The Frenchies are at it again.

[bozothedeathmachine]

http://apnews.myway.com/article/20060319/D8GEISGO0.html

This isn't the first time we've talked about France and their (IMO) irrational response to labor laws. This is just the latest. I generally don't understand to volatility as I've only been employed in the US and "will to work" is all I know. Even so this next quote just totally befuddles me (emphasis mine):



Companies are often reluctant to add employees because it is hard to let them go if business conditions worsen. Students see a subtext in the new law: make it easier to hire and fire to help France compete in a globalizing world economy.
Can someone explain this to me? When the tech bubble burst my job was tenuous at best. I was able to hang on, but it would've come to me getting axed I would've understand. That's the nature of business. Where does this sense of entitlement come from? Do these people expect to be employed by companies if these companies are hurting financially? Why do they want to kill a law that's will probably help the employment situation. I just don't get it.

[Mark]

http://apnews.myway.com/article/20060319/D8GEISGO0.html

This isn't the first time we've talked about France and their (IMO) irrational response to labor laws. This is just the latest. I generally don't understand to volatility as I've only been employed in the US and "will to work" is all I know. Even so this next quote just totally befuddles me (emphasis mine):



Can someone explain this to me? When the tech bubble burst my job was tenuous at best. I was able to hang on, but it would've come to me getting axed I would've understand. That's the nature of business. Where does this sense of entitlement come from? Do these people expect to be employed by companies if these companies are hurting financially? Why do they want to kill a law that's will probably help the employment situation. I just don't get it.


Well, in this country the flow of wealth from individuals to wealthy corporations is getting somewhat alarming. Maybe the French are trying to stop that to a certain extent?

I do know that if present trends continue, at some point the US will end up like Mexico. A very few mega-wealthy and lots and lots of poor. Of course, we'll have lots of doodads and shiny things that go beep, so probably no one will notice or care.

[TragicMonkey]

I do know that if present trends continue, at some point the US will end up like Mexico. A very few mega-wealthy and lots and lots of poor. Of course, we'll have lots of doodads and shiny things that go beep, so probably no one will notice or care.

Only when people can afford sufficient doodads and shiny things that go beep, though.

[Anti_Hypeman]

There may be enough people working at overloaded companies to form a powerfull voting block. It seems to be a fight between those with jobs protecting theirs at the expense of those trying to enter the work force.

[Mark]

Only when people can afford sufficient doodads and shiny things that go beep, though.

I saw a DVD player in the paper today for $29. ;)

[Anti_Hypeman]

I can see why companies would be afraid to expand under those conditions. They need some guest workers that will do anything for pocket change with no benefits. You have to say Bush is a brilliant economist the French could learn something.

[TragicMonkey]

I saw a DVD player in the paper today for $29. ;)

Yet cable TV prices keep rising.

My prediction: if cable television ever becomes too expensive for the middle class, there will be a violent revolution.

[Mark]

Yet cable TV prices keep rising.

My prediction: if cable television ever becomes too expensive for the middle class, there will be a violent revolution.

I agree...if their Blackberries are taken away as well.

[TragicMonkey]

I agree...if their Blackberries are taken away as well.

I've never even seen one, so they can't be that vital.

[Mark]

I've never even seen one, so they can't be that vital.

Well, me neither...but all my friends have them and seem terribly shocked that I don't!

I mean, does not owning a Blackberry really make us Luddites?!?!?!

[Jorghnassen]

My prediction: if cable television ever becomes too expensive for the middle class, there will be a violent revolution.

But the question is: will it be televised?

[Mark]

But the question is: will it be televised?

No, it will be podcast.




(I did get the reference, btw!)

[Ziggurat]

Well, in this country the flow of wealth from individuals to wealthy corporations is getting somewhat alarming. Maybe the French are trying to stop that to a certain extent?

That too betrays a fundamental misunderstanding of economics.

What is the purpose of a corporation? The standard answer is to make money, but that's wrong. Businesses make money, individuals make money, you don't need a corporation to make money. So what do corporations, in particular, do? The answer is actually pretty simple, and widely unappreciated: corporations exist in order to shield their owners from liability. Without that shield, most people would be unable to afford the risk of starting a business or even investing heavily in one, because they wouldn't have the spare money to cover possible liabilities if something went really wrong. That shielding of liability actually helps those WITHOUT significant assets more than it does people who are already wealthy, because it means that they can afford to invest in businesses without risking financial ruin. Corporations are what allow the little guy to get into the game at all, rather than what keeps him down.

That's slightly tangent to the claim that money is flowing from individuals to corporations, but that claim is still part of the same ignorance. Corporations are not independent entities. They are owned by individuals. Which means that what you're really talking about is money flowing from some individuals to other individuals, and you don't like the way it's flowing. Well, let me clue you in on another public secret, which you alluded to but may not have fully appreciated: corporations, businesses, and the people who own them get fabulously rich by LOWERING the cost of goods. It's a perverse economy indeed, and an inefficient and stagnant one, which does not reward lowering costs of goods. Apparently, though, the French are dead set against that. I can only conclude that French citizens are largely ignorant about how economies actually function.

[Mycroft]

When you lower the cost of goods you simultaneously increase the value of money.

[Mark]

That too betrays a fundamental misunderstanding of economics.

What could be more of a fundamental misunderstanding of economics than one that ignores the numbers? Ah, those pesky numbers...

(Emphasis mine)
According to the Department of Housing and Urban Development (HUD), "affordable housing" should cost less than 30% of a family's income, either in rent or a monthly mortgage. A recent article in THE ECONOMIST observed that for many Americans, finding houses in the affordable range is becoming a challenge. There may be a link between the housing problem and other social ills, since families paying more than 30% of their income are considered cost burdened and often have to cut back on necessities such as food, clothing, transportation, and health care.

From 1979 to 1997, the after-tax income of the top 1% of families rose 157%, while the gain for families near the middle was only 10%. And within the top one percent, most of the gains went to the top 1/100th of a percent.
http://www.pbs.org/now/politics/middleclass.html

In 1992, the richest 1 percent of American households owned about 42 percent of the total national wealth; whereas in 1982, the richest 1 percent owned 32%. (Herbert 1995)

In 1992, the concentration of wealth among the very richest in the United States is about twice that found in Britain.(Herbert 1995)

In 1995, the top 20 percent of American households owned more than 80 percent of the national wealth. (Herbert 1995) (Sandel 1996: 329)

In 1997, 50 percent of all financial assets in the US were owned by the wealthiest 1 percent of the population; and more than 75 percent of all financial assets were owned by the wealthiest 10 percent. (Cassidy 1997: 255)

Sixty percent of American families do not own any stocks at all, either directly or in a 401(K) pension plan; the majority of families who do own stocks have total holding worth less than $2,000. (Cassidy 1997: 255)
http://falcon.arts.cornell.edu/ams3/rich1.html

[Skeptic]

In the 1920s, South African mining companies attempted to fire white miners and replace them with black miners for lower pay. The communist party in SA, and other communist parties around the world, supported the white miners, giving rise to one of the most absurd political slogans ever: "Workers of the world unite for a white South Africa!".

Due to draconian hiring/firing laws, the unemployment rate of under-26 years olds in the workforce in France is 25%. Guess where it's double that? That's right, in the black/middle-eastern ghettoes. One can easily imagine what kind of society develops in a community where half the able-bodies young men are unemployed.

Guess where it is about half of that? That's right, among the priviledged students (especially in the Sorbonne) who are now rioting againt the very idea that it might be easier than previously to fire them once they get a job. The students are demonstrating, in effect, for a continuation of their own priviledges and amneties, at the expense of the poor in the ghettoes.

Vive l'Inegalite! Socialists of the Sorbonne unite for a permanent black underclass!

[Ziggurat]

What could be more of a fundamental misunderstanding of economics than one that ignores the numbers? Ah, those pesky numbers...

I've been looking for an argument in your post, Mark, but you didn't actually make one. None of those numbers actually contradicts anything I said. So I'm left to guess at what you mean, and if I don't address what you thought you were saying, you'll have to forgive me.

But let's take a look at one of your quotes for a second:
"From 1979 to 1997, the after-tax income of the top 1% of families rose 157%, while the gain for families near the middle was only 10%."
This quote means a hell of a lot less than it sounds like. First, most people don't stay in the same income bracket their whole lives. The vast majority of the population moves up the income chart quite significantly during the course of their lives - it's not uncommon at all to start in the bottom 20% and finish in the top 20% - so treating the different percentage brackets as distinct groups doesn't make any sense to begin with. Second, there's been a major shift over the last decade towards non-cash reimbursements, such as health care benefits. Those aren't being counted in that metric, but they matter, and they make they total employee compensation for those near the middle much larger than the stated 10%. And lastly, so what if the rich are getting richer faster than the rest of us? Is there any argument, other than jealousy, why that's a bad thing?

Or how about this:
" Sixty percent of American families do not own any stocks at all, either directly or in a 401(K) pension plan; the majority of families who do own stocks have total holding worth less than $2,000. (Cassidy 1997: 255)"
I can't quite tell what this quote means. I don't own any stock either. What I DO own are shares in a mutual fund - from your page I really can't tell whether that's getting counted in this metric or not. If it's not counted, then the metric is useless to begin with. But either way, what's the breakdown by age? Are 60% of people retiring without stocks, mutual fund shares, OR a pension? Or is that number dominated by young people in their 20's and 30's? And for those who aren't investing money, WHY are they not investing money? Is it really because they aren't able to, or is it because financial literacy is pretty bad and many people who could just don't understand that they should (and I know from first hand experience this happens)? If it's the later, who exactly is to blame and what should really be done about it? These are the sorts of questions you'd need to address if you want to actually form what I like to call an "argument". What you posted is what's commonly referred to as a "complaint".

[Mark]

I've been looking for an argument in your post, Mark, but you didn't actually make one. None of those numbers actually contradicts anything I said. So I'm left to guess at what you mean, and if I don't address what you thought you were saying, you'll have to forgive me.

But let's take a look at one of your quotes for a second:
"From 1979 to 1997, the after-tax income of the top 1% of families rose 157%, while the gain for families near the middle was only 10%."
This quote means a hell of a lot less than it sounds like. First, most people don't stay in the same income bracket their whole lives. The vast majority of the population moves up the income chart quite significantly during the course of their lives - it's not uncommon at all to start in the bottom 20% and finish in the top 20% - so treating the different percentage brackets as distinct groups doesn't make any sense to begin with. Second, there's been a major shift over the last decade towards non-cash reimbursements, such as health care benefits. Those aren't being counted in that metric, but they matter, and they make they total employee compensation for those near the middle much larger than the stated 10%. And lastly, so what if the rich are getting richer faster than the rest of us? Is there any argument, other than jealousy, why that's a bad thing?

Or how about this:
" Sixty percent of American families do not own any stocks at all, either directly or in a 401(K) pension plan; the majority of families who do own stocks have total holding worth less than $2,000. (Cassidy 1997: 255)"
I can't quite tell what this quote means. I don't own any stock either. What I DO own are shares in a mutual fund - from your page I really can't tell whether that's getting counted in this metric or not. If it's not counted, then the metric is useless to begin with. But either way, what's the breakdown by age? Are 60% of people retiring without stocks, mutual fund shares, OR a pension? Or is that number dominated by young people in their 20's and 30's? And for those who aren't investing money, WHY are they not investing money? Is it really because they aren't able to, or is it because financial literacy is pretty bad and many people who could just don't understand that they should (and I know from first hand experience this happens)? If it's the later, who exactly is to blame and what should really be done about it? These are the sorts of questions you'd need to address if you want to actually form what I like to call an "argument". What you posted is what's commonly referred to as a "complaint".


You argued that my view about the massive transfer of wealth occuring in this country was nothing more than a misunderstanding of economics. You used no numbers to back that up; I used actual numbers to refute what you said.

You have totally ignored the MASSIVE increase in wealth among the upper 1%, as compared to the rest of the country. You may approve of it, but don't try to hide behind an obstuse discussion of pension plans to imply that it is not happening. It is...the numbers say so.

[Mycroft]

You argued that my view about the massive transfer of wealth occuring in this country was nothing more than a misunderstanding of economics. You used no numbers to back that up; I used actual numbers to refute what you said.

You have totally ignored the MASSIVE increase in wealth among the upper 1%, as compared to the rest of the country. You may approve of it, but don't try to hide behind an obstuse discussion of pension plans to imply that it is not happening. It is...the numbers say so.

When you understand that wealth is not money, then you understand. Wealth is the things you trade money for, not the money itself. Money is just the way we keep track of who is entitled to what share of the available wealth.

The purpose of business is to create wealth.

[Ziggurat]

You argued that my view about the massive transfer of wealth occuring in this country was nothing more than a misunderstanding of economics.

Well, yes.

You used no numbers to back that up; I used actual numbers to refute what you said.

No, you didn't. None of your numbers have to do with corporations as such. That was central to your original statement, and that was what I was punching a hole in. If you only want to talk about the existence of some wealth transfer, and aren't concerned with corporations per se, that becomes a different argument than your original one. But even there, your numbers say absolutely nothing about a TRANSFER of wealth. Why? Because wealth is not a lump sum. It can be created and destroyed. The rich are wealthier now than they were before, both in absolute measures and relative to the rest of society. But since there's more total wealth, where did it come from? Do your numbers actually give any indication that this new wealth was owned by the middle class and subsequently transfered to the rich? No, your numbers say nothing about where it originated and how it moved. That the rich are richer tells you nothing about WHY the rich are richer.

You have totally ignored the MASSIVE increase in wealth among the upper 1%, as compared to the rest of the country.

Yes, I did ignore that, because (in case you haven't clued in yet) my argument didn't depend on the existence OR nonexistence of such an increase.

You may approve of it, but don't try to hide behind an obstuse discussion of pension plans to imply that it is not happening. It is...the numbers say so.

I never claimed something wasn't happening, I'm claiming you don't understand what's happening. And one of the central points of that misunderstanding is that the top 1% from 1979 and the top 1% from 1997 are largely not the same people.

[Mark]

Well, yes.



No, you didn't. None of your numbers have to do with corporations as such. That was central to your original statement, and that was what I was punching a hole in. If you only want to talk about the existence of some wealth transfer, and aren't concerned with corporations per se, that becomes a different argument than your original one. But even there, your numbers say absolutely nothing about a TRANSFER of wealth. Why? Because wealth is not a lump sum. It can be created and destroyed. The rich are wealthier now than they were before, both in absolute measures and relative to the rest of society. But since there's more total wealth, where did it come from? Do your numbers actually give any indication that this new wealth was owned by the middle class and subsequently transfered to the rich? No, your numbers say nothing about where it originated and how it moved. That the rich are richer tells you nothing about WHY the rich are richer.



Yes, I did ignore that, because (in case you haven't clued in yet) my argument didn't depend on the existence OR nonexistence of such an increase.



I never claimed something wasn't happening, I'm claiming you don't understand what's happening. And one of the central points of that misunderstanding is that the top 1% from 1979 and the top 1% from 1997 are largely not the same people.


OK. You win.

[Beerina]

Due to draconian hiring/firing laws, the unemployment rate of under-26 years olds in the workforce in France is 25%.

Guess where it is about half of that? That's right, among the priviledged students (especially in the Sorbonne) who are now rioting againt the very idea that it might be easier than previously to fire them once they get a job. The students are demonstrating, in effect, for a continuation of their own priviledges and amneties, at the expense of the poor in the ghettoes.

Vive l'Inegalite! Socialists of the Sorbonne unite for a permanent black underclass!

Worse, they are demonstrating against changes that will actually increase their rate of employment. Such is the nature of the quasi-religious, command-and-control promises that "sound good at first glance" to the masses, yet, scientifically (as if forcing economic experiments on entire populations is ethical for some reason) "tests" around the world demonstrate its inferior nature as an employment-generation model. Last century, one might argue no one knew the results of said experiments. It's been fifty years before anyone could honestly and remotely make that claim.

But it sounds good.

[Mycroft]

OK. You win.


:faint:

[Dcdrac]

All we have in the uK with our "flexible" labour force is a n awful lot of people in badly paid jobs which would be ok if the cost of basics such as housing and food were also low, food is getting cheaper here, but the cost of housing is extortionate and easily takes the largest chunk of our incomes.

For the average person in the UK you have to run harder and harder just to stay still financially.

[TragicMonkey]

All we have in the uK with our "flexible" labour force is a n awful lot of people in badly paid jobs which would be ok if the cost of basics such as housing and food were also low, food is getting cheaper here, but the cost of housing is extortionate and easily takes the largest chunk of our incomes.

For the average person in the UK you have to run harder and harder just to stay still financially.

Same in the US, only add a widespread lack of medical insurance as well.

[Charlie Monoxide]

Well, me neither...but all my friends have them and seem terribly shocked that I don't!

I mean, does not owning a Blackberry really make us Luddites?!?!?!Heck, I own a cellphone and rarely get calls on it. I assume that it's because I'm not popular.

Charlie (don't need no steenken blackberry) Monoxide

[Grammatron]

http://apnews.myway.com/article/20060319/D8GEISGO0.html

This isn't the first time we've talked about France and their (IMO) irrational response to labor laws. This is just the latest. I generally don't understand to volatility as I've only been employed in the US and "will to work" is all I know. Even so this next quote just totally befuddles me (emphasis mine):



Can someone explain this to me? When the tech bubble burst my job was tenuous at best. I was able to hang on, but it would've come to me getting axed I would've understand. That's the nature of business. Where does this sense of entitlement come from? Do these people expect to be employed by companies if these companies are hurting financially? Why do they want to kill a law that's will probably help the employment situation. I just don't get it.

Here's a wonderful quote from a French studen about to enter the workforce:
http://news.bbc.co.uk/2/hi/europe/4814762.stm
It(the new labour law) means that when I do get a job I will basically have to work as hard as I can to keep it.

If I make any mistakes I could be fired immediately.
How dare they expect the employees to work to their full potential.

[Grammatron]

Well, in this country the flow of wealth from individuals to wealthy corporations is getting somewhat alarming. Maybe the French are trying to stop that to a certain extent?

I do know that if present trends continue, at some point the US will end up like Mexico. A very few mega-wealthy and lots and lots of poor. Of course, we'll have lots of doodads and shiny things that go beep, so probably no one will notice or care.
Yes Mark, because that's exactly what happened to Mexico.

[Ziggurat]

Yes Mark, because that's exactly what happened to Mexico.

Oh, don't pick on him. He already conceded. :crowded:

[ZeeGerman]

In the 1920s, South African mining companies attempted to fire white miners and replace them with black miners for lower pay. The communist party in SA, and other communist parties around the world, supported the white miners, giving rise to one of the most absurd political slogans ever: "Workers of the world unite for a white South Africa!".

Due to draconian hiring/firing laws, the unemployment rate of under-26 years olds in the workforce in France is 25%. Guess where it's double that? That's right, in the black/middle-eastern ghettoes. One can easily imagine what kind of society develops in a community where half the able-bodies young men are unemployed.

Guess where it is about half of that? That's right, among the priviledged students (especially in the Sorbonne) who are now rioting againt the very idea that it might be easier than previously to fire them once they get a job. The students are demonstrating, in effect, for a continuation of their own priviledges and amneties, at the expense of the poor in the ghettoes.

Vive l'Inegalite! Socialists of the Sorbonne unite for a permanent black underclass!

I think you nailed it.

And the French absolutely need to go on strike from time to time. It's a national hobby.



Zee

[Jocko]

You have totally ignored the MASSIVE increase in wealth among the upper 1%, as compared to the rest of the country.

Why does it bother you when the rich get richer? It's obviously not coming at the expense of the middle class, or they'd be losing ground instead of gaining 10%. So what, exactly, makes you think we're going to wind up like Mexico?

[Jon_in_london]

All we have in the uK with our "flexible" labour force is a n awful lot of people in badly paid jobs which would be ok if the cost of basics such as housing and food were also low, food is getting cheaper here, but the cost of housing is extortionate and easily takes the largest chunk of our incomes.

For the average person in the UK you have to run harder and harder just to stay still financially.

Food and clothing are very cheap here- provided you go to a cheap place like Tesco and dont buy caviar and designer clothes the whole time.

Housing is extortionate here but this has more to do with a government that is incompetent and unwilling to properly regulate it and the simple fact that this island is horrendously overcrowded and getting more so all the time. Simply put - there just arent enough houses or the space to build them. The houses that do exist are almost universally small, mostly badly designed and characterless. This has little to do with employment laws.

The reason we are having to run harder to stand still is because Labour's passive-aggressive tax regime takes a bigger and bigger whack of our earnings every budget. The Times reported today for example, that the income tax take has doubled since 1997. This is due entirely to the fact that thresholds are not raised in line with earnings. Labour has introduced a squllion new taxes and now old taxes originally designed to hit the super-rich (like stamp duty and inheritance tax) are now hitting middle- or below-middle earners the hardest. All the while Labour's means-testing provides the strongest possible dis-incentives to save and be scrupulous.

Although unemployment is now rising here (quite fast too!) it is still low given the vaaaaast numbers of immigrants into the workforce and the loss of competitive status of UK Plc.

[Mark]

Why does it bother you when the rich get richer? It's obviously not coming at the expense of the middle class, or they'd be losing ground instead of gaining 10%. So what, exactly, makes you think we're going to wind up like Mexico?

The rate of increase is drastically higher among the upper 1%; by some calculations, over 400% higher. Also, their slice of the pie is growing ever larger as a percentage. The inevitable result (at current rates) is simple arithmetic.

[Ziggurat]

The inevitable result (at current rates) is simple arithmetic.

"In the space of one hundred and seventy six years the Lower Mississippi has shortened itself two hundred and forty-two miles. That is an average of a trifle over a mile and a third per year. Therefore, any calm person, who is not blind or idiotic, can see that in the Old Oölitic Silurian Period, just a million years ago next November, the Lower Mississippi was upwards of one million three hundred thousand miles long, and stuck out over the Gulf of Mexico like a fishing-pole. And by the same token any person can see that seven hundred and forty-two years from now the Lower Mississippi will be only a mile and three-quarters long, and Cairo [Illinois] and New Orleans will have joined their streets together and be plodding comfortably along under a single mayor and a mutual board of aldermen. There is something fascinating about science. One gets such wholesale returns of conjecture out of such a trifling investment of fact."
- Mark Twain

"current rates" have a funny tendency to not stay "current". As I already pointed out, the 1997 top 1% are largely different people than the 1979 top 1%, and they probably won't make up much of the top 1% in 2015 either. So I'm not sure why you're so wrapped up in where current trends will "inevitably" lead since there's nothing inevitable about current trends maintaining themselves.

[Mark]

"In the space of one hundred and seventy six years the Lower Mississippi has shortened itself two hundred and forty-two miles. That is an average of a trifle over a mile and a third per year. Therefore, any calm person, who is not blind or idiotic, can see that in the Old Oölitic Silurian Period, just a million years ago next November, the Lower Mississippi was upwards of one million three hundred thousand miles long, and stuck out over the Gulf of Mexico like a fishing-pole. And by the same token any person can see that seven hundred and forty-two years from now the Lower Mississippi will be only a mile and three-quarters long, and Cairo [Illinois] and New Orleans will have joined their streets together and be plodding comfortably along under a single mayor and a mutual board of aldermen. There is something fascinating about science. One gets such wholesale returns of conjecture out of such a trifling investment of fact."
- Mark Twain

"current rates" have a funny tendency to not stay "current". As I already pointed out, the 1997 top 1% are largely different people than the 1979 top 1%, and they probably won't make up much of the top 1% in 2015 either. So I'm not sure why you're so wrapped up in where current trends will "inevitably" lead since there's nothing inevitable about current trends maintaining themselves.


"A difference which makes no difference is no difference." Even if I bought your unsubstantiated claim (I don't) that the upper 1% is a completely different set of people (over what period?), what difference does it make?

[Ziggurat]

"A difference which makes no difference is no difference." Even if I bought your unsubstantiated claim (I don't) that the upper 1% is a completely different set of people (over what period?), what difference does it make?

Why am I not surprise by your inability to understand the significance of this?

Let me give you a toy example. Imagine two countries. In country A, the bottom half of income earners all get $30K per year, and the top half all earn $40K per year. In country B, the bottom half of income earners all get $20K per year, and the top half all earn $50K per year. Which country has greater income inequality? Well, country A does. Why? Because I didn't tell you everything yet.

In country A, half the people earn $30K per year as soon as they start working, and keep earning that until they retire. The other half earns $40K per year as soon as they start working, and keep earning that until they retire.

In country B, everyone starts work earning $20K per year, and earns that for the first half of their working life. In the second half of their working life, everyone earns $50K per year.

In country A, there really are different classes of people whose earnings are markedly different. In country B, everyone is the same, the only difference is what stage of their career they're at.

I know that these are vastly simplified examples, but the fact of the matter is that if you actually want to draw any REAL conclusions about income inequality, you need to be able to account for the fact that almost everyone in the US DOES move up the income ladder quite significantly over their life. Does a change in relative pay scales for different income brackets really reflect a growing class inequality, or does it instead reflect a steepening of the age/pay curve? In order to get an ACTUAL handle on the question of income inequality (the equivalent of not being tricked into thinking country B above has greater inequality), then you need to know these things. I actually admit I DON'T know enough about these details to draw a conclusion. But I know enough to recognize that these are variables that MUST be accounted for in order to arrive at an accurate picture. But you seem blissfully ignorant that they even exist.

[Mark]

Why am I not surprise by your inability to understand the significance of this?

Let me give you a toy example. Imagine two countries. In country A, the bottom half of income earners all get $30K per year, and the top half all earn $40K per year. In country B, the bottom half of income earners all get $20K per year, and the top half all earn $50K per year. Which country has greater income inequality? Well, country A does. Why? Because I didn't tell you everything yet.

In country A, half the people earn $30K per year as soon as they start working, and keep earning that until they retire. The other half earns $40K per year as soon as they start working, and keep earning that until they retire.

In country B, everyone starts work earning $20K per year, and earns that for the first half of their working life. In the second half of their working life, everyone earns $50K per year.

In country A, there really are different classes of people whose earnings are markedly different. In country B, everyone is the same, the only difference is what stage of their career they're at.

I know that these are vastly simplified examples, but the fact of the matter is that if you actually want to draw any REAL conclusions about income inequality, you need to be able to account for the fact that almost everyone in the US DOES move up the income ladder quite significantly over their life. Does a change in relative pay scales for different income brackets really reflect a growing class inequality, or does it instead reflect a steepening of the age/pay curve? In order to get an ACTUAL handle on the question of income inequality (the equivalent of not being tricked into thinking country B above has greater inequality), then you need to know these things. I actually admit I DON'T know enough about these details to draw a conclusion. But I know enough to recognize that these are variables that MUST be accounted for in order to arrive at an accurate picture. But you seem blissfully ignorant that they even exist.

Would you like to have an intelligent discussion? Or engage in personal insults?

You have ignored the different rates of increase for income brakets. Convenient. I'll hold off on the insults pending your response.

[Ed]

you guys talking income or wealth?

[Jocko]

The rate of increase is drastically higher among the upper 1%; by some calculations, over 400% higher. Also, their slice of the pie is growing ever larger as a percentage. The inevitable result (at current rates) is simple arithmetic.

Actually, Mark, it's not inevitable. Your conclusion relies on something being taken away from 99% of Americans. That's not happening. So where do you get the Mexico idea from?

I mean, if your neighbor gets a 30% raise and you only get a 10% raise, are you poorer for it? Assume that inflation is practically flat, as it has been in real life for years now.

[Jocko]

you guys talking income or wealth?

I think we're actually talking about good old fashioned Marxist class demonization. The rich are getting richer than the middle class is; therefore, they are the enemy. Why wait for them to become feudal lords before we attack them as such? Power to the proletariat!

If socialism was half as good at destroying poverty as it was at destroying wealth, I might be inclined to give it a shot. But I think we all know better, don't we?

[Mark]

Actually, Mark, it's not inevitable. Your conclusion relies on something being taken away from 99% of Americans. That's not happening. So where do you get the Mexico idea from?

I mean, if your neighbor gets a 30% raise and you only get a 10% raise, are you poorer for it? Assume that inflation is practically flat, as it has been in real life for years now.

You are ignoring the fact that there are a finite number of dollars. Unless the government prints more and thereby devalues them.

[Mark]

I think we're actually talking about good old fashioned Marxist class demonization. The rich are getting richer than the middle class is; therefore, they are the enemy. Why wait for them to become feudal lords before we attack them as such? Power to the proletariat!

If socialism was half as good at destroying poverty as it was at destroying wealth, I might be inclined to give it a shot. But I think we all know better, don't we?

No, we are talking about arithemtic. Spare me the "You're a communist!" drivel, OK?

Ed, I do understand the difference between income and wealth. I am talking about income.

[Ziggurat]

You have ignored the different rates of increase for income brakets. Convenient. I'll hold off on the insults pending your response.

No, Mark, I haven't ignored it. I've just pointed out that this number alone mean far less than you think it means. You ignore the points I raise (such as the unknown income vs. age curves) and you accuse me of ignoring your data because I don't agree with you about its significance. Yeah, sure, whatever. And again, as has been pointed out to you repeatedly, the income figures for the top 1% say nothing about wealth TRANSFER. The only way to reach that conclusion is to accept the lump sum theory of wealth, which (aside from being contradicted explicitly by your own numbers because of an overall growth in incomes) has been proven not only a failure but usually a tragedy and disaster whenever it is used to guide policy.

[Ed]

I think we're actually talking about good old fashioned Marxist class demonization. The rich are getting richer than the middle class is; therefore, they are the enemy. Why wait for them to become feudal lords before we attack them as such? Power to the proletariat!

If socialism was half as good at destroying poverty as it was at destroying wealth, I might be inclined to give it a shot. But I think we all know better, don't we?

If that is so it is simply stupid.

Once one hits a critical mass of wealth it necessarily grows. Always has been, will always be so.

It has never been obvious to me that any government taking money away from the rich ever benefitted the poor.

Incidentially, if you peruse the IRS files you find that a large proportion of HH's at those high levels are duel wage earner. Funny, if you are willing to compromise your life, you can earn a lot. But you still have to, you know, work.

[Ziggurat]

You are ignoring the fact that there are a finite number of dollars. Unless the government prints more and thereby devalues them.

Which happens pretty regularly - or didn't you know that?

Jeeze, Mark, talk about making it easy to demonstrate your ingorance of economics. You walked right into that one. The relevant metric has never really been dollars themselves - that's why such figures are useless if you don't adjust them for inflation. It's always been wealth - the dollar figures are adjusted by inflation to account for how much you can buy with those dollars, so that they reflect wealth and not just currency. And as we keep reminding you, wealth is NOT a fixed quantity.

[Otther]

You have ignored the different rates of increase for income brakets. Convenient. Could you explain how, even assuming the current rates continue, you see wealth being transferred? Assuming the current rates continue, all I see is a greater and greater disparity... but mutual growth nonetheless.

[Rob Lister]

Housing is extortionate here but this has more to do with a government that is incompetent and unwilling to properly regulate it and the simple fact that this island is horrendously overcrowded and getting more so all the time. Simply put - there just arent enough houses or the space to build them. The houses that do exist are almost universally small, mostly badly designed and characterless. This has little to do with employment laws.


I'm curious what you would have the government do in regulating the cost of housing. How would your solution impact the availability of housing, the blackmarketing of second-tier leases, the quality of housing, the upkeep of housing, the creation of housing, among other concerns.

[Mark]

Which happens pretty regularly - or didn't you know that?

Jeeze, Mark, talk about making it easy to demonstrate your ingorance of economics. You walked right into that one. The relevant metric has never really been dollars themselves - that's why such figures are useless if you don't adjust them for inflation. It's always been wealth - the dollar figures are adjusted by inflation to account for how much you can buy with those dollars, so that they reflect wealth and not just currency. And as we keep reminding you, wealth is NOT a fixed quantity.

OK, I'll ignore the latest insult (clearly you aren't capable of politeness), and assume everything you say is correct. In light of which, could you please explain to me:

a) Why Mexico has a very few MEGA wealthy people and lots and lots of very, very poor.

and,

b) Why most sociologists/economists seem to agree that the middle class in the US is disappearing.

Try it without an insult...consider that a dare, if you like.

[Mark]

Could you explain how, even assuming the current rates continue, you see wealth being transferred? Assuming the current rates continue, all I see is a greater and greater disparity... but mutual growth nonetheless.

One example: when I first moved out on my own in 1973, the rent on a decent apartment/small house was about the same as I earned making minimum wage, in a week and a half. My son moved out on his own 2 years ago, and a comparable apartment rents for about a month, to a month and a half pay at minimum wage; a house is generally around 2 months' wages (this is in Southern California).

Do I even need to mention energy prices (even adjusted for inflation)?

[YoPopa]

Could you explain how, even assuming the current rates continue, you see wealth being transferred?I'm not sure I understand this question. Is there an implication that it is someone's responsibility to transfer wealth?

I am happy with a system that allows me to transfer my wealth to anyone I choose in exchange for a fair amount of their wealth. I prefer not to have a third party get involved. They have a nasty way of taking a rather large percent without adding anything to the wealth.

[Grammatron]

One example: when I first moved out on my own in 1973, the rent on a decent apartment/small house was about the same as I earned making minimum wage, in a week and a half. My son moved out on his own 2 years ago, and a comparable apartment rents for about a month, to a month and a half pay at minimum wage; a house is generally around 2 months' wages (this is in Southern California).

Do I even need to mention energy prices (even adjusted for inflation)?

Do you think that maybe population density has changed?

[Mark]

Do you think that maybe population density has changed?

Surely. Which simply gives a reason for what is happening; it does not change the fact that it is happening.

Btw, I am not suggesting that there is some sort of conspiracy here...I am suggesting that the disappearance of the American middle class is a very real, observable phenomenon, and very unhealthy thing for our country. But I have no idea what to do about it.

[Grammatron]

Surely. Which simply gives a reason for what is happening; it does not change the fact that it is happening.

Btw, I am not suggesting that there is some sort of conspiracy here...I am suggesting that the disappearance of the American middle class is a very real, observable phenomenon, and very unhealthy thing for our country. But I have no idea what to do about it.

Move further away from Southern California and you will see that dollar gets you a bit more.

[Ed]

One example: when I first moved out on my own in 1973, the rent on a decent apartment/small house was about the same as I earned making minimum wage, in a week and a half. My son moved out on his own 2 years ago, and a comparable apartment rents for about a month, to a month and a half pay at minimum wage; a house is generally around 2 months' wages (this is in Southern California).

Perhaps he simply got too expensive an apartment.

Do I even need to mention energy prices (even adjusted for inflation)?

Go right ahead. What is the long term price if gas on a constant dollar basis?

[Mark]

Perhaps he simply got too expensive an apartment.
We checked dozens and they were all more or less in the same price range. Except some that were WAY more.



Go right ahead. What is the long term price if gas on a constant dollar basis?

I was mainly referring to home heating oil, natural gas, and electricity, but thanks for playing.

[Mark]

Move further away from Southern California and you will see that dollar gets you a bit more.

The number of places where that is true is falling drastically.

[Mark]

When I was a kid, most households were single income and did quite well. Not so now. From Rep. Bernie Sanders:

While the rich get richer and receive huge tax breaks from the White House, the middle class is struggling to keep its head above water. The unemployment rate rose to a nine-year high of 6.4 percent in June, 2003. There are now 9.4 million unemployed, up more than 3 million since just before Bush became President. Since March, 2001, we have lost over 2.7 million jobs in the private sector, including two million decent-paying manufacturing jobs -- ten percent of our manufacturing sector. Frighteningly, the hemorrhaging of decent paying jobs is now moving into the white-collar sector. Forrester Research Inc. predicts that at least 3.3 million information technology jobs will be lost to low-wage countries by 2015 with the expansion of digitization, the internet and high-speed data networks.

But understanding the pain and anxiety of the middle class requires going beyond the unemployment numbers. There are tens of millions of fully employed Americans who today earn, in inflation adjusted-dollars, less money than they received 30 years ago. In 1973, private-sector workers in the United States were paid on average $9.08 an hour. Today, in real wages, they are paid $8.33 per hour -- more than 8 percent lower. Manufacturing jobs that once paid a living wage are now being done in China, Mexico and other low-wage countries as corporate America ships its plants abroad.
http://www.buzzflash.com/contributors/03/09/04_sanders.html

From Bernie's site, an article by Holly Sklar:

The minimum wage buys less today than it did when Wal-Mart founder Sam Walton opened his first Walton’s 5 & 10 in Bentonville, Arkansas in 1951.

It would take more than $9 in 2006 to match the federal minimum wage peak reached in 1968, adjusting for inflation. At today's $5.15 an hour, it takes nearly two minimum wage workers to earn what one made 38 years ago.

The share of national income going to wages and salaries is at the lowest level since 1929—the year that kicked off the Great Depression. The share going to after-tax corporate profits, which heavily benefit corporate executives and other wealthy Americans through increased dividends and capital gains, is at the highest level since 1929.
http://bernie.house.gov/documents/document.asp?issueNum=4823

[WildCat]

I think you nailed it.

And the French absolutely need to go on strike from time to time. It's a national hobby.



Zee
It's always fun when the French farmers throw their annual snit, and block roads and dump truckloads of tomatoes all over the place. Now, that's entertainment! :D

[WildCat]

When I was a kid, most households were single income and did quite well. Not so now. From Rep. Bernie Sanders:
When you were a kid, the average house size was probably 800-1000 sq. ft. Now people want 3200 sq ft, nobody even builds them less than 2000 any more (hardly). So why does that surprise you?

And there's still lots of places w/ cheap, affordable housing. Of course, not many people want to live in those areas. Location, location, location, always has been and always will be the 3 most important things in real estate.

And I know of damn few adults (actually, I know none) who are heads of households making minimum wage. And if you are making minimum wage, might I suggest holding off on making the babies until you earn enough to feed/clothe/house them? Just a thought...

[Ed]

We checked dozens and they were all more or less in the same price range. Except some that were WAY more.




I was mainly referring to home heating oil, natural gas, and electricity, but thanks for playing.

OK. What are the constant dollar trends for home heating oil, electricity and such? Might as well throw in the cost of communcations. So, what is the trend?

[Orwell]

Of course they're protesting! Why shouldn't they? I mean, the French politicians that are pushing these reforms are essentially telling the French (particularly the young) that they have two crappy choices: you either get a job were you're basically treated like a second class citizen (you don't have any of the perks that your older countrymen enjoyed for most of their lives), or you don't have a job. Why is it surprising that there are protests?

Americans and Canadians are getting as screwed as the French. Why aren't we protesting too? Too apathetic, eh?

[Mark]

OK. What are the constant dollar trends for home heating oil, electricity and such? Might as well throw in the cost of communcations. So, what is the trend?

The trend is for wages to rise slower than expenses. You guys can put all the cheerful spin you want on this, but the bottom line is that this is what is happening. Read the quotes above.

[Mycroft]

The rate of increase is drastically higher among the upper 1%; by some calculations, over 400% higher. Also, their slice of the pie is growing ever larger as a percentage. The inevitable result (at current rates) is simple arithmetic.

You mistakenly assume that because the rich are getting a larger slice of the pie that the rest of the people will have to do with less. What you're forgetting is the entire pie gets bigger, making more for everyone.

[Mycroft]

You are ignoring the fact that there are a finite number of dollars. Unless the government prints more and thereby devalues them.

Actually, that's not exactly true.

Dollars circulate. If you spend them, put them in the bank or invest them in the stock market, they still circulate.

It makes sense if you think of dollars like blood cells in your body's circulatory system. You can increase the flow of blood to all the different parts of your body by improving the efficiency of your circulatory system. If you do this, all the parts of your body get more blood, but your body doesn’t need any more blood than it already has to accomplish this.

[Mark]

Actually, that's not exactly true.

Dollars circulate. If you spend them, put them in the bank or invest them in the stock market, they still circulate.

It makes sense if you think of dollars like blood cells in your body's circulatory system. You can increase the flow of blood to all the different parts of your body by improving the efficiency of your circulatory system. If you do this, all the parts of your body get more blood, but your body doesn’t need any more blood than it already has to accomplish this.

That's an interesting analogy. Seriously.

But, if the blood supply does not expand, but the body does, then we are faced with anemia...and the body will tend to concentrate blood in certain areas (as with shock), and starve others. I am not being sarcastic; it seems to me that is the situation we are faced with.

Let's put it this way. In my own case, I make 10 times what my father did...and have nowhere near his financial security. Anecdotal, I grant you, but still.

[Mycroft]

That's an interesting analogy. Seriously.

But, if the blood supply does not expand, but the body does, then we are faced with anemia...and the body will tend to concentrate blood in certain areas (as with shock), and starve others. I am not being sarcastic; it seems to me that is the situation we are faced with.

It's a simplistic analogy, but it's good for illustrating that point.

The supply of money isn't fixed. We have the Federal Reserve system to regulate the supply.

Money isn't wealth, it's really just a way of facilitating the exchange of wealth.


Let's put it this way. In my own case, I make 10 times what my father did...and have nowhere near his financial security. Anecdotal, I grant you, but still.

The difference isn't the economy, its lyfestyle choices and savings habbits. Ibet if you thought about it, if you chose to live the same lifestyle as your father, you'd have tons of money left over.

[Mark]

The difference isn't the economy, its lyfestyle choices and savings habbits. Ibet if you thought about it, if you chose to live the same lifestyle as your father, you'd have tons of money left over.

I don't think so...I pretty much am living the same lifestyle (much as I hate to admit it! I'm my father!). And as I said before, wages are not rising as fast as expenses; there's just no getting around that.

Let's put it another way: years ago buying a house cost about as much as an average year's income. Now that same house costs anywhere from 10 to 100 times an average yearly income, and up in some areas. This stuff really is happening; I'm certainly not making it up.

[Ziggurat]

OK, I'll ignore the latest insult (clearly you aren't capable of politeness), and assume everything you say is correct. In light of which, could you please explain to me:

a) Why Mexico has a very few MEGA wealthy people and lots and lots of very, very poor.

Because it's got that wonderful combination of a statist (and heavily petroleum-centric) economy plus rampant corruption which makes the generation of wealth very difficult for all except the few powerful and well-connected.

b) Why most sociologists/economists seem to agree that the middle class in the US is disappearing.

Do they? Have you got poll results or something to that effect? If the middle class is disappearing as you contend, presumably they turning into something else rather than being abducted by aliens or being taken up in the Rapture. If they're turning into something else, what is it? Are we expanding the upper class, the lower class, or both? Since this is also presumably a question of measurement and not simply opinion, what criteria are we even using to distinguish one class from another anyways?

Yes, I know, I failed to answer your question. But the question itself needs quite a bit more background information before I can decide if it even makes sense.

Try it without an insult...consider that a dare, if you like.

Is it an insult to point out that you're ignorant of economics when you are? It doesn't have to be - there's plenty of stuff I'm ignorant of, and there are aspects of economics that I don't really understand either. The only problem is you thought you knew more than you do (which is why you made that statement about the dollar supply being finite "Unless the government prints more and thereby devalues them" - demonstrating that you didn't know the government does in fact do this regularly), and so took offense to me pointing out your ignorance. But there's no reason you can't or shouldn't learn from your mistake rather than take umbrage.

[Mark]

Because it's got that wonderful combination of a statist (and heavily petroleum-centric) economy plus rampant corruption which makes the generation of wealth very difficult for all except the few powerful and well-connected.
Um...sounds to me like you just described the US.



Do they? Have you got poll results or something to that effect? If the middle class is disappearing as you contend, presumably they turning into something else rather than being abducted by aliens or being taken up in the Rapture. If they're turning into something else, what is it? Are we expanding the upper class, the lower class, or both? Since this is also presumably a question of measurement and not simply opinion, what criteria are we even using to distinguish one class from another anyways?

Yes, I know, I failed to answer your question. But the question itself needs quite a bit more background information before I can decide if it even makes sense.
Your attempt to avoid the point by alluding to aliens and the Rapture is noted. Tell you what, if you really are interested (you aren't), go to Google and type in "Economists" "Poll" and "middle class disappearing." You'll find a wealth of articles about and from economists saying that very thing. Maybe they're just ignorant, too. I didn't find any references to aliens, though.



Is it an insult to point out that you're ignorant of economics when you are? It doesn't have to be - there's plenty of stuff I'm ignorant of, and there are aspects of economics that I don't really understand either. The only problem is you thought you knew more than you do (which is why you made that statement about the dollar supply being finite "Unless the government prints more and thereby devalues them" - demonstrating that you didn't know the government does in fact do this regularly), and so took offense to me pointing out your ignorance. But there's no reason you can't or shouldn't learn from your mistake rather than take umbrage.

I guess that makes you ignorant of what economists all over are saying. No offense. ;)

[Ziggurat]

And as I said before, wages are not rising as fast as expenses; there's just no getting around that.

You really mean housing expenses, because that's the dominant cost that's gone up. Sure, that's true. And there are a lot of reasons for that (increasing population density, restrictions on the construction of new homes, competition for housing in good school districts). But one of the big, and often overlooked, reasons for that is the entry of women into the work force (that is a good thing, isn't it?). This has increased the standard of living for Americans significantly, but it also means more money for the middle class to compete WITH EACH OTHER for good housing, thereby driving up housing costs significantly. Sure, that's an unfortunate side effect, but it's also pretty much unavoidable (you're not advocating women return to the kitchen, are you?).

And perhaps more importantly, it's also a self-limiting process. Housing prices simply cannot continue to rise so quickly all across the country (all bets are off for a given locale, though), because housing prices respond to demand just as much as supply, and the demand by definition cannot exceed the capacity of people to pay for it. The rich, being by definition a small slice of the population, cannot drive general housing prices upwards, only the majority of Americans can do that. So unless we all get richer (which is fine by me), housing prices cannot expand indefinitely.

But in the mean time, if you really want housing prices to drop, the best thing to do is try to increase housing supply. What limits that? Lots of things, but many of them are very artificial (zoning laws, rent control, environmentalist lawsuits against developers) and can be reduced significantly if there's a political will to do so.

[Mark]

You really mean housing expenses, because that's the dominant cost that's gone up. Sure, that's true. And there are a lot of reasons for that (increasing population density, restrictions on the construction of new homes, competition for housing in good school districts). But one of the big, and often overlooked, reasons for that is the entry of women into the work force (that is a good thing, isn't it?). This has increased the standard of living for Americans significantly, but it also means more money for the middle class to compete WITH EACH OTHER for good housing, thereby driving up housing costs significantly. Sure, that's an unfortunate side effect, but it's also pretty much unavoidable (you're not advocating women return to the kitchen, are you?).
Women being able to work if they want is a god thing. Having to work just to maintain the lifestyle where one income used to be enough is not.


And perhaps more importantly, it's also a self-limiting process. Housing prices simply cannot continue to rise so quickly all across the country (all bets are off for a given locale, though), because housing prices respond to demand just as much as supply, and the demand by definition cannot exceed the capacity of people to pay for it. The rich, being by definition a small slice of the population, cannot drive general housing prices upwards, only the majority of Americans can do that. So unless we all get richer (which is fine by me), housing prices cannot expand indefinitely.

But in the mean time, if you really want housing prices to drop, the best thing to do is try to increase housing supply. What limits that? Lots of things, but many of them are very artificial (zoning laws, rent control, environmentalist lawsuits against developers) and can be reduced significantly if there's a political will to do so.

Ah, yes, those pesky environmentalists. Housing would be cheap and plentiful if it were not for them. Of course, that utterly ignores, for example, my own area where they have devloped every possible square inch of land with no regard for the environment whatsoever (or even traffic safety)...and housing is through the roof. But, hey, it sounds good, so by all means keep making that unsubstantiated claim. Gee, I guess by that theory housing in Japan is dirt cheap.

And I never said only housing expenses. I specifically said that was one example.

Also, you are ignoring still the fact that the upper 1% are gaining ground FAR faster than anyone else. Through special tax breaks, stock dividends, capital gains and the like. Meanwhile, most Americans have no hope of any significant savings, while Bush and the Republicans want to destroy Social Security (and are well on their way to doing it), with the help of people who want to deny what is happening in spite of the very real numbers.

[Ziggurat]

Um...sounds to me like you just described the US.

What, you honestly don't understand the fundamental and enormous difference in the level of corruption between the US and Mexico? As in, the Mexico where drug dealers can bribe the ARMY to protect them on drug smuggling runs into the US? Where there are towns in which nobody wants to be sheriff because that's almost a guarantee that you'll get killed by gangs? Jeeze, Mark, I know you're into trash talking about how bad things are here, I've gotten used to that, but if you honestly can't understand how much of a difference there is, then you're ignorant about a lot more than just economics.

Your attempt to avoid the point by alluding to aliens and the Rapture is noted.

I'm being a smartass, Mark. It's fine if you think my jokes are stupid, but really, the fact that I cracked one isn't exactly a sign of some sort of dishonesty on my part.

Tell you what, if you really are interested (you aren't), go to Google and type in "Economists" "Poll" and "middle class disappearing." You'll find a wealth of articles about and from economists saying that very thing. Maybe they're just ignorant, too. I didn't find any references to aliens, though.

I found a number of things, most of them one-sided arguments which give no indication of what the overall consensus (if it even exists) might be. But again, we're not just talking about whether or not income inequality is growing. We're talking about wealth transfer (didn't see that discussed at all), what the income divide means, and maybe even what (if anything) should be done about it.

Here's one exchange between two economists on the question:
http://online.wsj.com/public/article/SB114182443308492484.html
You seem to be taking Heather's side, I'm arguing closer to Russel's side. The forcefulness of the debate suggests to me that there isn't a consensus on the issue in either direction. I would note one quote from Russel, though, since you pobably don't want to read the entire exchange:
"Starting in the early 1970s, the divorce rate exploded in America, creating an enormous increase in households headed by women and an increase in the percentage of women in the workplace. Though the gap has decreased over time, women earn less than men. So more women working means more measured inequality. Should we have made divorce more difficult or made it harder for women to work? Both would have reduced measured inequality."

I guess that makes you ignorant of what economists all over are saying. No offense. ;)

None taken. Except that such a cursory Google search isn't going to give you the answer. Among other things, if an economist doesn't believe in a disappearing middle class, he may just not write anything about the topic rather than write an article disputing it. So how do you really tell what everyone is saying? If you've got more specific links showing comprehensive surveys of economists, then please, link to them. But I didn't see them in my Google searches, and I'm not going to spend all day reading through all the search results to try to guess which links you're drawing your conclusions from.

[Mark]

What, you honestly don't understand the fundamental and enormous difference in the level of corruption between the US and Mexico? As in, the Mexico where drug dealers can bribe the ARMY to protect them on drug smuggling runs into the US? Where there are towns in which nobody wants to be sheriff because that's almost a guarantee that you'll get killed by gangs? Jeeze, Mark, I know you're into trash talking about how bad things are here, I've gotten used to that, but if you honestly can't understand how much of a difference there is, then you're ignorant about a lot more than just economics.



I'm being a smartass, Mark. It's fine if you think my jokes are stupid, but really, the fact that I cracked one isn't exactly a sign of some sort of dishonesty on my part.



I found a number of things, most of them one-sided arguments which give no indication of what the overall consensus (if it even exists) might be. But again, we're not just talking about whether or not income inequality is growing. We're talking about wealth transfer (didn't see that discussed at all), what the income divide means, and maybe even what (if anything) should be done about it.

Here's one exchange between two economists on the question:
http://online.wsj.com/public/article/SB114182443308492484.html
You seem to be taking Heather's side, I'm arguing closer to Russel's side. The forcefulness of the debate suggests to me that there isn't a consensus on the issue in either direction. I would note one quote from Russel, though, since you pobably don't want to read the entire exchange:
"Starting in the early 1970s, the divorce rate exploded in America, creating an enormous increase in households headed by women and an increase in the percentage of women in the workplace. Though the gap has decreased over time, women earn less than men. So more women working means more measured inequality. Should we have made divorce more difficult or made it harder for women to work? Both would have reduced measured inequality."



None taken. Except that such a cursory Google search isn't going to give you the answer. Among other things, if an economist doesn't believe in a disappearing middle class, he may just not write anything about the topic rather than write an article disputing it. So how do you really tell what everyone is saying? If you've got more specific links showing comprehensive surveys of economists, then please, link to them. But I didn't see them in my Google searches, and I'm not going to spend all day reading through all the search results to try to guess which links you're drawing your conclusions from.


Gotta work for a while...for what's worth, though, I am enjoying debating with you. More anon...
(OK, I'll give you that the alien crack was kinda funny. ;) )

[Jon_in_london]

I'm curious what you would have the government do in regulating the cost of housing. How would your solution impact the availability of housing, the blackmarketing of second-tier leases, the quality of housing, the upkeep of housing, the creation of housing, among other concerns.

I would have the government make it progressively more expensive to own a portfolio of properties - either as buy to lets or holiday homes.

As I mentioned in my post, the quality of housing in this country is abysmal for all but the lucky few. This is unlikely to change as most new builds as also pokey and characterless.

I'm not sure what you mean by "second-tier leases"

[Ziggurat]

Women being able to work if they want is a god thing. Having to work just to maintain the lifestyle where one income used to be enough is not.
They don't have to, Mark. You can still easily maintain the middle-class lifestyle of someone living in the 70's on one income (ie, no cable TV, no computer, no cell phone, a junker car, polyester clothing, and a small house - that one matters quite a bit, because average house sizes have been increasing). But of course, most people WANT more than that (because really, the 70's sucked), and so we get a lot of two-income households. Are you really pining for the days of yore, or are you just pining?
And I never said only housing expenses. I specifically said that was one example.
Yes. But housing is the ONLY cost that's risen enough to make a significant dent. Yes, oil prices have risen, but not much when they're adjusted for inflation, and for most people they're STILL a small cost out of their total budget.
Also, you are ignoring still the fact that the upper 1% are gaining ground FAR faster than anyone else.
Now you're really sounding like a broken record, Mark. We've already been over this. I didn't ignore it. What I said, and what you haven't countered, is that this fact says nothing about the TRANSFER of wealth, because you simply cannot tell where the wealth is being generated from income figures alone. Furthermore, the fact that the rich get richer faster than I do is of very little significance as long as I'm getting richer too, and most Americans ARE getting richer. So what, aside from jealousy, is actually the problem with the rich getting richer? You have never answered that question in this thread, and yet you keep claiming that I'm ignoring the issue.

[Dcdrac]

In London we will havew to bite the bullett and ditch the greenbelt and let London grow naturally again, there is plenty of housing up north standing empty, trouble is no wants to live there becasue most of the work is not there.

[Jon_in_london]

In London we will havew to bite the bullett and ditch the greenbelt and let London grow naturally again, there is plenty of housing up north standing empty, trouble is no wants to live there becasue most of the work is not there.

Well, the gov could move a couple of hundred thousand civil servants up north for starters........

[Ziggurat]

Well, the gov could move a couple of hundred thousand civil servants up north for starters........

So why don't they?

Well, one possible reason is that governments, having the ability to tax, don't respond to market pressures the way private individuals and businesses do. Another is that they're just idiots. Could even be both.

[Jon_in_london]

So why don't they?

Well, one possible reason is that governments, having the ability to tax, don't respond to market pressures the way private individuals and businesses do. Another is that they're just idiots. Could even be both.

No. Just the latter.

[Jon_in_london]

More precisely, the "market pressure" on a government should be the wrath of the taxpayer and voter when money is wasted. Unfortunately, for the last ten years, the British have been absolutely terrified of the Tories. Labour could have won the last election even if it put billboards saying "Vote for us. Or dont.. whatever, we'll win anyway hahaha"

No market pressure.

[Ace_of_Sevens]

Um...sounds to me like you just described the US.

If you think the US has a statist econmy, you don't know what that word means.

[luchog]

The number of places where that is true is falling drastically.
I don't see that.

I know that by simply moving a bit outside the city limits where I live, my housing dollar value increases by roughly 50%, for a fairly insignificant decrease in convenience. Dollar value for other necessities and luxuries also increases by a few percent, mostly due to the ridiculously high city taxes.

[YoPopa]

Let's put it another way: years ago buying a house cost about as much as an average year's income. Now that same house costs anywhere from 10 to 100 times an average yearly income, and up in some areas. This stuff really is happening; I'm certainly not making it up.
Let's put it another way: Home ownership is at an all time high and has been steadily growing since well before you were in the work force Mark. As of 2004 69% of American households owned their home. source (http://www.financialservicesfacts.org/financial2/mortgage/homeown/) To think that the middle class has been priced out of the market is akin to the statement "Nobody goes there anymore, it's too crowded."

One of the reasons prices are so high is because so many people have gotten into home ownership. Rightly or wrongly, many homeowners regard the equity in their home as their primary vehicle of wealth accumulation.

.

[Mark]

Let's put it another way: Home ownership is at an all time high and has been steadily growing since well before you were in the work force Mark. As of 2004 69% of American households owned their home. source (http://www.financialservicesfacts.org/financial2/mortgage/homeown/) To think that the middle class has been priced out of the market is akin to the statement "Nobody goes there anymore, it's too crowded."

One of the reasons prices are so high is because so many people have gotten into home ownership. Rightly or wrongly, many homeowners regard the equity in their home as their primary vehicle of wealth accumulation.

.

And I am one of them. It does not change the fact that 1st time buyers are having a MUCH harder time...plus most households have to have 2 incomes to even think about owning a home; this was NOT the case in the past.

Ziggurat, I will grant you (and already have) that we all have lots of shiny toys that go beep these days.

In two informative articles in Monday's Rocky Mountain News, Bill Scanlon reported on Boulder's growing population of people living in poverty ("Poverty on the rise in Boulder" and "One Boulder worker's story: She couldn't afford life there"). As Scanlon writes, "Tucked behind the mansions, not far from the BMWs, one in seven people here live in poverty. That's a rate equal to Denver and Aurora, twice as high as Lakewood or Longmont, three times higher than Arvada, and five times higher than Boulder's neighbor, Louisville." With the median sales price for a single-family home hitting $500,000, even many college educated people are slipping into poverty in Boulder, and the middle class is quickly disappearing.
http://www.newwest.net/index.php/city/article/5521/C94/L94

With very little public outcry, we are letting corporate America dismantle the private defined-benefit pension system. At the same time, huge salary and pension benefits are lavished on executives. Remember, pensions are deferred compensation—people put off getting money in their paychecks today because of a promise that they would receive a specific amount of money (hence, the term “defined benefit”) many years later. It’s their money, not the companies’ money. The private pension was a fundamental pillar of the American middle-class dream: If you saved now, you could still have a middle-class life in retirement, and you wouldn’t have to gamble in the stock market to do so.
http://www.tompaine.com/articles/2005/05/31/the_disappearing_pension.php

Since I don’t write social commentaries, my concern is the disappearing middle class will significantly change the way we market food. It already is changing. Look at the growth of dollar stores, the Sav-a-Lots, etc. They are becoming the store of choice for that lower 50 percent, with that group “splurging” at Wal-Mart. Even the next 40 percent will be very price-conscious and probably mass merchant-loyal; they’ll only splurge at today’s traditional grocery stores. The top 10 percent will shop wherever they want.

This does not bode well for the companies whose primary target has been the middle class. I know this is not new, and in fact I wrote a book in the early 1990s on niche marketing where I said the mass market is dying. The victims of the social change will be those who continue to target a market that is disappearing.
http://www.foodprocessing.com/articles/2005/404.html

[Ziggurat]

Ziggurat, I will grant you (and already have) that we all have lots of shiny toys that go beep these days.
...
"Poverty on the rise in Boulder" and "One Boulder worker's story: She couldn't afford life there"

"Poverty" is a technical definition based largely on relative income - there's no possible way to actually eliminate it. But what exactly does the rise in poverty in one particular town (where housing prices are likely rising faster than for the country as a whole) have to do with the overall picture?

The primary driver for poverty in this country is not "wealth transfer", and it sure as hell isn't corporations. The main factor is single mothers. You want to reduce poverty in this country? Reduce single motherhood.

With very little public outcry, we are letting corporate America dismantle the private defined-benefit pension system. At the same time, huge salary and pension benefits are lavished on executives. Remember, pensions are deferred compensation—people put off getting money in their paychecks today because of a promise that they would receive a specific amount of money (hence, the term “defined benefit”) many years later. It’s their money, not the companies’ money.

Wow, whoever wrote this knows just as little about economics as you do. When you sign up for a defined benefit program, it isn't your money OR the corporation's money that's being promised to you: it's money that doesn't even EXIST yet, and that they can only hope will show up down the road. Damned straight defined benefit plans are going out the window, as they should. Defined contributions plans are really the best way to handle retirement planning, both for the company and for the workers, and they're here to stay. That money really IS your money, and it really does exist - and as long as you don't do something stupid like invest all your 401(k) funds in company stock, that money can survive a complete implosion of the company without having to resort to taxpayers to bail you out.

Since I don’t write social commentaries, my concern is the disappearing middle class will significantly change the way we market food.

Well, seeing as how I'm not in the food marketing industry, why exactly would I care about this annalysis? Is it simply because this guy too uses the "disappearing middle class" meme? So what? You still haven't set up exactly what your definition of the middle class IS, you haven't actually answered what they're becoming, and you certainly haven't indicated whether all these writers are even using the same definitions (and they don't really define what they mean either) so we can't even know how much they really agree with each other. The fact that a phrase keeps getting repeated isn't a substitute for an actual argument.

[Mark]

"Poverty" is a technical definition based largely on relative income - there's no possible way to actually eliminate it. But what exactly does the rise in poverty in one particular town (where housing prices are likely rising faster than for the country as a whole) have to do with the overall picture?

The primary driver for poverty in this country is not "wealth transfer", and it sure as hell isn't corporations. The main factor is single mothers. You want to reduce poverty in this country? Reduce single motherhood.



Wow, whoever wrote this knows just as little about economics as you do. When you sign up for a defined benefit program, it isn't your money OR the corporation's money that's being promised to you: it's money that doesn't even EXIST yet, and that they can only hope will show up down the road. Damned straight defined benefit plans are going out the window, as they should. Defined contributions plans are really the best way to handle retirement planning, both for the company and for the workers, and they're here to stay. That money really IS your money, and it really does exist - and as long as you don't do something stupid like invest all your 401(k) funds in company stock, that money can survive a complete implosion of the company without having to resort to taxpayers to bail you out.



Well, seeing as how I'm not in the food marketing industry, why exactly would I care about this annalysis? Is it simply because this guy too uses the "disappearing middle class" meme? So what? You still haven't set up exactly what your definition of the middle class IS, you haven't actually answered what they're becoming, and you certainly haven't indicated whether all these writers are even using the same definitions (and they don't really define what they mean either) so we can't even know how much they really agree with each other. The fact that a phrase keeps getting repeated isn't a substitute for an actual argument.


So...anyone who disagrees with you is ignorant. I have posted article after article---by economists---regarding the disappearing Middle Class and you still insist that anyone who disagrees with you is ignorant. There sure are a lot of ignorant people in your world.

We're done.

[Ziggurat]

I have posted article after article---by economists---regarding the disappearing Middle Class and you still insist that anyone who disagrees with you is ignorant.

Let's be honest here, Mark: I called Jonathan Tasini, only ONE of your sources, ignorant. And he's NOT an economist. You can find his bio here:

http://www.workinglife.org/Bio.html

He writes a lot about economics, but he's really a union guy. But actually, upon reflection, maybe he wasn't ignorant: maybe he's just willing to say something ignorant because he wants to push a particular agenda. I freely admit that I cannot rule out explanations other than his ignorance.

I never called any of your other sources ignorant. Now, do you have any response to the SUBSTANCE of my criticism?

[Mark]

Let's be honest here, Mark: I called Jonathan Tasini, only ONE of your sources, ignorant. And he's NOT an economist. You can find his bio here:

http://www.workinglife.org/Bio.html

He writes a lot about economics, but he's really a union guy. But actually, upon reflection, maybe he wasn't ignorant: maybe he's just willing to say something ignorant because he wants to push a particular agenda. I freely admit that I cannot rule out explanations other than his ignorance.

I never called any of your other sources ignorant. Now, do you have any response to the SUBSTANCE of my criticism?

What would you like me to say? Economist after economist and article after article say it is happening . The numbers say it is happening (I already posted them, so don't ask). You say it isn't.

[YoPopa]

So...anyone who disagrees with you is ignorant.
IMHO.. I don't think Zig said that. What he kept trying to get you to do was define what it is you say is disappearing. When someone comes to JREF claiming paranormal abilities the first thing they are asked is to define the terms. We can find lots and lots of paranormal experts who say that they have powers. We can't have an intelligent discussion with them if they can't even define what they mean by the words.

The discussion on defined benefits has a good tie in with the OP. The defined benefits programs, which most people can now see as being huge mistakes, were brought to us by the unions working with big business.

[Ziggurat]

What would you like me to say? Economist after economist and article after article say it is happening . The numbers say it is happening (I already posted them, so don't ask). You say it isn't.

No, Mark. I said you haven't even defined what "it" is. What defines the middle class, Mark? Is there an income cutoff level? An asset cutoff level? An education cutoff level? Some complex combination? If the middle class is disappearing, where are they going? Those are the kinds of questions that one asks if one is actually interested in understanding what's going on, rather than just cherry picking for data to try to support a claim (that wealth is being transfered from individuals to corporations) that doesn't even make sense to begin with. And those are the kinds of numbers you HAVEN'T posted yet.

And you still haven't actually backed down from that original claim (that wealth is being transfered from individuals to corporations), you've just tried to shift the subject to specific economic figures (such as the large income growth for the top 1% bracket) whose significance you can't even articulate. And when I probe you on what you think it actually means, and point out the problems in trying to draw conclusions from such a limited piece of information, you just repeated the mantra that I'm denying the numbers.

So, what would I like you to say? Well, how about either answering the questions I posed, or admitting that you don't actually understand the issue as well as you thought you did? I won't throw a hissy fit if you don't, but since you asked what I wanted, I told you.

[Mycroft]

And I am one of them. It does not change the fact that 1st time buyers are having a MUCH harder time...plus most households have to have 2 incomes to even think about owning a home; this was NOT the case in the past.

Ziggurat, I will grant you (and already have) that we all have lots of shiny toys that go beep these days.

As a guy who's in the business I can tell you that first time home buyers today expect homes that are nicer and bigger than the homes of their parents who have worked a lifetime to have what they have. If they need two incomes to support it, it's because they won't even consider a home that would have been a reasonable "starter home" 30 years ago.

It's all in the definition of "need."

[Manny]

What would you like me to say? Economist after economist and article after article say it is happening . The numbers say it is happening (I already posted them, so don't ask). You say it isn't.Some economists indeed say it is happening. Take off your blind cite hat and put on your skeptical inquiry hat for a bit.

You've mentioned that Americans (meaning middle Americans, not the very rich) have more "shiny doodads" (or whatever the phrase was) than ever before. It's established that more of us own our own homes, and that the median (not mean) size of those houses has increased and is increasing. We've got more cars per family, a higher level of education attainment per family, more wealth per family (both disposable and locked up, as in a house). As you correctly point out, families spend a lot more time engaged in salaried work than before, but total leisure time has not appreciably declined as the time required for household maintenance has decreased and outsourcing of chores has increased (itself another form of living quality). People are eating more and increasingly choosing to spend food dollars outside of the home (They're not necessarily eating better, but that's their direct choice -- the real cost of nutritious food such as fresh fruit and vegetables and high-quality protein sources have been declining). We fly more miles every year (except after 9-11 when everyone was afraid to get on a plane), we spend more days in hotel rooms for leisure, see more movies (albeit often at home on our shiny doodads rather than in a movie theater with overpriced Milk Duds).

All the trappings of what makes a family middle class as opposed to poor, all the measuring sticks people use to keep up with the Jones, are increasing. So what are those economists talking about? What do they mean when they say the middle class is disappearing? What do you mean?

[Giz]

Wow, whoever wrote this knows just as little about economics as you do. When you sign up for a defined benefit program, it isn't your money OR the corporation's money that's being promised to you: it's money that doesn't even EXIST yet, and that they can only hope will show up down the road. Damned straight defined benefit plans are going out the window, as they should. Defined contributions plans are really the best way to handle retirement planning, both for the company and for the workers, and they're here to stay. That money really IS your money, and it really does exist - and as long as you don't do something stupid like invest all your 401(k) funds in company stock, that money can survive a complete implosion of the company without having to resort to taxpayers to bail you out.

.

Actually Zig, the money [in DB plans] does exist. Defined Benefit Pension Plans have assets invested in stocks and bonds accumulating until the benefits are due. (You may have seen the articles - pension plans are $100 billion in deficit etc; that's saying actuarial liabilities assessed as $600 billion, assets [existing] equal $500 billion, shortfall (obligation less cash) = $100 b).

The difference between defined contribution/money purchase (i.e. 401k plans) and defined benefit (DB) plans is risk:

DB; Risk borne by employer (i.e. better/worse than expected investment returns make providing the plan cheaper/costlier than anticipated. If people live longer then it costs the employer more to continue to provide a benefit until death)

DC/MP(ie 401k); Risk is with the employee. He/She benefits from any stock gains, and loses from any falls. The cost of expecting to live longer will fall on him/her.

The reason for the shift away from DB to DC is simply that as interest rates remain low and life expectancy continues to increase the employer sees his pension costs rise. And rise. Freezing the plan gives an immediate improvement to their net assets and reduces their future costs.

I don't blame employers for this (they hire people anticipating a cost per employee of x (= salary+heathcare+pension etc) and if pension costs doubles (for example) then they face an uncontrolled increase in costs of 10%, maybe more? Their hiring/firing rational (and competativeness) will be based on total costs (and how well they control them). They won't want (and perhaps can't) consider pensions as somehow seperate from this.

Of course no matter how easy it is to understand the employers position, it's still often bad news for employees. There's no such thing as money for nothing - if your employer found it too expensive to continue to fund DB and switched to a cheaper DC then odds are you may end up worse off in retirement.

[Mark]

Some economists indeed say it is happening. Take off your blind cite hat and put on your skeptical inquiry hat for a bit.

You've mentioned that Americans (meaning middle Americans, not the very rich) have more "shiny doodads" (or whatever the phrase was) than ever before. It's established that more of us own our own homes, and that the median (not mean) size of those houses has increased and is increasing. We've got more cars per family, a higher level of education attainment per family, more wealth per family (both disposable and locked up, as in a house). As you correctly point out, families spend a lot more time engaged in salaried work than before, but total leisure time has not appreciably declined as the time required for household maintenance has decreased and outsourcing of chores has increased (itself another form of living quality). People are eating more and increasingly choosing to spend food dollars outside of the home (They're not necessarily eating better, but that's their direct choice -- the real cost of nutritious food such as fresh fruit and vegetables and high-quality protein sources have been declining). We fly more miles every year (except after 9-11 when everyone was afraid to get on a plane), we spend more days in hotel rooms for leisure, see more movies (albeit often at home on our shiny doodads rather than in a movie theater with overpriced Milk Duds).

All the trappings of what makes a family middle class as opposed to poor, all the measuring sticks people use to keep up with the Jones, are increasing. So what are those economists talking about? What do they mean when they say the middle class is disappearing? What do you mean?


I mean that retirement plans are disappearing, housing costs are out stripping wage increases, energy costs are outstripping wage increases, food costs are outstripping wage increases. I mean it is getting harder and harder for the middle class to make ends meet. And it is getting worse.

[Manny]

Excellent analysis, Giz, with the following caveat. The risks of a defined benefit plan are borne by the employer to the extent of the ability of that employer to pay. If the employer fails and leaves the pension underfunded the risk is transferred. In the case of smaller pensions, the kind most people get, that risk is socialized through the PBGC, which is funded by all the other pension funds around and ultimately backstopped by taxpayers. In the case of larger pensions, such as an airline pilot might get, that risk is returned to the pensioner, except that s/he may have had less opportunity to anticipate and plan for the shortage than if s/he had the pension assets attributible to him or her under his or her control from the outset.

[Ziggurat]

Actually Zig, the money [in DB plans] does exist. Defined Benefit Pension Plans have assets invested in stocks and bonds accumulating until the benefits are due. (You may have seen the articles - pension plans are $100 billion in deficit etc; that's saying actuarial liabilities assessed as $600 billion, assets [existing] equal $500 billion, shortfall (obligation less cash) = $100 b).

Actually, both what I said previously and this are simplifications. There is indeed money in defined benefit plans. But there's no guarantee that the money already in the plans will actually be sufficient to meet the obligations. In fact, unless it's all put in US treasuries (an incredibly costly way to run things), it's not even possible to make such a guarantee. There are laws that try to make sure that shortfalls are unlikely, but they're not perfect (which is why you see things like the mentioned deficit), and if the company gets squeezed in the marketplace, those obligations can prevent it from doing things like hiring more workers (which in turn hurts workers overall).

The reason for the shift away from DB to DC is simply that as interest rates remain low and life expectancy continues to increase the employer sees his pension costs rise. And rise. Freezing the plan gives an immediate improvement to their net assets and reduces their future costs.

Sure.

Of course no matter how easy it is to understand the employers position, it's still often bad news for employees. There's no such thing as money for nothing - if your employer found it too expensive to continue to fund DB and switched to a cheaper DC then odds are you may end up worse off in retirement.

Let's clarify this a bit: it's often bad for current employees who had a good deal under the old system, but it can be a very GOOD deal for future employees, who might not even be hired if the employer had to carry the extra burden of continuing a DB plan. And while it's true that there's no such thing as money for nothing, it's NOT true that this is a zero-sum game. If the company is more productive, there really can be more money to go around for everyone. The economy is simply changing too fast nowdays to justify the risk of DB plans for most companies, and those plans often penalize workers who jump from company to company compared to DC plans, as is increasingly common.

[Giz]

Excellent analysis, Giz, with the following caveat. The risks of a defined benefit plan are borne by the employer to the extent of the ability of that employer to pay. If the employer fails and leaves the pension underfunded the risk is transferred. In the case of smaller pensions, the kind most people get, that risk is socialized through the PBGC, which is funded by all the other pension funds around and ultimately backstopped by taxpayers. In the case of larger pensions, such as an airline pilot might get, that risk is returned to the pensioner, except that s/he may have had less opportunity to anticipate and plan for the shortage than if s/he had the pension assets attributible to him or her under his or her control from the outset.

All true. My only comments would be:

1) A PBGC which guarantees a certain low (emphasis low, as in safety net)level of pension is not neccessarily a such bad thing, starving pensioners on the streets isn't a great sight. (And the PBGC is funded by levies from businesses kind of like an insurance they must take out - though obviously if a lot of firms/plans go under simultaneously then the PBGC may need to be bailed out by taxpayers)

2) It's OK to say anticipate and plan for a shortage but how many people can? (And even less do). The flexibility, transparancy and portablility of DC plans are all good things. My point is rather more basic than DBvsDC; the cost of providing a lifetime annuity is rising. Someone has to cover that cost - you cant just wave your arms and say "I have control over my stock selection, hear me roar" and (unless you're Warren Buffet) expect to end up OK.

[Manny]

I mean that retirement plans are disappearing,Retirement plans are changing. There just isn't evidence that this will erode the fortunes of seniors in the future, and it certainly isn't affecting the economy or the middle class today.

housing costs are out stripping wage increasesNo, housing prices are outstripping wage increases. But low interest rates and financing innovations have kept housing costs down. Again, both the percentage of homeowners and the size of the median home has been increasing.

energy costs are outstripping wage increasesNo, they haven't. OK, in the past 12 months or so they have, but I don't think you're positing that the middle class started disappearing in 2004. People pay less for electricity (in part because of lower unit demand from their big appliances), less for heating (despite larger houses to heat) and about the same for gasoline as they did 30 years ago.

food costs are outstripping wage increases.No, they are not. Food costs have been well below wage increases for decades now. As I mentioned, families have been spending some of this savings on food service, as opposed to food. More than half the food dollars in the US are spent for consumption outside the home. Taking the entire family to a sit-down restaurant was an occasional luxury for our middle-class parents; it's routine for us.


I mean it is getting harder and harder for the middle class to make ends meet. And it is getting worse.Except that it isn't, and it isn't.


ETA: Giz, agree on both points.

[Ziggurat]

I mean that retirement plans are disappearing,

Evidence? You had a source talking about the disappearance of defined benefits plans, but I don't recall reading anything about the disappearance of defined contribution plans. In fact, as long as tax law remains as it currently is (they favor payments to DC plans over sallary payments), it's pretty much guaranteed that defined contribution plans are here to stay.

housing costs are out stripping wage increases,

We've been over that already. See Mycroft's post if you don't believe me. But if housing is really the problem, the solution is easy: drive women back out of the workforce.

energy costs are outstripping wage increases,

In the last few years, sure. In the last three decades? Nope. Will energy prices continue to rise quickly for the next 10 years? That's pretty hard to say, nobody has a terribly good track record on predicting oil prices that far out.

food costs are outstripping wage increases.

Evidence? The only link you posted regarding food was primarily about MARKETING food to poor people - I saw nothing about the actual costs of buying food increasing.

[Ziggurat]

My point is rather more basic than DBvsDC; the cost of providing a lifetime annuity is rising. Someone has to cover that cost - you cant just wave your arms and say "I have control over my stock selection, hear me roar" and (unless you're Warren Buffet) expect to end up OK.

Quite true. In the end, though, that cost is always going to be born by the worker, because it's always going to be the workers who are creating the wealth that retirees live off of (money being simply a bookkeeping way to control the flow of that wealth). And so if people are living longer and retirees are thus placing increasing burdens on workers, the natural response is really to keep working longer (so you spend more time creating wealth and less time living off the wealth others create) - and DC plans provide a more natural and direct incentive for workers to do that than current DB plans.

[Giz]

Quite true. In the end, though, that cost is always going to be born by the worker, because it's always going to be the workers who are creating the wealth that retirees live off of (money being simply a bookkeeping way to control the flow of that wealth). And so if people are living longer and retirees are thus placing increasing burdens on workers, the natural response is really to keep working longer (so you spend more time creating wealth and less time living off the wealth others create) - and DC plans provide a more natural and direct incentive for workers to do that than current DB plans.

No argument with that, except to hope that as responsibility for retirement provision shifts from paternalistic employers to the workers, the workers are aware of the shift (and are saving)!

[Dcdrac]

The workers are aware of the shift alright and have precious little left to save.