Wealth distribution in the US

[Malthus]

You need to know why something happened before you can come up with good fixes.

That is very hard to do.  There are lots of variables to track and there isn't any way to re-reun history as a controlled experiment.

The problem if anything is understated.  It is not just that there is a consistent long-dated trend of increasing income *and* wealth dispersion.  Money incomes of working class strata are actually stagnant and over some periods declining.  And most studies to examine the question also report findings that social mobility (measured in economic terms) has declined. (EDIT Thanks Jake for the map)  This is not a sustainable trend in a democracy.  People can tolerate a certain degree of inequality if they have some reasonable hope that their children can rise to the top.  But if that hope seems improbable, eventually there will be a reaction.

I agree with Berkut that redistribution by taxation seems less than optimal as a solution that treats symptoms over causes.  But I admit I don't have a better solution to offer.  But one thing to keep in mind is that the income and wealth flows we see are not the result of some open system of free competition.  The American economy is laden with distortions to competition and subsidies both open and hidden.  Exactly how this impacts ultimate flows of income and assets and hard to say with precision.  But one could take a guess.

Has anyone done a similar type of study for Canada? My impression is that the situation is nowhere near as severe up here, but I lack hard data.

Who cares about Canada?

Well, as a somewhat analogous country that can be used as a basis of comparison --- you should. 

[garbon]

You need to know why something happened before you can come up with good fixes.

That is very hard to do.  There are lots of variables to track and there isn't any way to re-reun history as a controlled experiment.

The problem if anything is understated.  It is not just that there is a consistent long-dated trend of increasing income *and* wealth dispersion.  Money incomes of working class strata are actually stagnant and over some periods declining.  And most studies to examine the question also report findings that social mobility (measured in economic terms) has declined. (EDIT Thanks Jake for the map)  This is not a sustainable trend in a democracy.  People can tolerate a certain degree of inequality if they have some reasonable hope that their children can rise to the top.  But if that hope seems improbable, eventually there will be a reaction.

I agree with Berkut that redistribution by taxation seems less than optimal as a solution that treats symptoms over causes.  But I admit I don't have a better solution to offer.  But one thing to keep in mind is that the income and wealth flows we see are not the result of some open system of free competition.  The American economy is laden with distortions to competition and subsidies both open and hidden.  Exactly how this impacts ultimate flows of income and assets and hard to say with precision.  But one could take a guess.

Has anyone done a similar type of study for Canada? My impression is that the situation is nowhere near as severe up here, but I lack hard data.

Who cares about Canada?

Well, as a somewhat analogous country that can be used as a basis of comparison --- you should. 

Is this like how we should be able to learn something from Sweden with a pop of 9 million?

[The Brain]

Which actual problems does this wealth distribution cause today?

[MadImmortalMan]

Came across this the other day. Seems somewhat relevant to the discussion:

So apparently the easy way to guarantee upward mobility is to live on top of shale oil deposits.

I posted that shit two days ago.

[fhdz]

Which actual problems does this wealth distribution cause today?

Is this a serious question?

[garbon]

Which actual problems does this wealth distribution cause today?

http://www.psychologytoday.com/blog/wired-success/201102/how-economic-inequality-is-damaging-our-social-structure

[The Brain]

Which actual problems does this wealth distribution cause today?

Is this a serious question?

Yes. Not everyone is an expert on the US.

[The Minsky Moment]

Has anyone done a similar type of study for Canada? My impression is that the situation is nowhere near as severe up here, but I lack hard data.

Funny you should mention that.  One of the blogs I review pretty regularly is Worthwhile Canadian Iniative - it's written by a group of Canadian economists.  I usually skim over the heavy Canadian-centric articles, which typically involve stuff like what the Bank of Canda is doing.    But today's post happened to link to an interesting and pertinent paper that gathered about 300 years of macro-data on wealth-income ratios.  One of the findings is a big increase in Canadian wealth-income ratios since 1970.  That's only a part of the picture of course.

The paper is worth reading for historical interest alone, you can find a link to it here: http://worthwhile.typepad.com/worthwhile_canadian_initi/2013/07/does-the-end-of-growth-mean-the-rise-of-inequality.html#more.  For example, it shows that in 1770, ownership of slaves accounted for about 1/4 of all private wealth in the United States.  However, abolition was accompanied by only a small decrease in the wealth-income ratio: housing and other domestic capital quickly took up the slack. The French chart is also interesting: not surprisingly private wealth during the 18th century consisted primarily of holdings of agricultural land.  More surprising, the French Revolution seems to have moderated the decline in the significance of land to total wealth.  It isn't until 1850 that land as a form of wealth goes into serious decline, but not because of any huge relative growth in private captial formation - rather there is a significant increase in stockpiling foreign assets.

[fhdz]

Which actual problems does this wealth distribution cause today?

Is this a serious question?

Yes. Not everyone is an expert on the US.

I understand. Most people from the US are not experts on the US. But if the rich are getting richer and the poor are getting poorer, which is absolutely and undeniably happening - all data corroborates it - then that means two things: 1) "trickle-down" supply-side economics are not working the way their proponents claim, because real wages for "normal" workers are either stagnant or declining vis-a-vis inflation and 2) this is causing the disappearance of the middle class, which means that the value being generated by higher levels of productivity isn't making it back to the people who are actually doing the producing.

[garbon]

Which actual problems does this wealth distribution cause today?

Is this a serious question?

Yes. Not everyone is an expert on the US.

I understand. Most people from the US are not experts on the US. But if the rich are getting richer and the poor are getting poorer, which is absolutely and undeniably happening - all data corroborates it - then that means two things: 1) "trickle-down" supply-side economics are not working the way their proponents claim, because real wages for "normal" workers are either stagnant or declining vis-a-vis inflation and 2) this is causing the disappearance of the middle class, which means that the value being generated by higher levels of productivity isn't making it back to the people who are actually doing the producing.

None of those are "real" problems in the sense that they aren't actually the problems that stem from inequality (I might be making less of a real salary then someone did in a similar role years ago, but my quality of life is still pretty high so I'd be hard pressed to note that as a problem). I think my link did better at actual problems that individuals/society faces.

[The Brain]

Which actual problems does this wealth distribution cause today?

Is this a serious question?

Yes. Not everyone is an expert on the US.

I understand. Most people from the US are not experts on the US. But if the rich are getting richer and the poor are getting poorer, which is absolutely and undeniably happening - all data corroborates it - then that means two things: 1) "trickle-down" supply-side economics are not working the way their proponents claim, because real wages for "normal" workers are either stagnant or declining vis-a-vis inflation and 2) this is causing the disappearance of the middle class, which means that the value being generated by higher levels of productivity isn't making it back to the people who are actually doing the producing.

Sounds like wealth distribution is a symptom, not a cause.

[fhdz]

Which actual problems does this wealth distribution cause today?

Is this a serious question?

Yes. Not everyone is an expert on the US.

I understand. Most people from the US are not experts on the US. But if the rich are getting richer and the poor are getting poorer, which is absolutely and undeniably happening - all data corroborates it - then that means two things: 1) "trickle-down" supply-side economics are not working the way their proponents claim, because real wages for "normal" workers are either stagnant or declining vis-a-vis inflation and 2) this is causing the disappearance of the middle class, which means that the value being generated by higher levels of productivity isn't making it back to the people who are actually doing the producing.

None of those are "real" problems in the sense that they aren't actually the problems that stem from inequality (I might be making less of a real salary then someone did in a similar role years ago, but my quality of life is still pretty high so I'd be hard pressed to note that as a problem). I think my link did better at actual problems that individuals/society faces.

I've made it about halfway through the article to which you linked, but it seems to be offering the more-detailed version of exactly what I said.

[fhdz]

Which actual problems does this wealth distribution cause today?

Is this a serious question?

Yes. Not everyone is an expert on the US.

I understand. Most people from the US are not experts on the US. But if the rich are getting richer and the poor are getting poorer, which is absolutely and undeniably happening - all data corroborates it - then that means two things: 1) "trickle-down" supply-side economics are not working the way their proponents claim, because real wages for "normal" workers are either stagnant or declining vis-a-vis inflation and 2) this is causing the disappearance of the middle class, which means that the value being generated by higher levels of productivity isn't making it back to the people who are actually doing the producing.

Sounds like wealth distribution is a symptom, not a cause.

It's a symptom of inequality which seems to have been caused by a slow purchase of the lawmaking process by corporate interests for about 30 years now, yes.

[The Brain]

Which actual problems does this wealth distribution cause today?

Is this a serious question?

Yes. Not everyone is an expert on the US.

I understand. Most people from the US are not experts on the US. But if the rich are getting richer and the poor are getting poorer, which is absolutely and undeniably happening - all data corroborates it - then that means two things: 1) "trickle-down" supply-side economics are not working the way their proponents claim, because real wages for "normal" workers are either stagnant or declining vis-a-vis inflation and 2) this is causing the disappearance of the middle class, which means that the value being generated by higher levels of productivity isn't making it back to the people who are actually doing the producing.

Sounds like wealth distribution is a symptom, not a cause.

It's a symptom of inequality which seems to have been caused by a slow purchase of the lawmaking process by corporate interests for about 30 years now, yes.

Just trying to make sure people don't fix a symptom.

[Valmy]

It's a symptom of inequality which seems to have been caused by a slow purchase of the lawmaking process by corporate interests for about 30 years now, yes.

How dare you critisize free speech