10th percentile) grew much more than it did for men at those income levels during the same period. That suggests that the decline in the real value of the minimum wage over that time played a causal role, the authors argue. That's not surprising, in one sense, since women are, roughly speaking, twice as likely to work for the minimum wage as men are.

If women were more affected by the minimum wage, men bore the brunt of the decline in unionization over the least three decades, the survey finds. One study the authors cite suggests that the fall in organized labor's share of the workforce can explain 14 percent of the rise in the variance among male wages between 1973 and 2001 (but it had no apparent effect on the variance of female wages).

There is little evidence on the effects of imports. And, the ambiguous literature on immigration implies a small overall impact on the wages of the average native-born American, a significant downward effect on the wages of high-school dropouts, and a potentially large impact on previous immigrants who work in occupations in which immigrants specialize.

The authors introduce two new issues, disparities in the growth of price indexes and in life expectancy between the rich and the poor. "While the poor may do better when price indexes are corrected, they do much worse when their health outcomes are considered," the authors write. They cite evidence that between 1980 and 2000 the life expectancy of the bottom 10 percent of earners increased at only half the rate of the top 10 percent. "This may be the most important single source of the increase in inequality in the United States, and it combines not only unequal access to medical care services and insurance, but also to differences in personal habits and environment related to education and income," the authors conclude.

The most controversial section of the survey looks at the question of why the rich have gotten so much richer. In a 2005 study, the authors found that the top 10 percent of earners saw their share of overall income rise from 27 percent in 1966 to 45 percent in 2001. But that study also documented that fully half of that increase came from the relative gains made at the very top of that spectrum - those at the 95th percentile and above. That study also distinguished between "superstars," whose incomes were market-driven, and CEOs, whose incomes were "chosen by their peers." In their new survey, the authors carve out a third group - high-income professionals, especially lawyers and investment bankers, whose pay is market-driven but who don't enjoy the benefits of "audience magnification," whereby the superstars can fill entire arenas or sell recordings to millions of people. Their point: income inequality is growing even among the top 10 percent of earners as the superstars and CEOs increase their pay faster than lawyers and investment bankers. But at least the pay of the superstars, lawyers, and investment bankers is market-driven. The pay of CEOs is not.

Their review of the CEO debate places equal emphasis on the market, in showering capital gains through stock options, and an arbitrary management-power hypothesis based on numerous non-market aspects of executive pay. "CEOs, through compensation committees and inbreeding of boards of directors, have a unique ability to control their own compensation," the authors write. "Furthermore, if a director approves a higher compensation package, that may subsequently lead her to receive more compensation at her own firm."

They cite one study of 1,500 firms that found that the compensation earned by the top five corporate officers in 1993-5 equaled 5 percent of their firms' total profits during that period; by 2000-2, that ratio had more than doubled to 12.8 percent. The trend was caused in equal parts by arbitrary pay decisions by corporate boards and by the showering of stock options on CEOs, they conclude.

Furthermore, the survey cites a study showing "ample evidence that firms work to disguise the magnitude of CEO pay," such as lifetime healthcare, below-market-rate loans, and above-market-rate loans when CEOs defer their compensation, to lessen shareholder outrage. Such research "is important because it tells shareholders what to expect and where their outrage constraint should be set," the authors write.

This skewing of pay at the very top in the United States contrasts with other countries, especially Japan. There, the income share of the top 0.1 percent peaked at 9.2 percent in 1938, reached stability of close to 2.0 percent after 1947, and ended up at 1.7 percent in 1998. Initially, America also saw an initial peak (8.2 percent in 1928) fall to a low (1.9 percent in 1973). But then the income share of America's top 0.1 percent rebounded (7.3 percent in 2000). Canada and the United Kingdom mimicked the U.S. pattern, though their most recent upturns were less dramatic. France, like Japan, has seen the income share of its very top earners stay quite stable since the mid-1940s.

Why the disparity? America's CEOs have had their pay inflated by generous stock options and having their pay set by peers on corporate boards, the survey finds, as well as institutional differences between the United States and other nations, including such things as regulations, unions, and social norms.

 

What’s caused the rise in income inequality in the US?

https://www.weforum.org/agenda/2015/05/whats-caused-the-rise-in-income-inequality-in-the-us/

Part of this difficulty is rooted in the complexity inherent in larger labor market inequalities. Falling labor force participation, stagnating median wages, and declining share of labor income, for example, are all part of current U.S. labor market trends. These trends are certainly connected, but they also have been studied through various research frameworks, which can inexorably lead to different policy implications. Acknowledging the complex and intertwined nature of these explanations is crucial to developing policy solutions that address the joint causes of inequality.

Of the three explanations for rising inequality, the so-called technology-and -education argument is the most prominent. This hypothesis focuses on the large wage premiums for workers with high levels of education and skills. According to Massachusetts Institute of Technology professor David Autor, demand for skills has consistently increased across developed countries. The skill premium, then, is a result of skills not being supplied at a rate to keep up with demand. The proposed solution to inequality driven by these trends is increasing education and job training opportunities for workers so they can get better paying jobs.

A second explanation is trade and globalization. Scholars, including Autor, point to increases in trade and offshoring as a cause of income inequality. According to this hypothesis, growing trade between the United States and the rest of the world, especially China, has increased the number of imports in the U.S. economy, which has led to job loss in industries that originally produced these goods in the United States. Offshoring has also affected jobs and wages. Both these trade phenomena lead to declining employment, falling labor force participation, and weak inflation-adjusted wage growth. Possible policy solutions for this trend include those that would make U.S. exports more competitive, among them the depreciation of the U.S. dollar.

The last explanation suggests that U.S. government policies created an institutional framework that led to increasing inequality. Since the late 1970s, deregulation, de-unionization, tax changes, federal monetary policies, “the shareholder revolution,” and other policies reduced wages and employment. This explanation would seem to call for policy changes such as increasing unionization, better supervision of Wall Street, raising the minimum wage, and maintaining a full-employment focus in monetary policy, to address inequality and declining wages.

These three main explanations for income inequality show the difficulty in pointing to one cause of inequality over others. Researchers’ emphasis on disentangling causes of income inequality is relevant to understanding the issue, but it also highlights the complexity of factors that contribute to labor market inequality. Income inequality has no one cause. As such, any policy solutions that address inequality must match this nuance and acknowledge the various factors that contribute to inequality.

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9 hours ago, AU64 said:

Who is the "we"......the failure I see all over the place is by people failing to take advantage of the opportunities they have.....

Add poor choices and lack of personal responsibility.

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On 6/15/2019 at 3:13 PM, DKW 86 said:

Folks, I dont mean to sound like an ass, but some of us may have just lost our job and/or maybe our career tho being rated the best in our position in a company of 4000. 

If I am singing the Internationale' a little too loudly, it is because I know first hand that a lifetime of working your ass off, and playing by the rules can go up in smoke in an afternoon. 

 

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2 hours ago, DKW 86 said:

Folks, I dont mean to sound like an ass, but some of us may have just lost our job and/or maybe our career tho being rated the best in our position in a company of 4000. 

If I am singing the Internationale' a little too loudly, it is because I know first hand that a lifetime of working your ass off, and playing by the rules can go up in smoke in an afternoon

Things a lot worse than losing a job can go up in smoke in a matter of seconds. If you enjoy what you and do feel gratified by it you will not lose a career. Hopefully things will work out for you.

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10 hours ago, SaltyTiger said:

Things a lot worse than losing a job can go up in smoke in a matter of seconds. If you enjoy what you and do feel gratified by it you will not lose a career. Hopefully things will work out for you.

Three years ago my son lost his job and almost simultaneously his wife asked for a divorce....today he has a much more fulfilling job and is in a much better marriage.  Some tough times in between but faith and family helped a lot...and he never lost hope for his future.

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17 hours ago, SaltyTiger said:

Things a lot worse than losing a job can go up in smoke in a matter of seconds. If you enjoy what you and do feel gratified by it you will not lose a career. Hopefully things will work out for you.

And just like, things changed...folks that havent even spent all of their last bonus check are suddenly not as expendable as was thought...

 

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