September 25, 2002
FOR GOD'S SAKE, PEOPLE, USE GOOGLE!!!

What good are modern information-management tools if people won't use them?

One of the most frustrating things about being an optimistic "computer revolution" guru is that over and over again I run into people who could use the magnificent information management tools we have at our disposal, have every incentive to use them (so as not to look stupid), and yet do not use them.

Today's example: I read Slate and find Eric Umansky bashing the New York Times for its coverage of yesterday's income statistics release by the Census Bureau:

Blair Snitch Project II By Eric Umansky: The Times' piece also says, "With its usual caution, the Census Bureau said the data did not conclusively show a year-to-year increase in income inequality. But the numbers showed a clear trend in that direction over the last 15 years." The article goes on to say that the richest fifth of the population earned about half of all household income last year, up from about 45 percent in 1985. The poorest fifth earned 3.5 percent of all income, down from 4 percent in 1985. That's evidence of something, but not necessarily of a 15-year-long trend. After all, the paper doesn't tell readers what happened during any of the years between '85 and '01. What if, say, the disparity reached its peak in 1992 and has been going down ever since?

But had Umansky done the simplest possible google search--typed, say, "Census income inequality" into the Search box and then pressed the "I feel lucky" button--he would have found himself at the right Census Bureau page. One single further mouse click will get you to a table of shares of (pretax) household income received by the top, middle, and bottom of the household income distribution from 1967 to the year before last (the new data release is a new release, after all, and has not yet been incorporated into the historical tables):

Historical Income Tables - Income Equality

Table IE-3.  Household Shares of Aggregate Income by Fifths
of the Income Distribution:  1967 to 2000

----------------------------------------------------------------- 
                            Share of aggregate income             
                 ------------------------------------------------ 
Year               Lowest  Second   Third  Fourth Highest   Top 5 
                    fifth   fifth   fifth   fifth   fifth percent 
----------------------------------------------------------------- 
2000 29/              3.6     8.9    14.9    23.0    49.6    21.9 
1999                  3.6     8.9    14.9    23.2    49.4    21.5 
1998                  3.6     9.0    15.0    23.2    49.2    21.4 
1997                  3.6     8.9    15.0    23.2    49.4    21.7 
1996                  3.7     9.0    15.1    23.3    49.0    21.4 
1995 25/              3.7     9.1    15.2    23.3    48.7    21.0 
1994 24/              3.6     8.9    15.0    23.4    49.1    21.2 
1993 23/              3.6     9.0    15.1    23.5    48.9    21.0 
1992 22/              3.8     9.4    15.8    24.2    46.9    18.6 
1991                  3.8     9.6    15.9    24.2    46.5    18.1 
1990                  3.9     9.6    15.9    24.0    46.6    18.6 
1989                  3.8     9.5    15.8    24.0    46.8    18.9 
1988                  3.8     9.6    16.0    24.3    46.3    18.3 
1987 21/              3.8     9.6    16.1    24.3    46.2    18.2 
1986                  3.9     9.7    16.2    24.5    45.7    17.5 
1985 20/              4.0     9.7    16.3    24.6    45.3    17.0 
1984                  4.1     9.9    16.4    24.7    44.9    16.5 
1983 19/              4.1    10.0    16.5    24.7    44.7    16.4 
1982                  4.1    10.1    16.6    24.7    44.5    16.2 
1981                  4.2    10.2    16.8    25.0    43.8    15.6 
1980                  4.3    10.3    16.9    24.9    43.7    15.8 
1979 18/              4.2    10.3    16.9    24.7    44.0    16.4 
1978                  4.3    10.3    16.9    24.8    43.7    16.2 
1977                  4.4    10.3    17.0    24.8    43.6    16.1 
1976 17/              4.4    10.4    17.1    24.8    43.3    16.0 
1975 16/              4.4    10.5    17.1    24.8    43.2    15.9 
1974 16/15/           4.4    10.6    17.1    24.7    43.1    15.9 
1973                  4.2    10.5    17.1    24.6    43.6    16.6 
1972 14/              4.1    10.5    17.1    24.5    43.9    17.0 
1971 13/              4.1    10.6    17.3    24.5    43.5    16.7 
1970                  4.1    10.8    17.4    24.5    43.3    16.6 
1969                  4.1    10.9    17.5    24.5    43.0    16.6 
1968                  4.2    11.1    17.5    24.4    42.8    16.6 
1967 12/              4.0    10.8    17.3    24.2    43.8    17.5  

So the answer to Umansky's question is: "No. The New York Times is not playing hide-the-ball and distorting the data." The top fifth of household received 43.8 percent of (pretax) income in 1973, 43.7 percent in 1980, 46.9 percent in 1992, 49.6 percent in 2000, and now 50.1 percent in 2001.

Four minutes, tops, to get your hands on the right numbers.

And--here's the weirdest thing--not only does Umansky not do the search that would show that his Times-bashing exercise was off-base, he proceeds to ask his readers for help in figuring out whether what he has said about the Times hiding the ball is smart or not: "(Reader Research Project—those folks procrastinating at work are encouraged to participate: Is the Times correct to say that it's a clear trend? First reader to answer that, and provide primary-source evidence, wins a super-secret present from Today's Papers.)". It must have taken about as long to ask for help as it would have taken to perform the google search.

Why not use the world-wide-web to find out whether your Times-bashing exercise is sound or not? I mean, it cannot be in any journalist's interest to lose credibility with their audience by saying stupid things, can it? It can't be in any editor's interest for his journalists to develop a reputation as people who don't do the quick-and-easy things you do to check your facts, can it? And in almost all circumstances in which you don't really know what you are talking about, a quick google search is a very good way to orient yourself, isn't it?

FOR GOD'S SAKE, PEOPLE, USE GOOGLE!!!

*Sigh*.


...And as of 12:00 noon EDT, nobody has yet helped Mr. Umansky...


...And as of 11:00 PM EDT, nobody has yet helped Mr. Umansky...


...And as of September 29, still no acknowledgement of error on the webpage by Mr. Umansky...


Carl Bialik points out that Umansky has a concession of the error on another webpage. However, there is no link from Umansky's original webpage.

Posted by DeLong at September 25, 2002 08:33 AM | Trackback

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Comments

Brad

The idea is indeed to bash the Times. That is the point of all sorts of such essays. Since we know that there is no poverty in America, there may never have been any during a Republican administration, we have to mock the Times so that the rest of you will know what we know.

The Times problem is merely trying to get any such story right.

Posted by: on September 25, 2002 08:56 AM

There seems to be a trend, lately, at Slate, of bashing the Times as biased and sloppy. I can't say whether they are, but I do know that most of Slate's ostensible examples have been simply incorrect.

On an unrelated note, what is interesting about the top quintile, is actually what's happening in the top 5%.

Posted by: Ian Welsh on September 25, 2002 08:57 AM

Times bashing is the latest hobby of the cool kids - you bash them when you think they might be wrong, you can bash them for what they do say, you can bash them for what they don't say. It's really quite easy to do, and a colossal waste of time.

Posted by: Atrios on September 25, 2002 09:18 AM

http://nytimes.com/2002/09/25/international/americas/25MEXI.html

"More than 71 years after the Mexican revolution promised relief to the masses, 10 percent of the population controls 40 percent of the nation's wealth, while 53.7 percent live in poverty."

There is another important article in the Times about an on going problem for our neighbor....

Posted by: Anne on September 25, 2002 09:25 AM

"On an unrelated note, what is interesting about the top quintile, is actually what's happening in the top 5%."

Are you referring to the rising proportion of income that is going to the top 5%?

So - 5% of Americans earned 21.9% of the income in 2000. Wow.

Posted by: on September 25, 2002 10:06 AM

Well - At least the top 5% will get to keep more of what they make as the top tax brackets are lowered.

Posted by: on September 25, 2002 10:09 AM

Bashing the times, like bashing Krugman, is an easy and effective way to boost your web traffic. As long as you care only about the number of hits and not the collective IQ of those making the hits. No wonder both are becoming more popular at Slate.

Posted by: on September 25, 2002 10:15 AM

This should not have been left out....

NOTE: Change in data collection methodology suggests pre-1993 and post-1992 estimates are not strictly comparable.

Posted by: Adam on September 25, 2002 11:09 AM

You inspired me to look for the parallel series for the UK but google isn't as helpful for us Brits (and nor is the UK's National Statistics website).

Posted by: Chris Bertram on September 25, 2002 11:37 AM

Kudos to our host for tracking down this example.

One unfortunate thing about cases such as this: I'd bet dollars to doughnuts that Mr. Umansky's opinions will be absolutely unchanged by the data you quote.

I'd like to think my own opinions, being more reasonable, are based on solid evidence, and would change in response to good arguments. But then I would say that wouldn't I?

Posted by: Tom Slee on September 25, 2002 11:43 AM

Sadly the editors at Slate seem to have little concern for accurate reporting. The "reporter" is simply being a propagandist and has no honest intentions and no editor who will insure honesty.

Nothing wrong with being partisan, but honesty should go along with being partisan. Propaganda however has no concern for honesty.

Posted by: on September 25, 2002 11:55 AM

Brad's point about research is well-taken, especially when you're bashing fellow journalists for not doing easy research.


But what about the subtext of this not-quite-an-argument? Were we really better off in 1992, when the share of income going to the top quintile was noticeably lower? (Not to mention in years before then.) That's the implication of fretting about the rise in high-end incomes.


And were we really better off when high-income men had low-income wives, making household incomes more equal? Are married professional women a terrible offense against egalitarian ideals, as Mickey Kaus, Charles Murray, and Michael Lind have suggested with varying degrees of tact? (At least Mickey is more interested in social, rather than economic, equality.)

Posted by: Virginia Postrel on September 25, 2002 01:26 PM

'That's the implication of fretting about the rise in high-end incomes.'

An alternate one might be worries that all economic growth is going to the top 5%. That's not strictly happening, of course; everyone else is still getting a fraction of growth. It's a worrying trend, though.

Has anyone produced estimates on how much of the shift is due to dual-earner families?

Posted by: Jason McCullough on September 25, 2002 02:22 PM

Virginia: You can't compare 1992 to 2000 on that chart. As I noted before, the note that Brad left off when he cut and past specifically says that the methodology was changed from 1992 to 1993. It seemed weird to me -- a steady trend, with a significant jump in one particular year. Compare 1993 to 2000...not that ominous.

Posted by: Adam on September 25, 2002 02:41 PM

RE:

>>This should not have been left out.... NOTE: Change in data collection methodology suggests pre-1993 and post-1992 estimates are not strictly comparable.<<

True. My bad. I, however, have never been able to figure out why the changes in the interview scripts and data recording procedures should have boosted the top-fifth share by two percentage points, as it looks like it did.

Posted by: on September 25, 2002 03:08 PM

Re:

>>But what about the subtext of this not-quite-an-argument? Were we really better off in 1992, when the share of income going to the top quintile was noticeably lower? (Not to mention in years before then.) That's the implication of fretting about the rise in high-end incomes.<<

I'm a social democrat and an economist, remember? I push for faster economic growth. I push for more egalitarian income distributions. And I hope that the two goals rarely come into conflict. (And, I would argue, in the United States they rarely do. What's good for GM may or may not be good for the country, but what's good for the income earner at the 25th percentile almost always is.)

Posted by: Brad DeLong on September 25, 2002 03:11 PM

Re:

>>Brad's point about research is well-taken, especially when you're bashing fellow journalists for not doing easy research.<<

It's more than that. Slate is an internet-only publication, for God's sake. The people who write for it should be primed to use the web at every opportunity.

Is it true that when Slate was started, they demanded hard-copy submissions mailed to their Redmond office, and then had people retype them into the database?

Posted by: Brad DeLong on September 25, 2002 03:13 PM

Re:

>>Compare 1993 to 2000...not that ominous.<<

Yeah. And that's one reason why we Clinton people sprained our shoulders patting ourselves on the back, and talking about how the nineties prosperity lifted all boats rather than just the yachts. But the 2001 number is 50.1 percent for the top fifth (compared to 48.9 in 1993), and 22.4 percent for the top twentieth (compared to 21.0 in 1993). And the 2001 number makes it much harder to believe that the trend toward rising inequality was halted in the 1990s.

Posted by: Brad DeLong on September 25, 2002 03:20 PM

So was it camaflauged? What causes the difference in the 2000-2001 numbers?

Hypothesis: New President, new calculation method?

Posted by: Adam on September 25, 2002 04:32 PM

Two queries:

1. How do the Census figures treat non-cash returns on owned assets, in particular the rental equivalent of owned housing and unrealized capital gains?

2. If those are pre-tax figures, are they also pre-transfer? E.g., do they count the EITC? How different would after-tax, after-transfer figures look?

Posted by: Mark Kleiman on September 25, 2002 05:12 PM

Imagine James Joyce using Google :-)

Posted by: Ian on September 25, 2002 06:57 PM

Imagine James Joyce using Google :-)

Posted by: Ian on September 25, 2002 06:58 PM

Re:

>> It seemed weird to me -- a steady trend, with a significant jump in one particular year.<<

I agree. There were changes in the survey method that year--the one that would have boosted the top share was a change in the maximum income that they would record. But back in 1994 I convinced myself that the top-coding change should not have been nearly that large. (However, I could have been wrong, and I cannot find my file on this anywhere.)

The Census Bureau says: "Part of the increase from 1992 to 1993 is due to
changes in survey methodology.... The Census Bureau introduced computer assisted
personal interviewing (CAPI) in January
1994 to the Current Population Survey. The
March 1994 supplement permitted households
to report up to $1 million in earnings, up from
$300,000, and we made parallel increases in
the reporting limits for selected other income
sources. Both of these changes affected the data.
One analysis of the 1993 inequality statistics
suggests that the increase in the maximum
amounts that could be reported accounts for
about 1.8 percentage points, or about one-third,
of the 1992-1993 increase of 5.2 percent. The
contribution of the change to CAPI to the increase
in measured inequality cannot be determined,
but may well bring the share of survey methods related
changes in inequality to over one-half of
the 5.2 percentage point apparent increase. See
Paul Ryscavage, “A Surge in Growing Income
Inequality?,” Monthly Labor Review, August 1995,
pp. 51-61."

Posted by: Brad DeLong on September 25, 2002 08:13 PM

Re:

>>1. How do the Census figures treat non-cash returns on owned assets, in particular the rental equivalent of owned housing and unrealized capital gains?

2. If those are pre-tax figures, are they also pre-transfer? E.g., do they count the EITC? How different would after-tax, after-transfer figures look?<<

Very good questions. I have the pdf files that are the Census Bureau reports on poverty, on income, and on historical inequality trends. But I'm not the right person to answer these questions in detail.

Posted by: Brad DeLong on September 25, 2002 08:20 PM

It is worth examining the wealth data. It's rather revealing. Income is only one part of the picture. The book for all this is definitely Kevin Phillips' "Wealth and Democracy". The figures pretty much speak for themselves. The US now has the highest income inequality in the western world.

As I noted before the really interesting thing to do is compare charts of income growth and wealth growth for the 1945 period to 1975 and 1975 to current. All boats really did rise and the bottom got about as much (in % terms) as the top. Even in the 90's the rich did better than the poor in percentage terms - rather dramatically.

Also note that the top 1% did better than the top 5% who did better than the top 20%. Much of the gain in the top quintile was actually at the very top. Income inequality has sharply increased over the last 25 years, no matter how you measure it. At the same time overall economic growth has been nothing to brag about compared to post-war years. This is correlation, not causation, but it's interesting correlation because it at least suggests that progressive taxation was not particularly bad for the economy. (Maybe it is, but the case is not easy to make on the evidence I am aware of).

Posted by: Ian Welsh on September 25, 2002 09:54 PM

>>1. How do the Census figures treat non-cash returns on owned assets, in particular the rental equivalent of owned housing and unrealized capital gains?

When I was in graduate school (not too long ago) I wrote a term paper discussing certain aspects of the gini coefficeient. I discussed the above issue.

If memeory serves me well, it turns out that a surprising number of households in the lowest 20% own their homes free - and - clear. Thus, if you take into account the rental equivalent of owned housing, the disparity of income in this country is not as great as it appears to be on the surface.

If I could locate the disk I would share the source.

I'm sure the information came from an online source. And I believe it was the Census Bureau itself.

Hope this helps a little.

Posted by: E. Avedisian on September 26, 2002 01:31 AM

I think everyone's being a bit harsh on Today's Papers. As far as I can tell, this article wasn't bashing the Times' calculus, it was merely saying that the Time's didn't explain the trend properly and reported a story in a way that could leave the reader with questions. Sure a Google search could answer those questions -- but don't newspapers want to avoid competing with web searches?

Posted by: Mike on September 26, 2002 07:18 AM

I've always kind of wondered why people who are so interested in the "welfare distribution" always seem to focus exclusively on income distribution while ignoring "consumption distribiton".

Surely consumption is a much better measure of welfare than income -- and it may be much larger or smaller. (A quick look at the BLS survey of consumer expenditures shows that those at its lowest income level, who seem poor indeed by income, consume nine times their income).

Also, the consumption numbers seem much more reliable methodologically for the purpose.

E.g., the very lowest levels of the income distribution include millionaire business owners and investors who have loss years, students in Harvard medical school and elsewhere who have high-earning careers ahead of them, and wealthy retirees drawing down savings -- all lumped in with adult minimum wage workers and people on welfare. (My memory is that the Fed's survey of consumer finances says the bottom 5% by income average in the top 15% by wealth, due to the 'business and investment loss effect').

At the same time the "top 5%" by income includes many very middle-of-the-pack people who make a one-time appearance after selling a home that has appreciated for many years, or taking a distribution of a retirment account balance that reflects lifetime savings.

Income numbers conflate all these disparate groups but consumption numbers sort them out. They also show the lifetime income effect -- how people in their high earning years reduce consumption to save so they won't truly be poor after retirment when they drop into the "low income" group.

The net of all this is that the "consumption gap" by income quintile is only a fraction of the income gap. For example, just quickly looking at the BLS consumer expenditure survey for 2000, one sees...

...........................income level
...................bottom 20%....top 20%.....ratio
Income.............$7,683......$110,118.....1-14.3
Consumption..$17,940.......$75,102.......1-4.2

So the consumption gap by income level given here is only 29% as large as the income gap (4.2/14.3).

Now, in a discussion that takes the daunting-looking 14X income gap as an indicator of the size of a societal "welfare gap", it would seem the 4X consumption gap is relevant too and well worth a mention -- even if it is less daunting. Perhaps it should even be the first thing mentioned, as the more meaningful measure.

Yet in all the countless newspaper articles and op-eds I've seen written on the "income gap", I don't think I've ever seen the consumption numbers mentioned even once. I keep wondering, why is that?

Posted by: Jim Glass on September 26, 2002 07:33 AM

"Are married professional women a terrible offense against egalitarian ideals, as Mickey Kaus, Charles Murray, and Michael Lind have suggested with varying degrees of tact?"

Professional and married: these men are a terrible offense to me. These men have no tact.

To hell with Slate. The New York Times is disliked for being the finest newspaper in the world.

Anne

Posted by: on September 26, 2002 09:26 AM

For all the sins committed by the New York Times, there are (for expiation?) the Thursday Business Section Economics columns. Ms. Postrel being too modest to mention hers from August 2000:

http://www.nytimes.com/library/financial/columns/081000econ-scene.html

Excerpts:

<< But what if increasing inequality is mostly a myth -- an artifact of
misleading data and changing lifestyles? What if just about everyone is getting
richer?

<< In his new book, "The Fourth Great Awakening and the Future of
Egalitarianism" (University of Chicago Press), the iconoclastic economic
historian Robert W. Fogel makes just that case.

[snip]

<< What he finds is good news indeed: a century of stunning material progress
and improved physical well-being in the United States and the rest of the
industrialized world. Poorer people have been the big winners. "In every
measure that we have bearing on the standard of living, such as real income,
homelessness, life expectancy, and height, the gains of the lower classes have
been far greater than those experienced by the population as a whole, whose
overall standard of living has also improved," Professor Fogel writes.

<< Most strikingly, technical and economic progress has bought us more time; we
live longer, healthier lives and enjoy much more time to do what we want rather
than what we must. In this, he notes, the poor have gained the most. A century
ago, the lower your income, the more hours a year you worked to earn it -- a
depressing prospect. Today, it's just the opposite.

<< Nowadays, the basics cost very little time. In 1880, for instance, covering
a typical household's annual food bills cost 1,405 hours of labor, or about a
half-year's wages back then, and those hours didn't include substantial unpaid
time in the kitchen. A year's worth of food now costs a mere 260 hours of
labor, and that price buys much greater variety and convenience, including a
lot of restaurant meals.

[snip]

<< So what about the rising inequality we hear so much about? Professor Fogel
argues that what looks like bad news over the last couple of decades mostly
reflects individuals' different choices about how to use all this free time.

[snip]

<< In an appendix to Professor Fogel's book, Chulhee Lee, a former research
associate at the University of Chicago and now an assistant professor at Seoul
National University, presents evidence that increases in these sorts of
variations account for much of what looks like a rise in income inequality from
1969 to 1989. Changes in how many heads of households and their spouses worked
and how many hours they worked accounted for 54 percent of the rise in the
spread between the highest 10 percent of household incomes and the lowest 10
percent. Changing wages, by contrast, accounted for less than 6 percent of the
increase in the gap.

<< You might think these are signs of widespread, permanent unemployment among
lower-income people. But Professor Lee found evidence to the contrary. As of
1994, 80 percent of those in the bottom 10 percent of incomes were spending
more than they earned, an increase from about 53 percent in 1972-73. And the
amount that 80 percent spent was about twice their incomes. Incomes look more
lopsided, but the ratio of spending between the richest and poorest deciles has
barely budged over time.

<< How can poor people spend significantly more than they earn? "You don't go
to a bank and say, 'I'm very poor but worthy -- please give me some money,' "
Professor Fogel said in an interview. Most likely, he said, they are using
savings to finance either transient unemployment, which may be voluntary, or
early retirement. Only a few of the poorest people stay poor over time, and the
same is true for the richest, who tend to be at the peak of their earning
years.

<< This evidence suggests that the apparent increase in inequality exists
because more people with financial assets are taking breaks from work. That
doesn't mean poverty has disappeared, of course, though its material hardships
have lessened significantly. But it does suggest that identifying the real
problems of the poor -- as most people understand that term -- requires a lot
more nuance than aggregated income statistics provide. Focusing on snapshot
inequality rather than on long-term life opportunities leads us to
underestimate the country's enormous material progress and to overemphasize
money as the solution to hard-core poverty.

<< Rather than worry about material inequality, Professor Fogel says, we should
concern ourselves with the alienation that keeps a minority of the
statistically poor from enjoying the self-realization our abundant time makes
possible. Deciding what to do with that time, he argues, is something Americans
of all income levels now face. >>

Posted by: Patrick R. Sullivan on September 26, 2002 10:05 AM

'So the consumption gap by income level given here is only 29% as large as the income gap (4.2/14.3).'

The wealth numbers are even worse than the income numbers; should that be the right indicator?

Posted by: Jason McCullough on September 26, 2002 12:54 PM

www.census.gov/hhes/poverty/povmeas/papers/chinpvup.html

Sorry the link is not hot. Don't know what I did wrong, but it explains what the Census Bureau is including in income measures, has some discussion of what could or should be included to give a clearer picture of the standards of living experienced by US citizens.

The income measure does not reflect the rent equivalent of owned housing, nor does it reflect many in kind transfers enjoyed by the lowest quintile.

Clearly, the income stats are strictly that, with little or no
enhancements. One should be extremely cautious about using that data alone to draw inferences or conclusions.

RE: Fogel ....."Deciding what to do with all that time...."
I really hate drawing conclusions from subjective experience and/or anecdote. However, if I were to do so in this case I would have to say that Fogel is talking about a different galaxy.

Posted by: on September 26, 2002 01:16 PM

I'm curious about the wealth/income inequality of thin slices at the top; for example the top 1%. As the class war implicit in this becomes less avoidable I become heard to to think about where you personally fall on these charts. When the top 20% begins to feel threatened by success of the top 1% then the politics change.

If you think, which I don't, that economic growth is uneffected by income distribution; then the next question is what proportion of that growth goes to which segments of the population.

If your in the top 10% do you get 90% of that? Do you get 50% of it? What amazes me in the reporting on this is that while everybody but the lowest 20% got some a share in the last 20 years of growth, the top 1% got the vast majority of it.

You can extract that info from this CBO report http://www.cbo.gov/ftpdoc.cfm?index=3089&type=1 or you can see a graph illustrating it here - http://enthusiasm.cozy.org/archives/2002_07.html#000016

Of course I not a professional so who knows what I'm missing, but it certainly looks to me like the top 1% is doing a pretty good job of grabbing most of the benefit of an expanding economy.

Posted by: on September 27, 2002 08:01 AM

" Of course I not a professional so who knows what I'm missing, but it certainly looks to me like the top 1% is doing a pretty good job of grabbing most of the benefit of an expanding economy."

Even some of the professionals here miss the point that it may well be that the top 1% are PRODUCING most of the expanding economy.


Posted by: Patrick R. Sullivan on September 27, 2002 08:20 AM

" RE: Fogel .....'Deciding what to do with all that time....' I really hate drawing conclusions from subjective experience and/or anecdote. However, if I were to do so in this case I would have to say that Fogel is talking about a different galaxy."

Fogel's got lots of data to support his arguments, remember:

""In every
measure that we have bearing on the standard of living, such as real income,
homelessness, life expectancy, and height, the gains of the lower classes have
been far greater than those experienced by the population as a whole...."

But, speaking as someone with a below average income, I've got a satellite dish that gives me something like 230 channels to watch in my spare time. One even has economics classes.


Posted by: on September 27, 2002 08:27 AM

Where to start?

Patrick states "Even some of the professionals here miss the point that it may well be that the top 1% are PRODUCING most of the expanding economy."

Maybe. But I've never seen any evidence of that - and more to the point, there is no reason to believe that they would produce less if they were earning rather less - since the post war high growth rates occured without such income disparity.

As for the consumption index - well yes - the rich don't consume as much more than the poor as they earn or possess. But from a demand point of view that simply indicates that giving them more money isn't particularly useful because they aren't doing their job as consumers. In terms of marginal utility, moreover, consumption does decline in utility after a certain point. If I have an income of 100 times more than you I'm unlikely to consume 100 times more than you do.

The old consume less - yes that is true, in general. Of course, when you aren't going to work every day (car costs), going out often (say for business lunches), don't need to buy new clothes to keep up appearances all the time - your consumption will drop. Also, simply put as you get older you have most of what you need (ever tried to buy gifts for well settled people in their 50's or later, it's a pain - if they really want it they've already bought it for themselves). All of which is to say - older people have already done the majority of their lifetime consuming unless they were poor all their lives. It's a natural lifecycle change.

I do agree that income isn't the best measure - but I would suggest that wealth is, not consumption. And income isn't as bad a measure as many make out - the wealthy with small incomes and the poor who have a single outstanding year are not all that common. Most people move up and down the chart in relatively small increments. Further the trend is important - whatever the numbers the trend is consistently towards greater concentration of wealth and income, not just in the top quintile, but in the top 1% and the top .1%. It doesn't matter if you look at wealth or income, you see the same trend - to the point where the US has the highest wealth concentration in the Western world.

As for the methodological change which caused the jump in values - it isn't that big a deal. It does mean that earlier values were understated, but as noted before the trend continue. While you can't directly compare the numbers before and after the change, you can see the continued trend - the numbers keep moving in the same direction. Also note that the prior methodology understated actual wealth concentration. So does the new one - just not as much.

Huge wealth differentials, irrespective of "material circumstances like having 110 channels (why is this good?) are not good for democracy and they are not good for the economy. We have a clear spiral of increased wealth leading to increased political power leading to increased wealth in the US, leading to the corruption of the federal government at a scale that hasn't been seen in almost a century. Half the population doesn't vote, taxes continue to rise for the middle class and the working poor and fall for the rich. I won't say their is causation in this, but there is certainly correlation, and as Phillips' points out, this emphasis on finance and this gutting of the middle class is the historic pattern in failing Empires - it is the rot that starts to take hold even as the tree reaches it's greates magnificence. (The British empire looked great pre WWI, but economically it had been in decline since 1880 at the latest - and probably since 1870.)

Posted by: Ian Welsh on September 27, 2002 09:04 AM

Patrick states "Even some of the professionals here miss the point that it may well be that the top 1% are PRODUCING most of the expanding economy."

Aha, let us dispense with the rest of us working fools. Arrogant fool.

Posted by: on September 27, 2002 10:29 AM

Time for a conspiracy theory about Slate editorial policy.
Microsoft's compact, 8 person Board includes one person with ostensible political links, a former senior official in the Reagan administration, http://www.microsoft.com/presspass/bod/korologos/default.asp.

Posted by: Mike Martin on September 28, 2002 06:43 PM

Slate's edited by Weisberg, author of the (quite good) book In Defense of Government.

Other than Kaus's ongoing nuttery, there's not much conservative about the site.

Posted by: Jason McCullough on September 29, 2002 01:34 PM
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