Can someone explain my wrong thinking?

[OdderMensch]

OK I hear this all the time, and I just read it in a thread so I'm going to ask this here.

to paraphrase-
"There is a vast gap between the richest and poorest in the USA."

Well, here's my problem with this statment, and it's derivitives.

You can only be so poor. No home, no medical care, starveing, with no education or hope for meaningful employment. That's it right? Rock bottom.

Now, people have been able to attain this status for as long as there has been people right?

Now we live in a time of fantasic technology and luxury. And there is no basic limit on how far that can go. You can have so much money, wealth and or power that nearly anything you want can be yours.(No, you cannot violate TLOP with money. Physics, it seems, is immune to bribery)

As I see it you have a zero point, and a point heading to infinity. So, of course the 'gap' between these two points will increase with time!

Why is this 'gap' ever precevied or presented as a bad thing? (note the poster on this foroum said he didn't know if this was a bad thing.)

[iain]

Originally posted by OdderMensch
OK I hear this all the time, and I just read it in a thread so I'm going to ask this here.

to paraphrase-
"There is a vast gap between the richest and poorest in the USA."

Well, here's my problem with this statment, and it's derivitives.

You can only be so poor. No home, no medical care, starveing, with no education or hope for meaningful employment. That's it right? Rock bottom.

Now, people have been able to attain this status for as long as there has been people right?

Now we live in a time of fantasic technology and luxury. And there is no basic limit on how far that can go. You can have so much money, wealth and or power that nearly anything you want can be yours.(No, you cannot violate TLOP with money. Physics, it seems, is immune to bribery)

As I see it you have a zero point, and a point heading to infinity. So, of course the 'gap' between these two points will increase with time!

Why is this 'gap' ever precevied or presented as a bad thing? (note the poster on this foroum said he didn't know if this was a bad thing.) If you take the definition of disparity in wealth as that between the poorest person in the country and the richest person in the country you are probably right.

However, statistically that is not the most meaningful definition to use because you will be comparing outliers who are not representative of most people.

A better definition might be to compare the richest and poorest x percent (where x is 2, 5, 10 or 20 for example). In the US, the poorest two percent of the population includes several million people.

Now the question is something like "Is the best way to organise a country one in which the poorest 2% are at rock bottom whilst the richest 2% have more money than they could ever usefully spend." (I admit the wording of this statement is biased, but you could reword it better).

Different countries and traditions have different answers to this. The European tradition (which Americans would call socialist) is this is the not the best way to do things and society should be organised so that there is as little extreme poverty as possible; if necessary taking money from the rich to do so.

Many people take the alternative view that this is the best way to do things. It is certainly not inevitable that a rich country will have a significant very poor underclass; though this is the way things have worked out in the US.

Personally (since it was me who made the comments in the other thread) I would tend to come down on the European "socialist" side but I'm certainly open to persuasion and I don't think the evidence is all one way.

[Drooper]

Contrary to claims you read often, the rich in the US are getting richer and the poor in the US are getting richer as well. Have been for ages.

I had this very argument with an academic here in the UK, who wrote a paper in oncimer inequality. It used income distriubitonm data of the type usually used, braking down household income into deciles. From that you get the normal nonsense: the bootom 10% have income of only x% of the top. Moreover, they show the ratio falling over time.

I took some income date from the Inland Revenuw, which has very accurate infomation on earned income. This shows very clearly that the income of the lowest 10% of earners has increased significantly over time.

The additional part of this puzzle comes from the inclusion of those people who have the lowest incomes - reitirees or the unemployed. Of course the thing about these groups is that the unemployed one week are employed the next. It is not the same people (apart form the long term unemployed which is an entirely different issue) The retirees are are just that. Having had a lifetime of earning, they are living off their accumulated capital. Even so, these groups have seen their income rise significantly over time, but not as fast as those earning (even the lowest 10% of earners)

The penchance for claiming that the poor are getting poorer etc. is just politcal nonsense, not grounded in fact. It is just plain wrong, but always wheeled out as ammunition for some political objective that envariably entails an increase in tax, more public spending or increased government regulation.

[iain]

Originally posted by Drooper
The penchance for claiming that the poor are getting poorer etc. is just politcal nonsense, not grounded in fact. It is just plain wrong, but always wheeled out as ammunition for some political objective that envariably entails an increase in tax, more public spending or increased government regulation. Drooper,

Thanks for the always interesting information.

Just to clarify my own position, I haven't claimed anywhere that the poor are getting poorer, just that the gap between rich and poor is widening.

I would be interested to know how the income or quality of life of the poorest in the US compares to that of the poorest in European countries.

[Drooper]

I never meant to suggest that you implied that the poor are getting poorer. That is just a warcry I hear all the time from all quarters, including my father - boy we have some fierce debates!!!


For cross coutnry comparison of income. I don't have anything immediately to hand, but I will chase somthing up. The main problem is of course that in the US people are leftto dispose a larger proportion of their income. In Euroean countries governments take more of your income and chose how it will be spent.

This means that you can take measures of disposable income which bend the figures more in favour of the US.

Alternatively, if you take account of the income taken and spent by the government, which naturally results in redistribution, you can bend the number more in favour of European countries.


In terms of cross country comparison for "quality of life" (an economist would use the term "utility"), there are added complications. You can't measure this, because it depends on subjective valuation. US quality of life is more easily measured, since it is given by the income and consumption figures which result from people's own choices in how they dipspose of their resources. People choose how to maximimise their own quality of life and the result is there in dollars and cents. By comparison, if the government takes a larger share and spends it on, whatever, it is next to impossible to make an objective quantification of peoples' utility. For example, although the world's best state funded healthcare system would be very popular, it is impossible to work out whether people would in fact spend a little less in favour of other goods or services if they had the choice.

edited for spelling :rolleyes:

[Segnosaur]

Another 'problem' with the gap between rich and poor is the way poverty is often defined. I believe here in Canada (it may actually be a U.N. definition), a person is considered living in poverty if their income is less than (I think) 80% of the 'average'.

The problem with that definition... You could have a country where everyone is a millionaire, has an expensive car, more than enough food to eat, etc, and have one person who is a multi-billionaire. Because the billionaire's income brings up the average so much, all those millionaires are officially considered as living in poverty.

Originally posted by OdderMensch


Why is this 'gap' ever precevied or presented as a bad thing?

I'm not sure if you're serious, but I can only point to the obvious answer: Something's wrong when a nation with so many extremely rich people can't get it together to somehow improve the status of the very lowest on the ladder.

Something much more basic is wrong when people ask why we should even try. If the answer to this one isn't obvious, we have another of those unbridgable gaps.

[Tony]

Originally posted by sundog


I'm not sure if you're serious, but I can only point to the obvious answer: Something's wrong when a nation with so many extremely rich people can't get it together to somehow improve the status of the very lowest on the ladder.



Just courious, but why should the rich (assuming they obtained their riches through legitimate means) get together to improve the status of the lowest members of society?

[Segnosaur]

Originally posted by sundog


I'm not sure if you're serious, but I can only point to the obvious answer: Something's wrong when a nation with so many extremely rich people can't get it together to somehow improve the status of the very lowest on the ladder.

But the problem is, it doesn't really tell us anything about how 'low' the 'lowest' are. Do they have food to eat? Do they have a roof over their heads and medical care? For the most part, the answer is yes.

And if they don't have these things, is there any underlying reason? Is the person disabled? (In that case, they should be cared for). Or is the person 'lazy'? (Perhaps a stereotype, but the 'lazy welfare bum' does occur.) If the person decides they just don't want to work, should we support them?

[max]

quote:
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Originally posted by sundog


I'm not sure if you're serious, but I can only point to the obvious answer: Something's wrong when a nation with so many extremely rich people can't get it together to somehow improve the status of the very lowest on the ladder.

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But the problem is, it doesn't really tell us anything about how 'low' the 'lowest' are. Do they have food to eat? Do they have a roof over their heads and medical care? For the most part, the answer is yes.

And if they don't have these things, is there any underlying reason? Is the person disabled? (In that case, they should be cared for). Or is the person 'lazy'? (Perhaps a stereotype, but the 'lazy welfare bum' does occur.) If the person decides they just don't want to work, should we support them?

Segnosaur

Yea we should support them even if it's only to stop them thieving from the rest of us :D

Originally posted by Tony


Just courious, but why should the rich (assuming they obtained their riches through legitimate means) get together to improve the status of the lowest members of society?

Some of us feel an obligation to help others when possible; some don't. There's no point in arguing the point, I think it must be something you're born with.

[Advocate]

Originally posted by sundog


I'm not sure if you're serious, but I can only point to the obvious answer: Something's wrong when a nation with so many extremely rich people can't get it together to somehow improve the status of the very lowest on the ladder.

My problem with that is how do we determine how much their status needs to be improved? IMHO it should be a fixed level based on the cost of living rather than a percentage of the income of those in a higher income bracket.

Something much more basic is wrong when people ask why we should even try. If the answer to this one isn't obvious, we have another of those unbridgable gaps.

I am not questioning that there are some people who need assistance. There will always be some. What I am questioning is how many there are and how we can best help them. And yes, I do know this was directed towards someone else.

[DrMatt]

Originally posted by OdderMensch
You can only be so poor. No home, no medical care, starveing, with no education or hope for meaningful employment. That's it right? Rock bottom.


Nah, it heads off the other way. You can be in debt with no way to make payments and with interest compounding exponentially.

I think there are a few subtleties to point out. If the bell curve starts to flattens out, the proportion of people in the top and bottom brackets increases substantially. Most people in the extreme top and bottom brackets do not create any wealth: people in the bottom brackets generally can't, and people in the top brackets generally have no incentive to. So, as those in the extremes move further towards the extremes, the whole economy suffers.

You mentioned medical care. Consider the effect of unchecked disease among the poor on the viability of diseeases in the population as a whole. That increases risk to everybody, not just to the poor.

Finally, consider the impact of widely diverging wealth on political power. Hmm.

[DrMatt]

Originally posted by Tony


Just courious, but why should the rich (assuming they obtained their riches through legitimate means) get together to improve the status of the lowest members of society?

The richer the society as a whole, the richer the rich are. The "lowest" members of society haven't enough wealth to create any wealth for the richest to exploit. Simple economic incentive...

[kedo1981]

Defining what is poor is an issue that been bugging me for a long time the right wants it one way, the left, another.
Is it fair to count the so-called working poor with the “bad choice poor” (drug addicts, drunks, lazy people).
Should the people that flush the free education down the crapper and are unemployable with a “salt of the earth poor”

[OdderMensch]

Originally posted by sundog


I'm not sure if you're serious, but I can only point to the obvious answer: Something's wrong when a nation with so many extremely rich people can't get it together to somehow improve the status of the very lowest on the ladder.

Something much more basic is wrong when people ask why we should even try. If the answer to this one isn't obvious, we have another of those unbridgable gaps.

I'm serious. Everytime I hear a report on how the 'gap' is increaseing I mentally cringe. Many good points have been made in this thread that adress my main concerns.



as iain points out, a comparison of extremes may not be useful in this case, I might be looking at the problem in the wrong way.
Drooper indicates that the statistics that lead to this statment in the first place are out of sync with reality.
and Segnosaur has illiustrated the problems with defineing 'poor' and 'rich' in the first place.



My main point is that, so long as my wealth is gained from legetimate means, my being rich does not make anyone else poor. I think, while more can always be done, this country has done many wonderful things to improve the status of the very poor. I am not without compasion, and speak from the position of the 'working poor.'

But poor people will alway exist, people will slip thru cracks, and create cracks if non are there. Weather due to pride or mental illness(but am I redundent?) some people will refuse outside aid, or will be unable to us the aid to substansually improve there position. So as I now see it, the gap will ever expand, because people can always get richer, and thats a good thing.

[Mike B.]

Originally posted by Segnosaur
Another 'problem' with the gap between rich and poor is the way poverty is often defined. I believe here in Canada (it may actually be a U.N. definition), a person is considered living in poverty if their income is less than (I think) 80% of the 'average'.

The problem with that definition... You could have a country where everyone is a millionaire, has an expensive car, more than enough food to eat, etc, and have one person who is a multi-billionaire. Because the billionaire's income brings up the average so much, all those millionaires are officially considered as living in poverty.

I think this is an important point. I always wondered when one hears that "x amount of people are living below the poverty line."
What is that line? It always changes, right?

Back to the main point...

I suppose if you took the income of the bottom 20 percent and the top 20 percent and looked at disparity, there would be an increase in the percent of disparity. However, as Drooper has pointed out, how telling is that statistic?

One other point about socialism. Iain made the point and it is indeed true that European governments would be considered more socialistic. However, the US government despite political rhetoric is hardly free of socialism (I am not saying that is a bad thing.) I sometimes hear (not Iian) some European commentators talk about the US as if it was a complete laszie-faire economy. In some rhetoric the US is sort of set up as a strawman. i.e. "We don't want the American system where workers have no rights whatsoever." I remember once being told on here how bad America was because we let many people "starve to death" because they did not have enough money.

Aid to Dependent Children, Food Stamps, Medicaid, minimum wage, unemployment benefits, etc. are things done to create a "safety net." Of course one could debate that these are inadequate.

[The Central Scrutinizer]

Originally posted by sundog

I'm not sure if you're serious, but I can only point to the obvious answer: Something's wrong when a nation with so many extremely rich people can't get it together to somehow improve the status of the very lowest on the ladder.


Why don't the poor get together and improve their own status? Instead of sitting around waiting for a hand out.

[The Central Scrutinizer]

Originally posted by DrMatt

Most people in the extreme top .... brackets do not create any wealth: .... and people in the top brackets generally have no incentive to.

They don't create wealth? What about their own? How do you think they got rich? Maybe by creating wealth?

[Bjorn]

Originally posted by The Central Scrutinizer

They don't create wealth? What about their own? How do you think they got rich? Maybe by creating wealth?About half of them (source Forbes) are rich because someone left them money.

Why don't the poor get together and improve their own status? Instead of sitting around waiting for a hand out. Some are physically disabled, some are mentally not as able as most (some can't even advance to burger-flipping), some have a history of abuse. And of course, some are alcoholics, or drug addicts, or just lazy by choice, but somehow I wonder if laziness would tempt me to sleep in Central Park, NY, through an average winter.

Who thinks we could we all have been millionaires if we just tried harder? :confused: