Your Papers, Please.

Comments

1. lonbud - March 21, 2006 @ 6:23 pm

   Disingenuity is the most-used tool in your belt, Michael.

   50% sounds like a pretty decent income gain, even “big” to most minds. Then again, the chinese textile worker who did her good work for 50 cents an hour however many years ago and works today for 75 has enjoyed a 50% gain in her income.

   But even your example of the American economic miracle loses a good deal of its sheen under anything more than a cursory glance.

   The top 40% of American wage earners gained 50% in pay between 1974 and 2004? Well, that’s less than 2% per year, my friend. 60% saw their incomes grow by 35% over the same time span? The blessings of our economy know no bounds! That’s a little more than one percent a year!

   Contrast the bounty enjoyed by our labor force with that of our economy’s corporations: a 766% increase in after tax profits between 1974 and 2004, a more than 25% annual increase.

   That is what I call a “big gain.”

   Put in the context of my industrious chinese textile worker, she’d have gone from 50 cents an hour to 3.83 an hour.

   According to the US Census Bureau, between 1974 and 2001 (last year data reported), as a share of the aggregate income in America, the top 20% of wage earners’ share increased from 43% to 50%; the top 5%’s share went from 16% to over 22%.

   In the same period of time, the entire bottom 80% of the country went from 57% to under 50%. The bottom 60% saw their piece of the pie diminish from 32% to less than 27%.

   I would say that many, if not most Americans are less well-off now than they were in the 70s.

   Some Americans, lots even, are marginally similar to quite a bit better-off; and a growing number (though still quite few as a percentage of the whole) are wildly more well-off than their counterpart members of the society were in the 70s.

   But the disparity in the distribution of modernity’s benefits is clearly skewed away from the many and toward the few.

2. Tam O’Tellico - March 21, 2006 @ 9:16 pm

   M: What’s hilarious here is that roughly 4% of the full-time workers in America work for the national minimum wage, which is an annual gross income of $ 10,700, or $ 9,890 after payroll taxes. Your argument is seriously that these people DON’T SURVIVE ?!?

   Of course, they survive thanks to the saftey net you and your President want to pull out from under them.

   Well, you have proven one thing for certain – you take great pleasure in kicking a very dead horse. If I were you, I’d never mention that absurd $10,000 a year thingy again. But then, I’m not you.

   M: Read the past four years of [Krugman’s] columns; if you can find even THREE accurate forecasts or predictions, I’ll concede this whole argument on the spot. Refering to that error-filled nonsense was your first mistake.

   I suppose that last is what passes for proof in your world – are the statistics accurate or not? If not, where’s yours on that subject?

   BTW, how about if you find any competent economist – that doesn’t include free-market fanatics – who seriously accepts the notion that your President’s massive tax cuts pay for themselves. I won’t hold my breath.

   M: I’d particularly like you to address this point that I made on March 13th: Further, it’s SIMPLE to join the top 20% of Americans. There are no gatekeepers, it’s all up to individuals. Race matters, but it’s merely a hurdle, not a wall. There are plenty of minorities in the top 20%.

   I assume you’re referring to guys like Clarence Thomas, who we all know never benefitted from govt programs for the bottom 20%. But you’re absolutely right; it’s so simple – at least in your mind. It amazes me that with your plethora of statistics you can’t comprehend basic math. Yes, any particular individual has a good chance of becoming one of the 20%, particularly if he is white, male, has a good mind and good connections. In fact, if he has all that going for him, he doesn’t have to even work very hard.

   But do the math. By definition, not everyone can be among that 20%, and by definition 20% will always be on the bottom. The difference between your position and mine is that you’re perfectly content to let them suffer, and I say that the 20% on top not only has a moral obligation to mitigate against their plight, but that it is in their self-interest to do so.

3. lonbud - March 21, 2006 @ 9:48 pm

   I think it telling, Michael’s coy neglecting to address Tam’s suggestion that his lean years in Colorado, Kansas, and North Carolina were spent at Fort Carson, Fort Leavenworth and Fort Bragg.

   It’s clearly absurd for vast numbers of people in this country — adults with even only their lonely selves to support, not to mention a loved one, a dependent — or a hardworking, god-fearing, family of four dutiful supplicants at the teat of consumer capitalism — to live “comfortably” or “adequately” on anything within twice $10,000 a year.

   I don’t see the point in picking at the carcass of that dead horse.

4. Jeff Guinn - March 22, 2006 @ 5:10 am

   lonbud:

   I would say that many, if not most Americans are less well-off now than they were in the 70s.

   That statement is completely at odds with the economy as it exists today. For any of your numbers to make sense, you must take the CPI as given. However, as I noted well above, the CPI overstates inflation, sometimes significantly so.

   That is especially true over time, even relatively short time spans. My example of a $5500 dollar car then, and a $17,000 dollar car now is an example of hedonistic inflation. Yes, the price is higher, but the commodity in question has also changed, and some of that change is reflected in the higher price, thereby overstating inflation.

   With respect to cars, the number of weeks an average person must work to buy the average car has edged slightly upward. Since time is as constant a thing there is, then that might be a good proxy for inflation.

   But even that isn’t enough, because, contrary to your assertion, the economically useful life of a car has doubled in the same period, meaning fewer purchases over time, and higher resale values. As well, ownership costs are way down because modern cars require so much less maintenance than those of even 30 years ago.

   Cars are just one element of the economy, yet they are symptomatic. Virtually all economists believe the CPI overstates inflation by at least 0.75%; many believe almost double that. Today, any attempt to factor out hedonistic inflation leads the conclusion we are experiencing deflation.

   Anyway, reducing the CPI by 0.75 to 1.5% per year reveals a totally different picture of real income, much more consistent with our economies behavior today.

   Tam:

   Mr. Herdegon’s position is that few of the bottom 20% are actually suffering in any meaningful sense of the word, and that people in that 20% can follow up on a few very simple decisions and get out of that 20%. Just as those in higher brackets can fail to make those decisions and fall into the bottom 20%. Far more than any society preceding it, simple merit plays a significant part in material success.

   Your assertion that people in the top 20% have a moral obligation may be true. But as I have wondered before, what would you do to impose that obligation?

   Other countries have tried massive income redistribution — never to a good end.

5. Michael Herdegen - March 22, 2006 @ 2:05 pm

   …are the statistics accurate or not? If not, where’s yours on that subject?

   I just demonstrated that they are NOT accurate – Krugman was off by a factor of four, a stunningly incompetent performance.
   Further, upthread, I showed why even if he had been correct, it was irrelevant.

   But you’re absolutely right; it’s so simple – at least in your mind.

   Why do YOU think that it’s not simple ?
   Ridiculing my position isn’t the same as providing your own.

   Why is it wrong to say that most adult Americans can improve their own life situations, but that most choose not to do so ?

   You’re absolutely correct to say that, by definition, there will always be a bottom 20%, but the notion that they “suffer” is incorrect.
   If the bottom 20% are suffering in ’06, then in ’74 the bottom 30% were suffering, for in real, constant dollars, the threshold income for the bottom one-third in ’74, and the bottom one-fifth in ’04, was the same.

   So we’re making progress, no ?

   I think it telling, Michael’s coy neglecting to address Tam’s suggestion that his lean years in Colorado, Kansas, and North Carolina were spent at Fort Carson, Fort Leavenworth and Fort Bragg.

   It is telling.

   And here’s what it illustrates: Tam makes assumptions or suggests things, but very rarely bothers to find out if those assumptions are accurate. For instance, he’s never bothered to ask me if, in fact, I was referring to living on those military installations, or even if I’ve ever lived on them.

   For the record: I have lived on Fort Bragg, Fort Carson, and Fort Riley, but was not referring to my time in the military when speaking of living cheaply.

   Another example: Tam writes Pensacola – isn’t that another military base? I assure you, that is the only place in Pensacola you can live well for $10,000 a year. […]
   As for the Space Coast, it hasn’t been a cheap place to live and hasn’t been since the very first astronauts were proving they had the right stuff.

   Both of those statements are completely incorrect and without merit.
   Tam could have asked me about my experiences actually living on Florida’s Space Coast, or found someone else with experience there to ask, or looked it up on-line…
   But, he prefers not to learn anything which might contradict the fragile and carefully constructed fantasy in which he lives.

   It’s clearly absurd for vast numbers of people in this country […] to live “comfortably” or “adequately” on anything within twice $10,000 a year.

   Yes, the fact that you think that people can’t get by on $ 20,000 a year [!!!] goes a long way towards explaining why you think that we’re in another Great Depression, and why you’re puzzled about the lack of discontent among the American populace.

   Further, your assertion that people lived better in the ’70s is…
   Bizzare, at best.

   I suggest that you find someone who actually lived through the ’70s as an adult, and ask them if they’d like to go back.

   I also find hilarious your notion that a 50% gain in income isn’t worthwhile, because some other group got more.
   Talk about cutting off your nose to spite your face.

6. Jeff Guinn - March 22, 2006 @ 3:15 pm

   Mr. Herdegen:

   I suggest that you find someone who actually lived through the ’70s as an adult, and ask them if they’d like to go back.

   Been there, done that, don’t want to do it again.

7. lonbud - March 22, 2006 @ 11:45 pm

   it’s very simple, michael:

   where the chinese textile worker gains a 50% increase in income over the same period of time the corporations whose profits depend on her labor gain over 700%, there is a fundamentally unfair balance of payments at hand.

   your argument resolves to: quit your bitchin’ — at least you aren’t a slave.

   clearly life is better with interest rates at 4% than it was when they were at 24%, but for the vast majority of working people in America, their after-tax leisure dollars went farther and bought better goods in the 70s than they do today. in fact, today, the vast majority of American workers don’t even HAVE any after-tax leisure dollars. they are spending money lent to their creditors by foreign central banks.

   i hate to go here, but i’m going to try and show specifically how impossible it is for even a single person to live “comfortably” on $20,000 a year.

   20000 – 2639 1040 tax = 17,361
   17361 – 1530 payroll tax = 16,101
   16101 – 4800 housing = 11,301 (400 per month rent)
   11301 – 600 utilities = 10701 (50 per month utilties)
   10701 – 7300 food = 3401 (20 per day for food)
   3401 – 540 transportation = 2861 (45 per month transportation)
   2861 – 1200 household incidentals = 1661 (100 per month)
   1661 – 700 sales tax = 961
   961 – 500 clothing = 461
   461 – ? newspapers, magazines, movies, telephone, healthcare?

   this is a budget with no frills, no entertainment, no froth, no freedom. and you couldn’t even make it work in any town in America with more than 50,000 people in it.

8. Michael Herdegen - March 23, 2006 @ 3:28 am

   Well, I am impressed.

   Your argument resolves to: quit your bitchin’ — at least you aren’t a slave.

   Ha !

   That’s not quite it, but close enough.
   It’s more like “the rich have been getting rich faster than everyone else, but everyone else has been getting richer too. (So quit whining).”

   The thing is, you are focusing exclusively on the least among us, and I guess my most basic point is that the average American is doing well, and better all the time.
   Five out of six Americans want for no basic need, and most have more than plenty.

   That’s why we’re wrangling over the bottom 20%, of which “Jane 20K” is almost part.

   20000 – 1400 1040 tax = 18,600 [1]
   18600 – 1530 payroll tax = 17,070
   17070 – 3600 housing = 13,470 (300 per month rent, w/roommate)
   13470 – 900 utilities = 12,570 (75 per month utilities)
   12570 – 3650 food = 8,920 (10 per day for food)
   8920 – 600 household incidentals = 8,320 (50 per month)
   8320 – 320 clothing = 8,000
   8000 – 540 transportation = 7,460 (45 per month)
   7460 – 4250 health insurance = 3,210 (Humana Large Group PPO, 85 per week)
   3210 – 280 sales tax = 2,930 (3500 * 8%) [2]
   2930 – 430 state income tax = 2,500 ($ 0 – $ 1000; 430 is an arbitrary mid-range number) [3]

   So you’ve got $ 200/mo to play with, and that’s if you actually spend $ 10/day on food. While you can easily do that by eating one meal a day at a mid-range restaurant, or three meals a day of fast food, you could also spend only $ 3/day by cooking at home and brown-bagging your lunch.

   So really, you’ve got $ 200 – $ 400 to play with.
   You could get a car, or your own apartment…

   You can certainly afford life insurance, an IRA, newspapers, magazines, movies, a telephone, computer, and ISP, not to mention cable TV.

   [1] IRS Publication 501, Exemptions, Standard Deduction, and Filing Information

   [2] Comparison of State and Local Retail Sales Taxes
   Only 18 states tax groceries, and 30 states have a maximum State+Local Rate of under 8% – only 6 have a maximum rate of 10% or more.

   [3] STATE INDIVIDUAL INCOME TAXES
   (Tax rates for tax year 2006 — as of January 1, 2006)

9. Jeff Guinn - March 23, 2006 @ 4:57 am

   lonbud:

   And a life far more comfortable than most of the rest of the world enjoys.

   Also, I think your food amount is double what someone could really do if they prepared all their meals at home. My family of four doesn’t spend much more than 20/day.

   So make your bottom line over $2100.

10. lonbud - March 23, 2006 @ 11:55 pm

    Yep. Gotta wear shades.

11. Tam O’Tellico - March 27, 2006 @ 10:17 pm

    I see Jeff and Michael are still surviving quite nicely on $10,000 a year. Must be they’re still feeding on the rotting carcass of that dead horse they keep kicking.

    For the record, I too lived through the 70s, and I am certainly not excited about living thru that again.

    But I have no interest in comparing life in the 70s with life in the Oh-Oh’s, so please let us not waste any more time slapping each other around with competing statistics. M/J believe the glass is half-full, and say the rest of us are pessimists for believing it is half-empty. I say whether the glass is half-full or half-empty, it has a gaping hole in the bottom, and we are being led by those who, if they recognize that fact, don’t seem to care.

    As even Jeff seems to be acknowledge, members of a civilized society have a moral obligation to care for each other, an obligation which logically and fairly must fall heavier on those who have the most to share. Instead, this administration grants massive tax cuts to the wealthy in the face of war and disaster.

    Whether your a Liberal or a Conservative, you ought to agree that is worse than stupid – it is tragic for us and for future generations. I am still waiting for the list of prominent economists who disagree with that assessment.

    Unfortunately, this President is not a prominent economist, and he refuses to listen to those who are. Either that or he is incapable of comprehending the simple truth.

    Now, I don’t wish to ascribe his inadequacies necessarily to meanness – perhaps his priviliged upbringing left him incapable of understanding. Or perhaps he truly believes, for instance, that it is wise to hang the fortunes of older poor folks on the same corporate forces Michael claims are, and ought to be, “value neutral”. It is not value neutral to let the poor starve, but that will be the consequence of reversing the New Deal, and anyone who can’t see that is a fool.

    Whether one chooses to call it enlightened capitalism or socialism, there must be a system designed to distribute income more evenly or a system designed to redistribute the excessive income gained by a few. Instead, our present system is designed to determine which breed of pig gets to hog the trough.