Income Disparity by the Numbers: Volume II- The One Percent

© Phil Wendt, 2012

This is the second in a series of essays on the issue of income disparity in the United States.  In the first essay (See: Income Disparity by the Numbers) I tried to lay out the basic metrics that describe and quantify income disparity in this country, both currently and historically.  After analyzing these data, four basic conclusions were drawn about income disparity as summarized below.

  1. The wealth of this country is being more concentrated over time into fewer and fewer people at the top.
  2. Upper end (top 20% and the top 5%) wage earners are not only earning more, their wealth is expanding at a faster rate than those in lower income brackets.
  3. The bottom 80% of wage earners have seen their share of aggregate wealth steadily decline over the past forty years, while the upper 20% has steadily increased their share of this country’s aggregate wealth.
  4. This income disparity is not a new or even recent event. In fact, it’s not an event at all, but a process that has been steadily ongoing, virtually unchecked, for the last forty years and more.

 

We can either have democracy in this country or we can have great wealth concentrated in the hands of a few, but we can’t have both.”

-Louis Brandeis 

U.S.  Supreme Court Justice  

 

The Data

In the first round of analyses, I used data collected by the U.S. Census Bureau as I felt these data were reliable and unbiased.  Unfortunately the Census Bureau data did not include information on the top 1% of wage earners.  Because of all the hype lately centered on the Occupy Wall Street (OWS) movement, I wanted to address this segment of society and understand its relationship to the overall income disparity picture.  In addition, the Gini Index of Income Disparity discussed in the first essay clearly showed that wealth is being concentrated into a smaller and smaller segment of the population as time progresses.  Therefore any data describing this economic segment will be helpful in gaining a more complete understanding of the wealth dynamic in this country.

When I was initially compiling data for my original essay, I chose to limit my analysis to data that was easily obtainable by anyone, and that was from an objective, unbiased source.  There was data on the 1% segment available; however I couldn’t readily determine its source or veracity, so I decided to exclude the 1% segment from my initial analysis.  In the meantime, I was able to identify several sources of 1% data, including the Congressional Budget Office and information provided in scholarly, peer reviewed journals (Quarterly Journal of Economics), which I will reference more specifically later.  There is no shortage of numbers in the literature on the 1%, but much of it seems to be unsubstantiated, or at least of unknown or suspect sources.  I’m sure there are other sources as legitimate as the sources I used in this analysis, but I wasn’t trying to do an historic retrospective on the subject.   So for now, as I move through this analysis I will cite my sources and let the reader be the judge. 

 

Rounding Out the Wealth Distribution Picture

Figure 1. Average Pre-Tax Income in 2007 Dollars

In the first analysis which didn’t include the 1% income segment the data showed a clearline of economic demarcation at the 80% income segment, where earners in the upper 20% saw their income and wealth share grow steadily over the last forty years, while those in the lower 80% saw their real income and wealth share stagnate or decline over the same time period.  Now with the 1% income segment as shown in Figure 1, it’s becoming clear where the wealth is indeed accumulating, and with an even wider gap evident between the top 1% and 5% than exists between the upper 20% and the lower 80%.  I would suggest that the gap between the top 1% and the top 5% may also represent another line of economic demarcation, this one separating the wealthy from the super wealthy.  Even though I believe that the 80%/20% demarcation line represents a more structural difference between these two economic segments, the secondary demarcation line at 1% shows the considerable economic and political power that resides within this small segment of our population.  It also helps to explain the attention this top 1% group has gotten through the OWS movement.

Figure 2. Top 1% Share of Total Pre-Tax Income, 1913 – 2008

So how does the 1% income segment fair in terms of share of the overall wealth in this country?  Figure 2 shows the share of total pre-tax income from 1913 to 2008.  These data show the current share of overall wealth to be over 20%: that means that over 20% of the wealth of this country is owned by just 1% of its people (this translates to just over a million people).  If one compares the overall trend line from 1979 through 2007 in Figures 1 (Income) and 2 (Wealth Share), the trends follow basically the same steep slope upwards over the same period.

There are also some interesting trends to note over the full historical record shown in Figure 2.  As I had shown in the first installment of “Income Disparity”, this trend of rapid and steep escalation of wealth and wealth concentration in the upper income ranks is by no means new.  It’s interesting to note that the two highest percentages in wealth share were in 1928 (23.9%) and 2007 (23.5%).  The following year of each of those peaks began the two worst economic downturns in history (1929 began the Great Depression, and 2008 began the Great Recession).  This situation was also noted by Thomas Piketty and Emmanuel Saez in their article “Income inequality in the United States, 1913-1998” published in the Quarterly Journal of Economics (2003), and later updated in 2010 with new data through 2008.   Is it possible that there is a certain ‘wealth carrying capacity’ for the top 1% in our economy?   Assessing cause and effect here in this instance is beyond the scope of this cursory analysis, although it might make for a good doctoral dissertation topic…for someone else.  However, assuming that there is a strong relationship between financial wealth and political power, then concentrating both wealth and power would make it more, not less, likely to have a catastrophic financial collapse.  Such a concentration of power facilitates the development of the “To big to Fail” scenario.  By the time you reach this point your options are severely limited as we saw in early 2008.

 

The Top and the Bottom

 

Figure 3. Average Real Income of Bottom 99% and Top 1% from 1913 – 2008

Now let’s take a look at the 1% and the remaining aggregate 99% together.  Figure 3 shows the annual real (adjusted to 2008 dollars) income of the top 1% and the remaining aggregate 99% from 1913 -2008.  The data had to be shown on separate axes in order to discern both trends more clearly.  The top 1% group shows that during the first half of the 20th century the income trend doesn’t follow the wealth share trend observed in Figure 2.  However, during the latter half of the 20th century and through today, the 1% income trend follows the wealth share trend quite well.  This is also consistent with the Gini Index data from the first “Income Disparity’ essay, at least during the period of record beginning in1947 from the Gini Disparity Index.  The Gini Index clearly shows that from 1947 onwards the wealth of this country has been concentrating into fewer and fewer people.  It’s also interesting to note that the income for the 99% income segment gained by only 5.7% during the period from 1973 to 2008.  During this same time period, the top 1%’s income rose by over 170%.  I would suggest that this further supports the idea of a secondary line of economic demarcation at the 1%/99% interface.  While the 99% group did actually gain during this 35 year period, an increase of just 5.7% over three and a half decades can’t really be considered ‘keeping up.’  What’s poignant about this meager increase is that we’re not talking about a small segment of our society here, but rather 99 percent of all those who work.  I remember years while working where a 5.7% raise was considered marginal in any one year. 

 

Figure 4. Average CEO Pay vs. Average Wage Income, 1970 – 2006

Earlier I discussed the relationship between wealth and power.  Along these lines I thought it might be interesting to look at a subset within the top 1%, namely CEOs, in comparison to average wage earners.  Figure 4 shows the average CEO pay (total compensation) versus average wage income during the period 1970 – 2006.  I think that the most salient point to be made here is that in order to adequately show the CEO data, the vertical axis had to be converted to a logarithmic scale.  CEO compensation has increased by several orders of magnitude over the past 40 years, while the overall average income has remained flat.  To bring this a little closer to home, think about this another way, namely that those folks included in the average wage earner category are the folks actually working for those CEOs.  During the 40 years when those CEOs were exponentially increasing their salaries, what was happening to those very wage earners working in those companies (the flat black line in Figure 4)?  They have seen their salaries stagnate, health benefits vaporize, and their pensions turned into 401k’s, if they’re lucky.

On a personal note, I worked for two Fortune 500 companies in the 70’s (Texas Instruments and Lockheed) and had excellent salary and benefits (health plans, pensions, and stock options).  I left private industry to work in public service for the State of California, and for the privilege I took an initial 45% cut in pay, but had received comparable benefits.  Over the 25 years I worked at the State, my salary increased as I moved up into higher positions, and my benefits remained intact.  Today, as a retired state employee with a pension and health benefits I have a target on my back because of my “luxurious” retirement plan.  I understand the frustration of those who do not have a comparable retirement plan.  But to those who work in industry and rail against those ‘flush” government workers, I can only turn your attention to Figure 4.  This disparity in retirement/benefits between the government and private sector is about what the private sector lost, not about anything structurally different occurring in the public sector in the last 40 years.  This discussion may seem a little too personal, but I tell this story to illustrate a point.  The question isn’t why does one sector have all these benefits, the question should be “…what happened to the benefits the private sector used to have?”  Again…see Figure 4.  This is not just about CEO’s but a corporate philosophy that values shareholder’s returns over its employees.  The issue here is about corporate power and wealth, and judging by the data shown in Figure 4, I’d say that the growth of the 1% is occurring at the expense of the remaining 99%.

 

“I think the point here is that there are limits to income disparity where ultimately there is a price to be paid for too much concentration of wealth within a society.”

 

Occupy Wall Street

In the first installment of Income Disparity I pretty much ignored the OWS movement as a topic because that’s not where my interest was focused.  However, within the context of an essay on the top 1%, I would be remiss if I didn’t at least touch on the OWS movement.  In one sense, I believe that the OWS missed the real point of economic demarcation, which I have shown to be the 20%/80% interface, but after analyzing the data on the top 1%, I believe that a secondary line of demarcation can be seen at the 1% level.  It also makes for a more appealing and dramatic mantra for a social movement.  Personally, I don’t think it particularly matters where that line is in terms of the OWS movement itself. 

To me, OWS is not about wealth distribution, but more about fairness, or a perceived lack of it. Why do banks get bailed out and not foreclosed homeowners?  That disparity is what I believe the OWS is focusing on, namely a  perceived different set of rules for the wealthy (1%, 5%, 20%???) than for the rest of society. Personally I believe that the free market has to play by the rules, and under strict market rules businesses that were too big to fail should have. If not, then individual homeowners should have been provided the same advantages as big business/banks.  Granted, there are some fools who should have figured out that there is no world in which you can buy a $700K house on a salary of $15K/yr.

But I do believe that we are at some sort of tipping point here, and I don’t fully understand all the socioeconomic subtleties that drove us to this point.  I believe it is real, even if it is not well defined or even represented accurately by OWS.  Seems like the rules have changed somewhere along the way, and perhaps we’re just starting to notice.

I for one probably wouldn’t have thought about the issue of income disparity had it not been for OWS.  In addition I believe that OWS may have had some part in prompting the Attorney General of Massachusetts, Martha Coakley, to file suit against the nation’s five largest mortgage lenders in December of 2011.  “There is no question that the deceptive and unlawful conduct by Wall Street and the large banks played a central role in the crisis through predatory lending and securitization of those loans,” Ms. Coakley said when announcing the lawsuit.  She continued…”The banks may think they are too big to fail or too big to care about the impact of their actions, but we believe they are not too big to have to obey the law.”

There are those who rail against Big Government, yet were adamant about that same government using its might to bail out Wall Street, with no strings attached. Homeowners were then were left to deal with the aftermath, while the banks got to stash away their bail out money.  Enter… OWS.  I sincerely hope that they can articulate just what it is that they want, because it would be a shame to waste the vast amount of energy spent by OWS and achieve nothing.

 

Concluding Remarks

I don’t believe that this analysis of the top 1% changes any of my conclusions in my first Income Disparity essay.  But I do believe that the information presented here creates a more complete picture of the overall income disparity picture in this country.  I think it clearly shows where a significant portion of the rapidly increasing wealth concentration in this country is going.  Social commentators often talk about this country turning into the land of the “Haves” and the “Have nots”.  I would suggest that it’s more like the Haves, the Have nots, and the Have-it-alls. 

When I first started looking into this issue, I really never asked myself the question of whether or not income disparity was inherently bad.  After all, we’re a capitalist based country and what is capitalism if not wealth concentration.  But the trends seem to show that the American Dream of working hard and getting ahead is not working the way some think it should. Wealth is concentrating into a smaller and smaller group of super rich, while middle income folks continue to lose more ground each year.  The top 1, 5, or 10% have concentrated their political power as well, turning the American Dream into basic crony capitalism. This has structurally changed the income disparity picture over time through exerting their political strength to rig the free market system by eliminating the risk inherent in a truly ‘free’ market system. Don’t get me wrong, no one should ever have to apologize for their success. Fairness is not a life’s guarantee, but the playing field should be level.

The term “Income Disparity” itself sounds like an indictment.  It’s not meant it to be, but after this cursory analysis, I believe it’s a fair question…”Are we at a point where the income disparity itself in this country is harmful?”

Piketty and Saez (2010) indicate that research has shown that this level of income disparity endangers our society in various ways including; limiting social mobility, disrupting the cohesiveness of communities, reducing longevity, increased drug abuse, increased crime rates, and reduction in overall child well being.  I think the point here is that there are limits to income disparity where ultimately there is a price to be paid for too much concentration of wealth within a society. 

As I noted in my initial analysis, this income disparity is not new and is growing wider all the time.  I don’t believe it is the result of capitalism at its best, but rather crony capitalism at its worst.  The free market is rigged where the ‘too big to fail’ don’t, and only the basic wage earner pays for the misdeeds of the uber-wealthy.  So the OWS may not have it figured out yet, but I think they’re on to something.  If nothing else, they got me thinking about it, and I hope that my analysis here got you thinking about it as well.

 

If you found this essay interesting, you may also wish to read my follow up essays: “Income Disparity by the Numbers: Volume III – How we got Here” and “Income Disparity by the Numbers: Volume IV – The 2012 Election: Wealth vs. Jobs

 

POSTSCRIPT:  Over the past month since I posted my original essay on Income Disparity, my brother Chris and I have had many discussions about this issue and the OWS movement.  We may be on opposite ends of the political spectrum, but those illuminating discussions helped me understand not just what he thought about these issues, but what I thought about them myself.  I’m grateful to him for spending the time to engage in fruitful discourse.  We certainly need more of that in today’s world.

 

9 Responses to Income Disparity by the Numbers: Volume II- The One Percent

  1. Chris Wendt says:

    This is very provocative…compelling actually.

    I need time to digest it, think about it, and figure out to what action, to what ends it should compel. I promise a full reply after some thought.

    Chris

  2. Chris Wendt says:

    The second Essay brought about an emotional reaction from me upon reading it. It wasn’t anger, but astonishment; not disillusionment but anger; you see my dilemma. Anger is a good motivator for writing, but not a good perspective from which to be writing. I accept at face value the data and trends revealed, and can generally agree with the conclusions to the extent they are derived from the data, in the context of a current macroeconomic discussion of the United States. But, in order to come to terms, personally, with the implications of this second essay, I needed to think about this is in several different perspectives, which I hope will add to the understanding of the subject. My viewpoints include micro-, nano-, and global; and biblical.

    Microeconomic Discussion
    As much as the National Debt, the national budget deficit, the foreign trade deficit, and other national economic indicators may be important to watch and know about, it is important to realize that the national economy is an amalgamation of micro economies functioning in micro markets experienced by micro cultures. The U.S. is not a shining alabaster city on a hill. America is 43,191 places comprising tiny bucolic villages, small towns, company or factory towns, college towns, border towns, frontier towns, cities of every size, with sprawling suburbs and interior ghettos; farmlands, uplands, lowlands, ranchlands, game lands timber lands; religious enclaves and religious regions, and lots of neighborhoods with the names of foreign countries preceded by the word “Little”; dens of iniquity, meccas of the rich and famous, vacation hideaways; Broadway and Hollywood; flood zones, tornado alley, and purple mountain majesties. This not only gives comfort and pride, it helps explain how the divergence in wealth has been able to occur seemingly unnoticed for as long as it has, and to the extents it has reached.

    That is because the comings and goings and the wealth of the top 1 percent, five percent, even the top twenty percent are of no real concern for those Americans who gather for breakfast at Ruthie’s Diner in Stockton, Illinois, or for lunch at the Blue Ridge Café in Floyd, Virginia, of taking for a steak dinner and blackberry pie at the Family Tradition Restaurant in Harrisville PA, or knocking down some red beers at the Iron Horse Brewery in Ellensburg, Washington. The lives of those people are sufficiently complicated by school, work, church functions, the weather and their crops or herds, health issues, having children and the prospects of their retiring and of aging. I suspect that the survivability of major economic calamity is inversely proportional to the size of any given micro culture and its attendant micro economy, and directly proportional to how far-removed any micro economy is from the national economy, with a nod to the fact that the “national economy” is an intrinsic part of the global economy.

    Nano economic Discussion

    I want to take this wealth disparity to the most granular level possible, any subset of exactly 100 individuals. Selecting these individuals to reflect precisely the 2007 wealth distribution in Figure 1 we find 80 people making under $200,000 and 20 people making over $200,000. When I think about this, it reminds me very much of my own neighborhood. Of the20 making more than $200,000, half (10 people) are making $400,000 or more, with half again (5) making $600,000 or more, including Mr. Big who is making about $1.9 million. Again, this is very reminiscent of my hometown, Wantagh, on Long Island, if not my immediate neighborhood, as people who make more than $400,000 or $600,000, or nearly $2 million a year are living in larger homes on larger property, and more likely on the waterfront than on my street. Not that I or my neighbors don’t care about this income disparity phenomenon (we certainly do), it is simply that this kind of a distribution in our little town seems about right, and my immediate neighbors can take some significant solace from the fact that people living in waterfront estates pay a lot of our school district’s taxes.

    Another benefit from this distribution is the fact that the wealthier set establishes high expectations from our schools, which drives both academic and extracurricular achievement, and higher taxes for the entire town. Those higher taxes, while a source of endless complaining by middle and lower income people, provide a floor to the lowest income level of our community. This is by no means a universal situation, but it is the extant economic reality of the suburban communities in my township and county.

    Most importantly, in our little town we share in the Lake Wobegon Effect, where “all the women are strong, all the men are good looking, and all the children are above average.” This effect is cited as one cause for the CEO compensation bonanza you cite in the second essay (link). Lawfully (Contistutionally) and politically as well as practically, though, how much should Mr. Big be able to earn, says who, and what are you going to do about it if he does not agree with you? At least on this Nano economic scale, not much.

    Next “installment” responses: Global perspective, Biblical perspective, dealing with definitions, and relating to OWS.

  3. Phil Wendt says:

    I think it helps to realize that the data presented in my two essays represents a sort of conceptual model of the wealth distribution dynamic in this country, and doesn’t translate well to smaller micro- or nano- scales. And I’m not sure Wantagh, or LI for that matter is the most representative place from which to look around and judge how things are going. I suggest that you take a look at a wealth distribution map of the US and you’ll see that LI is in the upper end of the socioeconomic strata.

    As a nation, I think we tend to locate ourselves along socioeconomic lines, so you don’t often get a community that runs the full gamut of income strata. But I agree that most people failed to notice the expanding income disparity gap because they were busy living their own lives.

    For me the issue is still not about Mr. Big, and his lot in life. The issue is about fairness and having a level playing field. You may look around and think that all seems pretty much OK, but how has the value of your home faired over the last few years, and your 401K? I think the Great Recession got people to start noticing not just the income disparity, but the fairness disparity. A huge crime was perpetrated against thousands, if not millions of our citizens through predatory lending practices. Were these folks who doubled down on deals that were too good to be true complicit in the crime…yes. But they were also victims, and more importantly the rest of us who took no part in the crime became victims through lowered property values and investment portfolios. To compound the crime, the perpetrators were essentially made whole, or partially whole, while the rest of us basically got told to take a hike.

    This is not about Mr. Big…more power to him. It’s about the power wielded by the richest few who control congress (both parties) and make the rules to advance their interests. What’s more insulting, is that they do this in the name of job creation using the tired old adage about a rising tide floating all boats. Well, if you’re in the lower 80%, your boat hasn’t been floated in a long time. Reaganomics was and still is a failed economic model… except for the rich.

    The way this changes is if enough people actively seek the change at the ballot box. It took decades to get to this point; it will take decades to reset our economy so it works for everyone, and not just the privileged few. This is macroeconomics, and its effects are manifested at the micro level. So far, I’ve heard nothing that explains why the lower 80% losing ground over four decades is either fair, or good for anybody, or why it’s in any way part of the American Dream.

    This isn’t Lake Wobegone, its real towns and cities full of people who thought that the American Dream was attainable through hard work. Was it that these people didn’t work hard enough? Or was it something else? It’s not about the money, or the wealth of others. To me it’s still about the rules, and fairness, plain and simple. Go back to that initial anger and disillusionment you felt as you read this essay. That’s what you should be feeling…act on that; and forget Lake Wobegone, because all the kids, and their families, are in fact not above average and fading fast.

    Oh, and the Bible…really?

  4. Chris Wendt says:

    Biblical Perspective

    No, not The Bible unless you would like to go there for a reference, but ‘biblical’ as used in the phrases, “…times” and “…proportions”, with implications of “ancient” and “sweeping”, as well as being often ‘mysterious’ or at least difficult to fully understand, prima facie. Think of this perspective as zooming out in time, not a morality warp.

    Just as soon as civilization sprung up, it (“civilization”) became popular and spread itself rapidly across what was an ever-expanding place called “the known world”. (Of course, places to which civilization had not yet spread were certainly ‘known’ to the people who lived in those places, but those people and those places were off the grid and remained off the grid until such time as “civilization” found them, explored them, conquered them, exploited them, and either assimilated them, cross-bred with them, or annihilated them…and wrote about them. The Western Hemisphere is illustrative of this, but so are Asia Minor, Europe, and Africa. Eastern & southern Asia, on the other hand, were for eons a parallel universe to “the known world” to their west.

    The point is, starting in Mesopotamia and spreading out over geography and time, the economy was essentially global, meaning micro economies were rapidly accreted to the larger and better-functioning economies of trading partners, of conquerors, and of empire builders. Wealth accumulation was a function of consolidating and wielding power, not the reverse, as is the case today. From before the advent of recorded history and through the dark ages up to the Renaissance, wealth accumulation in all successful (regardless of the duration of their success) economies was a foregone conclusion: winner take all. The feudal system is illustrative of this, but since you mentioned The Bible, a better example can be found in the Book of I Samuel. http://www.biblegateway.com/passage/?search=1+Samuel+15&version=NASB .

    In that episode, Saul, the first King of the Israelites after they reached the Promised Land from Egypt, disobeyed God’s instructions to annihilate the Amalekites which led to Saul being rejected by God and ultimately replaced by David, the second King of the Israelites.

    But here’s the rub. One of the ways by which Saul disobeyed God’s instructions was the taking of spoils, the best of the livestock and other possessions of the Amalekite tribe, and bringing them home to share the wealth among the Israelite people, so to speak. Well, this was about power, not wealth in terms of possessions, or more appropriately, currency, and God had pre-directed that all of the Amalekite possessions, “currency”, should be destroyed, not captured and re-purposed or re-deployed.

    This biblical perspective establishes a clear abiding precedent for a global view of socioeconomics as well as the true nature of the relationship between power and “wealth”. It also calls into question the validity of using “income” as a proxy for wealth, and begs a review of definitions for the sake of argument.

    Next installment(s): Global perspective; definitions; OWS.

  5. Phil Wendt says:

    My intent in analyzing the income disparity in the US was to try to create a clear image, via graphic data and narrative, of the nature of this very perplexing issue. I think that by drilling down to the nano level, or zooming out to the ‘biblical’ level only serves to obscure the clarity of the original image. This is understandable given that the original image drew a response from you of both anger and disillusionment (again, you should hold on to those feelings). I’m also glad you had to go back 2000 years in order to have this current debacle make sense.

    Now we’re a democratic republic, thanks in part to the very history you describe. That history lead us, through great loss of life and treasure, to become a civilized society; we saw that power-wealth paradigm as something to be managed in a way so as to avoid becoming a class-oriented society, and one where everyone had an even shot at making it big, or becoming “Mr. Big.” Neither ancient history nor our own history establishes any precedent whatsoever for what is happening today, only a lesson as to why we sought to abandon those Machiavellian ways and evolve into a civilized society. Yes, they used power to gain wealth, now we (a very small segment of our society, actually) are using wealth to gain power and influence only to gain more wealth. Still seems like we’re going backwards. And no fairytale bible story is going to legitimize the current income/fairness paradigm we’re experiencing today.

    My essays are about income disparity, not necessarily wealth disparity. I tried not to equate the two, as one generally flows from the other. That said I believe income is a reasonable “index” of wealth. “Income” is a much closer approximation of wealth for the lower 80%, and may significantly underestimate wealth for the upper income classes due to the fact that their wealth is less tied to salary and wages and more tied to investments and capital assets. So, in reality, the “income” disparity tells only half the story of how the lower 80% is fairing by comparison. It’s actually much worse! In any event, the income component tells a valid story all on its own, and the “wealth” issue only relates to how and from where that power is wielded in this country.

    And again my issue is more focused on fairness and not wealth, although I grant you that it’s difficult not to bring wealth into the picture. The income disparity is merely a symptom of the ‘fairness disparity.’

  6. Chris Wendt says:

    You succeeded in your “intent in analyzing the income disparity in the US…to create a clear image, via graphic data and narrative, of the nature of this very perplexing issue.” But the perplexity remains.

    You took exception to my assuming micro and nano perspectives of what you targeted as “income disparity in the US”, and you chided me correctly, for so freely
    interchanging “wealth” and “income” in my responses. I yield on the income/wealth idiomatic point. However, in so doing, it is apparent that income is not a valid measure of wealth any more than income defines wealth or causes it. But to prove that point, then a nano-perspective not only needs to be appreciated for its relevant nuance, but yet taken down one order of magnitude, all the way to the level of families, and even to the individual level.

    At that ultimate level of granularity, we no longer have a study or trend analysis situation, we have a global or universal reality issue, or, actually billions of them. However, I submit that thinking about the whole of mankind in every place and type of existence and lifestyle we “share” among every last one of us, that “wealth” is measured subjectively, and individually, and validly only by each individual one of us, billions of times over.

    Back on the point of income does not equal wealth/wealth is not necessarily caused by income: within the global perspective, and from a historical perspective of your reference, the US, many people do not have or have not had any income at all. Yet many of those people, by their own subjectively valid measures, are wealthy.

    Many people attempt to monetize wealth and then attempt to equate the measure of money or the cash value of real property or capital with a measurement of relative or real wealth. If a person has a lot of money or stuff for which a cash value can be inferred and which can be held up as a proxy for wealth, they could rightfully say that, by their individual subjectively valid measurement, “I am wealthy!” Similarly, a person who aspires to amass cash, financial instruments, and property, but who was wiped-out in the market crash of 2008 could clench his teeth and mutter, ruefully, that, upon measuring himself against his individual subjectively valid standard of wealth, “I am poor!” Valid, and valid.

    However, you know where I am going with this, there is a Hopi Indian family ecstatic over their harvest of maize and beans, who, using their individual, subjectively valid measurement, can also declare, in their native language, that they are “wealthy”. The one, striking similarity between the Hopi Indian Tribe and OWS is the tents. Other than that, they are worlds apart, one group happy in their wealth, the other mad as hell, stewing in their jealousy over what others have in comparison to some artificial income measurement, inappropriately applied by themselves as a proxy for their individual wealth.

    OWS should maybe plant some corn in Zucotti Park, and learn a rain dance from the Hopi this summer.

  7. Phil Wendt says:

    I don’t think anyone can presume to know what the Hopi Indian is thinking about their lot in life. It seems rather presumptive to project a level of content upon them in describing their personal feelings of wealth. In the larger picture of history, I would imagine that they and many other Native American tribes might feel severely screwed by how their civilization ended up today and how they were treated by our government historically. You may be assuming that they are not well informed about their own history, or the current economy. I think that the OWS movement and the recent focus on income disparity has resulted from people getting better informed about the economy as a whole, and are looking at many of the same numbers I’m looking at and thinking that all is not as fair as it should be.

    It’s not about whether or not people feel they are wealthy, or are necessarily jealous of those better off. It’s about whether people feel they have been treated fairly. I think that people have been looking far too long at the granular view alone, and missing the bigger, long-term picture shown in my analysis. People are now seeing this larger picture, and they are starting to realize that Reaganomics, for example, was a bad joke perpetrated on the masses (lower 80%), and that they have lost considerable power over the last four decades (if they ever had any at all). When I was working in water resources, we had a saying…”Water doesn’t flow downhill, it flows towards the money.” And so it is in life today, and people are noticing this disparity in fairness and reacting to it. Their reaction through OWS may be a bit disorganized, but many movements start out this way. But don’t confuse the inability of OWS to develop a clear message with there being an unclear view of income disparity. I believe that the picture I developed on income disparity is a legitimate story, whether or not OWS tells it correctly. The masses are starting to see it and are reacting to it.

    My interest is not in justifying OWS or being an apologist for them. I really didn’t know what to expect when I started this analysis. I often don’t know how I truly feel about something until I write about it. This was for my own edification. These discussions were quite helpful in furthering my understanding of my own thoughts on this, and if anyone else can garner a greater understanding of income disparity from my analysis and our discussions, then all the better. But this really was for me. I had no idea when I started this that I’d be talking about fairness and crony capitalism. But there you have it.
    Now, GO GIANTS!!!!!

  8. Chris Wendt says:

    Quickly I quip: So what we really have here is a fairness disparity?

    Full-blow, verbose response later in the week.

  9. Phil Wendt says:

    In part, yes. I believe that as far as OWS is concerned, I believe that fairness is at the very heart of what is driving their movement. For me, the fairness issue is more speculative, because I’m trying not to get too far from what the data is telling me. The disparity is real, as the data clearly shows, but causality is a bit more complicated. What has happened in terms of income disparity occurred over four decades. The most obvious fairness indicator I can point to is the issue that I mentioned a few times already, and that is that banks (who perpetrated this crime on people through predatory lending practices) got bailed out, but the true victims, including we folks who took no loans but saw our own home values tank, didn’t get bailed out. The 1%ers use their monetary resources to buy influence in congress to their own advantage, where all we have to influence congress is our puny one vote. The political machine works to the advantage of the 1%; again, crony capitalism which is inherently unfair to the masses.

    But, I’ll await your more verbose response later in the week.