The Corpus Callosum

Economy Almost Back To Normal

Posted by Joseph j7uy5 on July 31, 2008
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This chart shows that the economy is almost back to normal.
 Just a little farther to go, then the mission will have been
accomplished.

i-07610f54e366bd27f8e47023fead12c8-CUS659.gif

What is odd about this, is that it excludes income
from capital gains.  I suspect that the income disparity would
be even greater, if capital gains were included.  

The graph is from an article at Economist.com, href="http://www.economist.com/world/unitedstates/displayStory.cfm?source=most_read&story_id=11792366">Workingman’s
Blues.  

The article itself is annoying.  

Phil Gramm, a former senator from Texas and adviser
to Mr McCain’s campaign, told the Washington Times that: “We
have…become a nation of whiners. You just hear this constant whining,
complaining about a loss of competitiveness, America in decline…Thank
God the economy is not as bad as you read in the newspaper every day.”

He had a point. American headlines are crammed with words like
“failure”, “hurting” and “Fannie Mae”…

He had a point?  The article goes on to list many items of
gloomy economy news, with only a couple of bright spots.  One
of the bright spots is that not all of the news is as bad as it was in
the 1930′s.  The other?

Poor Americans today are more likely to have fridges,
dishwashers and air-conditioning than average Americans were in 1971.

This is a reference to the notion that a rising tide lifts all boats?
 So what if rich people are richer, if poor people are richer,
too?  It is a flimsy justification for usury and exploitation.

Plus, I doubt the validity of the data.  I knew a lot of
average Americans in 1971, and they all had fridges.  The
probability of an average American having a fridge in 1971 was close to
1.  It would be hard to top that.  

True, you can get an air conditioner at Sam’s for less than $100 these
days.  But it does not do a lot of good, if you can’t pay the
electric bill.  Or if you are homeless.

True, the rate of homelessness href="http://www.nytimes.com/2008/07/30/us/30homeless.html?scp=2&sq=homelessness&st=cse">dropped
recently.  But that is a comparison between February-April
2005, and January 2007.  It does not reflect how things may
have deteriorated since then, or how they are likely to deteriorate
even more as foreclosures escalate and social services are cut. (the
full report is here.)

What is more important, though, is not the comparison between the
wealthiest Americans and poor Americans.  What is important is
the disparity between the wealthiest Americans, and the rest of the
world.  

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Comments

  1. #1 Dunc
    July 31, 2008

    Poverty is a relative concept. If you get a raise of 1%, and everybody else gets a raise of 10%, you feel worse off than you were before. It’s all about disparity.

  2. #2 John Conway
    July 31, 2008

    “This is a reference to the notion that a rising tide lifts all boats? So what if rich people are richer, if poor people are richer, too? It is a flimsy justification for usury and exploitation.”

    I disagree. If the poorest have a decent quality of life, I don’t really see the problem. I doubt that’s actually the case, but in theory I don’t see what’s wrong with it.

  3. #3 Eric Lund
    July 31, 2008

    I disagree. If the poorest have a decent quality of life, I don’t really see the problem. I doubt that’s actually the case, but in theory I don’t see what’s wrong with it.

    The problem is that, by nature, we humans are greedy bastards. I suspect that an economy in which “the poorest have a decent quality of life,” if it could exist, would be an unstable equilibrium. Whenever there have not been adequate constraints, the richest people have tended to amass ever more wealth, and frequently at the expense of the poor. As the chart shows, the current Gilded Age is not the first in American history. The US has been lucky so far, but in other parts of the world Gilded Ages have often ended violently.

  4. #4 stumpy
    July 31, 2008

    My parents were average Americans, and they had two refrigerators, plus a big horizontal freezer, when I was growing up. They also had four kids. My partner and I (also average Americans) have two kids, but only one refrigerator, and no separate freezer.

  5. #5 Joseph j7uy5
    July 31, 2008

    There is evidence that income disparity lowers life expectancy. Thus, relative prosperity is important from a public health perspective.

    There is also the matter of fairness. FOr example, the oil industry is making record profits. The oil does not inherently belong to them; it belongs to the people. Look, for example, at the situation in Ecuador, when oil was obtained by Texaco (now Chevron). Regardless of the outcome of the legal battle, it is clear that the people who had the oil (the indigenous people) are not the ones who benefited.

    I have no objection to people making a profit, but there is a valid ethical concept of unconscionable profit.

  6. #6 Ken Hirsch
    August 1, 2008

    I knew a lot of average Americans in 1971, and they all had fridges. The probability of an average American having a fridge in 1971 was close to 1.

    That’s hardly a representative sample. The Census Bureau says that in 1971, 83.3% of households had a refrigerator. In fact, of households with $25,000 or more in annual income (the highest income group they report in the table), only 94% had a fridge. Source: 1974 Statistical Abstract of the United States, Table No. 646, p. 37 (7.5MB PDF)

    Today 99.3% of all households and 98.3% of the bottom fifth have refrigerators.

  7. #7 stumpy
    August 1, 2008

    My parents had two fridges and a separate freezer (see above).