2007-09-15

America sharply divided into "haves" and "have nots"

From the department of DUH:
Over the past two decades, a growing share of the public has come to the view that American society is divided into two groups, the "haves" and the "have-nots." Today, Americans are split evenly on the two-class question with as many saying the country is divided along economic lines as say this is not the case (48% each). In sharp contrast, in 1988, 71% rejected this notion, while just 26% saw a divided nation.

Of equal importance, the number of Americans who see themselves among the "have-nots" of society has doubled over the past two decades, from 17% in 1988 to 34% today. In 1988, far more Americans said that, if they had to choose, they probably were among the "haves" (59%) than the "have-nots" (17%). Today, this gap is far narrower (45% "haves" vs. 34% "have-nots").

...

The increased prevalence of both views -- that the country is increasingly divided along economic lines and that a given individual is on the wrong side of that divide -- finds support in national economic data. As numerous studies have demonstrated in recent years, income gains over the last few decades have been heavily concentrated at the very top of the income distribution. For example, in an update of their earlier study of long-term U.S. income trends, economists Piketty and Saez compute that the share of income going to families in the top 1% of the income scale has doubled from 8% in 1980 to 16% in 2004 even excluding capital gains.
It's attitudes and statistics like this which show that, if the market is God, then God is cruel, unthinking and inefficient.

7 comments:

BLBeamer said...

Cruel, unthinking and inefficient

Funny, that's how many people view the Scriptural doctrine of election, too.

Over the past two decades, a growing share of the public has come to the view that American society is divided into two groups, the "haves" and the "have-nots.").

The “haves vs. have nots” attitude described in the article is more than just twenty years old, for crying out loud. An American politician, William Jennings Bryan, gave a famous speech (“The Cross of Gold”) about 100 years ago on that subject. The labor movement and the Progressive movements in the US were to a large extent motivated by that view – and it wasn’t new then. It goes all the way back to Cain and Abel.

Not to say that there aren’t truly “have nots” in American society, but I can’t escape the feeling that the results of this study is more evidence of the universality of envy, than it is the cruelty or inefficiency of markets.

One Salient Oversight said...

Real Median Income has not increased at all since 2001. Perception, in this case, has its basis in hard facts.

BLBeamer said...

The same study says per capita income has grown.

I'm no fan of many of the economic policies of most of the administrations/Congresses in my adulthood, so I wonder why you feel that median income is such an important indicator compared to other measures?

One Salient Oversight said...

Average or per capita simply takes the number and divides it.

Median is when you look at the figure at the 50th percentile.

Eg:

Person A: earns $100,000.
Person B: earns $30,000.
Person C: earns $20,000.

Average income = $50,000
Median income = $30,000

If Person A then earns more, while persons B & C do not, then the average (per capita) income rises, while the median income does not.

Back to reality:

The stats show that Median income has not risen in the United States while per capita income has.

It means, quite simply, that economic growth has been enjoyed only by the top 50% of income earners while the bottom 50% have had no benefits at all.

Hence the conclusion that America is divided into "haves" and "have nots"

BLBeamer said...

Once again, my apologies to you. I worded my question poorly.

I understand the difference between average and median incomes and how they are calculated.

When I asked my admittedly cryptic question, what I should have asked was, "Why do you think that median income shows that markets are cruel or inefficient?" Or is that what you even meant to say?

I perused the published pamphlet on which this article was based, and it shows pretty clearly that the markets, while they may be considered heartless by some, are anything but inefficient or capricious: those who do not develop education or skills which the market highly values; or who do not get married and stay married; or who have illegitimate children, end up in the lower half of the income curve.

When I said in my earlier post that it appeared that envy was manifesting itself, I simply meant that many of these self-described "have nots" see the market reward people who offer what the market values and are envious of that.

I felt the fact that these people describe themselves as have nots in comparison to others was an interesting bit of data.

One Salient Oversight said...

I'm approaching this subject as one who supports the notion of social-market economics - that is, that an effective and efficient medium be found between letting the market rule and having the economy centrally planned (as in Communism).

The fact that, since 2001, median incomes have gone nowhere means that the bottom 50% of income earners have not been advantaged by the economic growth in that period. Figures prior to this (say, during Clinton's era) did show that median incomes rose as the economy rose.

The point I am trying to make is that the market can oftentimes be inefficient in its distribution of resources. One reason why Communism collapsed was because those who controlled production were inefficient as well.

As to your point about the "have nots" displaying envy, you need to remember that the percentage of people who have felt disenfranchised has increased considerably. As the article I linked to points out, in 1988 those who described themselves as the "have nots" made up a very small percentage of the population.

So, on the one hand, you have economic statistics showing median incomes going nowhere (quantitative evidence). And, on the other hand, you have a poll that suggests that 48% of people think they fit into the "have not" category (qualitative evidence).

The two are obviously linked.

Whenever the marketplace fails to provide real flesh and blood human beings with meaningful employment and a respectable level of material wealth, then a market failure is occurring.

BLBeamer said...

I understand the position you hold, it's not uncommon. I am not one of those doctrinaires who believes that markets are perfect or that market failure is impossible - nothing involving humans can be so. But I do have a pretty high standard for what I consider market "failure". And while there may be what you consider "inefficient distribution of resources", compared to any alternative, markets are the least inefficient.

If the US had a laissez-faire labor market, then I would tend to lean toward your opinion, probably. But we do not, not by a long shot. Given our political class from President Bush on down, any "improvements" that could possibly be enacted would only make things worse. I suspect the same is true of any government peopled by folks with conflicting goals and incentives.

Given that the study pretty clearly explains that those who provide what the market rewards (viz., not divorced; education/skills; no illegitimate children) are in the upper two quartiles, and those things are available at almost no cost other than opportunity cost, what more could be done to make the have nots into haves? I have some ideas. I would be interested in yours.

By the way, perhaps I missed it, but I would have been interested to see how many of those who felt they were have nots actually fell in the upper 50% of the income curve.