The New Rich

[Danmar]

I think the big issue is a reduction in upward income mobility. People will accept being poor if they think they or their kids can improve their financial position through education and hard work. I think most poor people still think this but all studies I have seen paint a picture of decreasing upward mobility. Furthermore, the US doesn't compare very well with the mobility of other OECD countries, Including Canada. Midpack, maybe you can find some data or a graph on this?

 

[Midpack]

I think the big issue is a reduction in upward income mobility. People will accept being poor if they think they or their kids can improve their financial position through education and hard work. I think most poor people still think this but all studies I have seen paint a picture of decreasing upward mobility. Furthermore, the US doesn't compare very well with the mobility of other OECD countries, Including Canada. Midpack, maybe you can find some data or a graph on this?

Sorry, I just had a hot buttered rum with my bride (it's really cold here), so I'm not up to searching for charts anymore. And the neighbors are coming over for MNF. See all ya'll mañana!

Interesting the Druckenmiller info referenced by Theduckguru above, that's the thread I self-censored just a few days ago...pivotal issue for retirees, but politics are inevitable IMO.

 

[daylatedollarshort]

Hey, this is classified information; too difficult to reconcile with the popular polarity of exploiters and victims!

I long to find away to get into some victim class. It's the only way to live in modern America, and likely much of the rest of the world.

Ha

Ha, here is one of my favorite links of all time that may help. It is on how to pay zero income taxes -

ROI: How to Avoid Paying Income Taxes - WSJ.com

Excerpt-

"I spoke to Gil Charney, principal tax researcher at H&R Block's HRB +0.03% Tax Institute, to see how a regular Joe could pull a GE. The verdict: It's more feasible than you think—especially if you're self-employed."

 

[timo2]

I long to find away to get into some victim class. It's the only way to live in modern America, and likely much of the rest of the world.

Ha

All you have to do is declare yourself a victim of something. Or make up your own victim class. all it takes is the proper mindset! (apologies to actual victims of criminal activity)

 

[Theduckguru]

Sorry, I just had a hot buttered rum with my bride (it's really cold here), so I'm not up to searching for charts anymore. And the neighbors are coming over for MNF. See all ya'll mañana!

Interesting the Druckenmiller info referenced by Theduckguru above, that's the thread I self-censored just a few days ago...pivotal issue for retirees, but politics are inevitable IMO.

I thought Druckenmiller's position was interesting. You may notice he excluded any of his wealth from his solution.

 

[imoldernu]

You don't get or are ignoring what those two graphs say. I suppose it's OK to have your opinion formed by your politics, but what does it accomplish? The actual in practice numbers are not only "not quite like that", they are nothing like that.

I guess I don't get it... Am not very smart about money...
I don't have much in politics here though, so it's innocent...

Edit: Anyway... Here's the logic I was looking at, to come up with the comment...
.................................................................................................
In 1963, the top marginal tax rate for a single person filing separately was 90% on amounts over $200,000, so THAT tax on the $1 million would be 90% of $800,000 or $720,000. Assuming that the taxed individual was taxed at 50% for the first $200,000 ... $100,000.... That would leave the net income after taxes
$1,000,000 minus $720,000, minus $100,000 for a total after tax income of $180,000.

50 years later...

In 2013, the top marginal tax rate for a single person filing separately is 39.6% on amounts over $400,000, so THAT tax on the $1 million would be 39.6% of $600,000, or $237,000. Assuming that the taxed individual was
taxed at 30% for the first $400,000, $120,000... That would leave the net income after taxes
$1,000,000 minus $237,000, minus $120,000 for a total after tax income of $643,000.

 

[Meadbh]

I think the big issue is a reduction in upward income mobility. People will accept being poor if they think they or their kids can improve their financial position through education and hard work. I think most poor people still think this but all studies I have seen paint a picture of decreasing upward mobility. Furthermore, the US doesn't compare very well with the mobility of other OECD countries, Including Canada. Midpack, maybe you can find some data or a graph on this?

I'm not sure if this is exactly the information you were looking for, Danmar, but here is the Wikipedia entry on the Gini Coefficient.

List of countries by income equality - Wikipedia, the free encyclopedia

Since the 1970s, Canada's Gini (after taxes and transfers) has risen from 0.304 to 0.324. The US Gini has risen from 0.316 to 0.378. This suggests that income inequality is rising, particularly in the US.

When it comes to upward mobility, the data are mixed, but it appears that being the son of a father who is in the bottom 20% of all earners makes it more difficult to be upwardly socially mobile in the US than in Scandinavia.

Prosperity & Upward Mobility by Country

 

[haha]

I'm not sure if this is exactly the information you were looking for, Danmar, but here is the Wikipedia entry on the Gini Coefficient.

List of countries by income equality - Wikipedia, the free encyclopedia

Since the 1970s, Canada's Gini (after taxes and transfers) has risen from 0.304 to 0.324. The US Gini has risen from 0.316 to 0.378. This suggests that income inequality is rising, particularly in the US.

When it comes to upward mobility, the data are mixed, but it appears that being the son of a father who is in the bottom 20% of all earners makes it more difficult to be upwardly socially mobile in the US than in Scandinavia.

Prosperity & Upward Mobility by Country

Something to consider is that the US has a much more heterogeneous population than any Scandinavian country. The bottom 20% of all earners in Sweden for example is a very different bottom 20% than that which is found in the US.

I despair of anything other than political points ever coming from these random social sound bites. Someday we will be ruled by computers, and iMO they likely will do a better job of it.

Ha

 

[Theduckguru]

Of course! But I guess most of us on here would probably equate the true measure of being rich in terms of happiness vs $s. But on the monetary scale, $250K aint much.

You should give $25K a try, it likely would change your whole perspective.

 

[samclem]

Since the 1970s, Canada's Gini (after taxes and transfers) has risen from 0.304 to 0.324. The US Gini has risen from 0.316 to 0.378. This suggests that income inequality is rising, particularly in the US.

The increase in income inequality is happening in virtually every developed country--countries with strong social welfare nets and ones with weak safety nets, countries with extremely high taxes on the rich and those with flatter taxes. With this type of very broad trend it is logical to look beyond internal national factors for causation. Likely factors:
-- Low-skilled labor is decreasing in value in the developed countries. The low-skilled labor is being done overseas (where the work is resulting in >tremendous< improvements in overall quality of life unseen in their history). A strong back just ain't worth as much as it was 50 years ago in the US (when we had a post-war labor shortage and industrial boom). The remaining low-skill jobs are sought by more people (including legal and illegal immigrants), putting downward pressure on the per-hour wage.
-- Capital has retained its earning power. As the world economy grows, people with money who can put it to work effectively have gotten good returns. Since the people with money are able to make more money, this factor contributes to an increase in income inequality.

 

[haha]

All you have to do is declare yourself a victim of something. Or make up your own victim class. all it takes is the proper mindset! (apologies to actual victims of criminal activity)

I've got one! I'm a victim of the very annoying ideas afloat in the world today.

Somebody give me money!

Ha

 

[Options]

Read it. Wished I hadn't. What a ridiculous "article".

 

[anethum]

Something to consider is that the US has a much more heterogeneous population than any Scandinavian country. The bottom 20% of all earners in Sweden for example is a very different bottom 20% than that which is found in the US.

I despair of anything other than political points ever coming from these random social sound bites. Someday we will be governed by computers, and iMO they will do a much better job of it.

Ha

Here's another chart. Canada is perhaps more heterogeneous than the US these days, and Australia has had a huge influx of non-European immigrants in recent decades. Economic mobility in both of those countries is much less tied to the wealth of the parents than in the US. It's striking to me that even an old world country like France appears to have greater mobility now than the US.

(from the following website which uses 2011 data)
U.S. lags behind peer countries in mobility | Economic Policy Institute

 

[Meadbh]

Here's another chart. Canada is perhaps more heterogeneous than the US these days, and Australia has had a huge influx of non-European immigrants in recent decades. Economic mobility in both of those countries is much less tied to the wealth of the parents than in the US. It's striking to me that even an old world country like France appears to have greater mobility now than the US.

Very interesting chart. Is the US becoming an "old world" country as far as social mobility is concerned?

 

[M Paquette]

Very interesting chart. Is the US becoming an "old world" country as far as social mobility is concerned?

No, the goal is more a restoration of feudal forms and a caste system. The reduction in mobility is handy, of course, but this also needs the limiting of educational opportunities, which higher costs for higher education nicely implement. There's a bit of a feedback mechanism here where limiting education helps cap mobility. At some point we should be able to demonstrate that Demoist systems don't function well in this environment, and move further towards implementing the neo-reactionary's goal of moving all decisions for society into the hands of the aristocracy.

http://techcrunch.com/2013/11/22/geeks-for-monarchy/

It's good to have goals in life. This one is a bit more... unusual than most. (A cookie for the first person to spot the unspoken but likely incorrect assumption these neo-reactionaries are all making...)

 

[Tree-dweller]

And especially, why we like to rank ourselves in terms of dollars income! I consider myself to be rich, in a sense, but my idea of what it takes to be rich has almost nothing to do with income. Having oceans of free time, more than the bare necessities, and feeling completely content with every aspect of life is where it's at IMO. I have that, and let the Donald Trumps of the world eat their hearts out.

Too true. It may have to do with where you came from. As a child of immigrants, having grown up in a very blue-collar neighborhood of a big city, my modest house in a close suburb makes me feel, well, comfortable. If I had grown up a scion of some industrial magnate, my modest house might mean I was a failure in some eyes (not mine). Up-arrow vs down-arrow, I guess.

 

[RobLJ]

Rich

Rich/wealthy obviously are those at the top of the pyramid, so those earning 250k a year clearly rank if you look at the income data, which places a household in the top 5%. Total wealth (net worth) is another matter and a larger fence to jump. The income measure conceals of course the American aristocracy (or rentiers or. . . ) who have enormous investment assets but no "income"--i.e., "carried interest." Or many here on FIRE. Andrew Carnegie and Bill Gates are the point at the top of the pyramid and apparently are what the American wealthy think of when they think of "rich" but somewhere in the top 5-10% qualifies in my mind. Due to a one-time bonus last year for DW, I think we snuck a nose in the camel's tent for at least one year, and I have no doubt that we are wealthy, even if we drive a Subaru.

 

[Malcolm2]

I'm not sure if this is exactly the information you were looking for, Danmar, but here is the Wikipedia entry on the Gini Coefficient.

List of countries by income equality - Wikipedia, the free encyclopedia

Since the 1970s, Canada's Gini (after taxes and transfers) has risen from 0.304 to 0.324. The US Gini has risen from 0.316 to 0.378. This suggests that income inequality is rising, particularly in the US.

When it comes to upward mobility, the data are mixed, but it appears that being the son of a father who is in the bottom 20% of all earners makes it more difficult to be upwardly socially mobile in the US than in Scandinavia.

Prosperity & Upward Mobility by Country

I believe this data is just meaningless. Not useful to compare a country of 315 million people to Canada that has only 34 million.

Far more budding businessmen and others are still trying to immigrate to the U.S. from around the world than to Canada, or any other first world country. Go to a third world country and walk around to where the Embassies are. The Embassy with the longest line for visa applicants will be the American.

By the way, "income equality" is at odds with Capitalism. We are a Capitalist country and have been since the beginning. Thats a good thing.

 

[Rusa]

The nerve of those people! Don't they realize they are just making others feel bad? They need to knock off this hard work, planning, and education stuff - it just leads to inequality, and we can't have that!

-ERD50

Well said.

 

[haha]

Here's another chart. Canada is perhaps more heterogeneous than the US these days, and Australia has had a huge influx of non-European immigrants in recent decades. Economic mobility in both of those countries is much less tied to the wealth of the parents than in the US. It's striking to me that even an old world country like France appears to have greater mobility now than the US.

(from the following website which uses 2011 data)
U.S. lags behind peer countries in mobility | Economic Policy Institute

I won't trade soundbites with you. Whatever you want to believe, go ahead and believe.
These things are complex, and it is my opinion that the only purpose of any of these charts, statements, whatever is political. It is hard to know what a carefully designed medical study shows, how much less certain is some grand social pronouncement made off some questionable observations.

Ha

 

[Malcolm2]

I guess I don't get it... Am not very smart about money...
I don't have much in politics here though, so it's innocent...

Edit: Anyway... Here's the logic I was looking at, to come up with the comment...
.................................................................................................
In 1963, the top marginal tax rate for a single person filing separately was 90% on amounts over $200,000, so THAT tax on the $1 million would be 90% of $800,000 or $720,000. Assuming that the taxed individual was taxed at 50% for the first $200,000 ... $100,000.... That would leave the net income after taxes
$1,000,000 minus $720,000, minus $100,000 for a total after tax income of $180,000.

50 years later...

In 2013, the top marginal tax rate for a single person filing separately is 39.6% on amounts over $400,000, so THAT tax on the $1 million would be 39.6% of $600,000, or $237,000. Assuming that the taxed individual was
taxed at 30% for the first $400,000, $120,000... That would leave the net income after taxes
$1,000,000 minus $237,000, minus $120,000 for a total after tax income of $643,000.

Of course in both cases the person EARNED the $1M. Never actually belonged to the government, or those that didn't work for it right?

Few people actually paid taxes at 90 percent in 1963.

The standard of living and mortality for all Americans is vastly better now than in 1963.

Our various economic booms would have likely never happened it the tax rates were not reduced.

Government spending as a percent of GDP was about 30 percent in 1963, now its 40 percent.

Taking from others to excess so the government can dole it out with political aims is not a recipe for success.

 

[photoguy]

I believe this data is just meaningless. Not useful to compare a country of 315 million people to Canada that has only 34 million.

Far more budding businessmen and others are still trying to immigrate to the U.S. from around the world than to Canada, or any other first world country. Go to a third world country and walk around to where the Embassies are. The Embassy with the longest line for visa applicants will be the American.

I'm not sure why the comparison to Canada is not meaningful. Canada and the US are very similar culturally (as much as two countries can be) and both have a large percentage of the population as immigrants (canada is 20%, US at 14%). The net migration rate is slightly higher for canada (~5.5/1000) than the US (~3.6/1000).

If the US can't be compared to Canada, then what countries should it be compared with?

 

[samclem]

By the way, "income equality" is at odds with Capitalism. We are a Capitalist country and have been since the beginning. Thats a good thing.

Here's a problem: Quite apart from any humanitarian issues, when people "at the bottom" believe neither they nor their children have a chance of getting "to the top", then there is violence and disorder that no amount of police power can put down. And that type of thing usually isn't good for anybody (including those at "the bottom," but especially those "at the top"). I am >definitely< a believer in capitalism and the free market, but these economic systems can only survive if they continue to meet the needs of the society in which they are practiced. It is counterintuitive and a bit ironic, but a limited amount of redistribution (of opportunity, not just wealth) is among the means of assuring this happens. It's a small "tax" on "pure" capitalism that, in the real world, has proven necessary to allow these economic systems to exist. A hungry person is not a rational person, and a person with "nothing to lose" threatens the wealth and wellbeing of everyone around him.


This has more to do with "economic mobility" than "income equality", but some of the issues overlap.

 

[Dwhit]

I guess I don't see why income equality is such a desirable goal. Shouldn't the goal be to find the system that produces the highest benefits for the most people? A village of hut dwellers in the jungle probably has very high income equality, but that does not make their village necessarily the best place to be.

The west has typically tried to organize in the most competitive manner that could lead to the most scientific and economic advances. One could certainly question if this really provides the most happy life, but it does seem to provide the most prosperous.

Income equality sounds like a measure to keep the mobs happy so others can continue their efforts to advance.

 

[jollystomper]

I guess I don't see why income equality is such a desirable goal.

"From each according to his ability, to each according to his needs" (or something like that)