Wealth Disparity

rsmarken · December 1, 2010, 5:40am

[From Rick Marken (2010.11.30.2140)]

Kenny Kitzke (2010.11.30.23:00EST)--

Doctor Rick, how about taking your own advice and medicine?ï¿½ Instead of
fussing and writing about the wealth disparity you wail about
onï¿½CSGNET

I fuss, write and wail about the wealth disparity in the US because I
find it not only morally repugnant but also economically disastrous
and completely unnecessary.

But what I would really like to know is why you -- a confessing Xtian
no less -- seem to be, if not positively pleased, at least perfectly
comfortable with the level of wealth disparity in the US. After you
have your nice night's sleep perhaps you could explain how you are
able to control for what seem to be two rather incompatible system
concepts: Christianity and unregulated free market capitalism.

Best

Rick

···

--
Richard S. Marken PhD
rsmarken@gmail.com
www.mindreadings.com

Martin_Lewitt · December 2, 2010, 1:54am

[Martin Lewitt Dec 1, 2010 1846 MST]

[From Rick Marken (2010.11.30.2140)]

Kenny Kitzke (2010.11.30.23:00EST)--

Doctor Rick, how about taking your own advice and medicine? Instead of
fussing and writing about the wealth disparity you wail about
on CSGNET

I fuss, write and wail about the wealth disparity in the US because I
find it not only morally repugnant but also economically disastrous
and completely unnecessary.

But what I would really like to know is why you -- a confessing Xtian
no less -- seem to be, if not positively pleased, at least perfectly
comfortable with the level of wealth disparity in the US. After you
have your nice night's sleep perhaps you could explain how you are
able to control for what seem to be two rather incompatible system
concepts: Christianity and unregulated free market capitalism.

Upon closer inspection, perhaps the compatibility is explained by a shared commitment to nonviolence and by orthogonal foci, Christianity is concerned with the spiritual realm and capitalism with the material realm. Since Christianity could tolerate master/slave relationships and forgive sins like adultery and false witness, mere wealth disparity would seem to be a minor concern. especially when most of the wealthy provide employment, products and services to others.

regards,
Martin L

···

On 11/30/2010 10:40 PM, Richard Marken wrote:

Best

Rick

Kenneth_Kitzke_Value · December 2, 2010, 5:19am

[From Kenny Kitzke (2010.12.01)]

I will answer why there is no conflict between being a Christian and not worrying about wealth disparity. You added the idea of “unregulated free market capitalism” which I did not mention.

First, the big picture. Christ himself said in Mat. 26:11, “For you have the poor with you always,” This is historically true and perfectly natural. Christ came to give the gospel of eternal life to the poor; not to give them monetary wealth in this short mortal sojourn. He met basic needs like feeding the hungry miraculously but He did not put a gold coin in their lunch bag to buy some better luxuries.

On the other hand, Christ would encourage individuals with excess wealth to willingly give to those in need. The point is willingly; not coercively as in governmental taxation and redistribution as the governmental sees fit. Compassion and self denial is a good work that I believe will be rewarded in the world to come.

Further, Paul told Christ’s Gentile disciples in 1 Cor. 13: 3 that if “I bestow all my goods to feed the poor, …but have not love, it profits me nothing.” So, if you help the less fortunate with every excess $, not out of love for them, but to feel good about your benevolence or to be praised by men for your generosity, it is not profitable work.

Now consider two other points. Helping those in true need is a Christian obligation as one is able. Helping a loafer who prefers begging to work is not. For scripture says, “No work, no eat.” I have no compulsion to help some street person with an unemployment check, to avoid work and to buy booze or drugs, when down the street is a “help wanted” sign at a diner.

Lastly, the command to tithe was something required of the rich AND the poor. And, it was on an equal percent basis. That makes more moral sense to me than having the rich give proportionately more than others even those who give nothing. Christ noted the story of the woman who gave her widow’s mite while others merely gave out of their abundance. It is one of the most touching stories in the scripture. It speaks of give and sacrifice being more noble than get and enjoy the fruits of others. I ask you why you don’t moan about the relatively poor people who take and take but never give? Where is the ethics in that?

Well, I could go on and on about how God instructed the more fortunate in the theocracy of Israel to help the less fortunate. For example, they would not harvest the corners of their fields so that the poor could glean food to eat. Yep, the poor still had to work to eat.

I could show how the most righteous men of the bible were often the most wealthy because they were blessed by God. It was not just how smart they were or how hard they toiled as you seem to think is the key variable in income.

Neither God nor His Son was concerned about wealth disparity in a nation and neither am I as a Christian. The Bible tithe for Israel was the first 20% of your increase every year and an additional 10% each third year for everyone; not just the rich. That is why the Pharisees tithed on their mint seeds. I like this system concept and have no conflict with it. I believe that something like 97% of those below the poverty line in the USA have toilets, color TVs, etc., What do you suppose the truly poor of the world without food, shelter, clothing or plumbing would think about your immoral plea and concern about wealth disparity for the poor in America?

Life in Christ is more than worrying about physical wealth. It’s another reason why God’s children should have little concern about wealth at all, much less about wealth disparity. These mammon matters are all trumped by the weightier matters of the law and life. Thinking of those things lets me sleep sound at night without any conflict.

I feel like a preacher and am not sure it is appropriate here on CSGNET. But, you asked for it! I doubt if you will agree but I hope you understand my hierarchy better. I am too tired to go any further. If you want to dig into this deeper, perhaps it would be best to communicate privately and not bore everyone else.

Good night and shalom.

Kenny

In a message dated 12/1/2010 12:40:54 A.M. Eastern Standard Time, rsmarken@GMAIL.COM writes:

···

[From Rick Marken (2010.11.30.2140)]

Kenny Kitzke (2010.11.30.23:00EST)–

Doctor Rick, how about taking your own advice and medicine? Instead of
fussing and writing about the wealth disparity you wail about
on CSGNET

I fuss, write and wail about the wealth disparity in the US because I
find it not only morally repugnant but also economically disastrous
and completely unnecessary.

But what I would really like to know is why you – a confessing Xtian
no less – seem to be, if not positively pleased, at least perfectly
comfortable with the level of wealth disparity in the US. After you
have your nice night’s sleep perhaps you could explain how you are
able to control for what seem to be two rather incompatible system
concepts: Christianity and unregulated free market capitalism.

Best

Rick

Richard S. Marken PhD
rsmarken@gmail.com
www.mindreadings.com

Kenneth_Kitzke_Value · December 7, 2010, 11:42pm

[From Kenny Kitzke (2010.12.07)]

Will the real Rick Marken please stand up? See below. On December 12 you claimed to Martin L. that, “But my objections to wealth disparity are economic, not moral.” But, on November 30 you wrote to me that, “I fuss, write and wail about the wealth disparity in the US because I find it not only morally repugnant but also economically disastrous and completely unnecessary” See proof below. Your words are as informative as Department of Commerce data. You went on to question my moral beliefs that a Xtian (taken as an insult) could not be concerned about such a disparity by saying, “But what I would really like to know is why you – a confessing Xtian no less – seem to be, if not positively pleased, at least perfectly comfortable with the level of wealth disparity in the US.” I answered that from a Biblical standpoint.

You did not ask me further about the economic impact of Wealth Disparity in the US which you now seem to perceive as your prime gripe. Since you keep grinding away at Martin L’s (did I get the possessive right Bill?) economic and moral interpretations, I will jump back in.

Here are a few observations:

It is essential to distinguish between earnings from labor and wealth. I recall that Martin T. was questioning Martin L. about his definition of wealth. I think you and Martin T. should also define wealth and how the charts you have been presenting relate to wealth. Is GDP a measure of wealth or of income? Are we discussing a disparity in weatlh or in income? Which one touches most on morality? Which one touches most on economics?
In any society or nation of people, there has always been a disparity in income and in wealth among individuals within the society or nation. It is called a distribution. And, statistically, natural phenomena, including those including people, tend to obey a empirical principle memorialized by Vilfredo Pareto (an Italian economist, no less, and scientific social theoretician, to be noted by Kent). Called the Pareto Principle and better known as the 80/20 Rule. I have used it with much success in the improvement of human productivity and the quality of output. It is a good starting point unless you have data that shows a different distribution. A measured fact that 20% of the USA population owns 80% of the wealth or earns 80% of the income would not be any surprise. Nor would it be anything requiring forced redistribution by government primadonnas as Rick contends will yield a greater economy for that nation (setting the morality issue aside).
Statistically, dealing with the relative wealth or income of the distribution’s dispersion tails (in a relatively normal curve distribution) is a rather phantom issue. The wealth of a nation is measured by central tendency or mean. If the 20% of the population around the mean (the middle class), increase their wealth by some known %, the effect on the mean will be far greater than an effect of a similar % increase in one or even both distribution extremes.
While governmental control or coercion can decrease the wealth disparity by taking wealth from the high end population and redistributing it to the low end, that will not change the mean one twit. If by freedom of action, including working harder, being more innovative and creative, or by investing smarter, the middle class can increase their income and wealth, the mean can rise whether the wealth disparity at the extremes increases or decreases.
I think this freedom, found in this national experiment called the USA to a greater degree than socialized or communistic economic systems, is a significant reason for how the USA could become the wealthiest nation in the world in a couple hundred years with less than ten generations of people.

If a socialized nation like Sweden, with a lower disparity in income and wealth was a better way to live, I would think there would be a huge migration over the last 50 years of citizens moving from the USA to Sweden. Check out the data to see if this is the case. How many Swedes in the USA or Canada can’t wait to emigrate back to Sweden? From the Swedes I know personally, they go to Sweden to visit. They prefer to live here in the USA and raise their families here where freedom is a rich blessing that can’t be measured just in salaries. Given the changes our President sees as improvements in America, they may decide to take their USA acquired wealth back to Sweden and horde it there where at least the skiing is free and as pleasurable as in the USA. A little tongue in cheek while I still am free to say it. Bjorn and Dag could provide some rebuke or some give and take I suppose.

[From Rick Marken (2010.12.06.2230)]

Martin Lewitt (Dec 6, 2010 1731 MST)–

it doesn’t mean that the disparities were bigger then, just that those positions are possibly defensible, given hedonic considerations.

They are defensible no matter what. If you want to defend huge wealth disparities go for it. That has nothing to do with whether they exist or not.

Despite charts of inflation adjusted dollars, the wealth disparity between a poor American and an average sub-Saharan African may well be greater than that between the poor American and the billionaires.

I doubt it, but if that makes you feel better about egregious wealth disparity, go for it. But my objections to wealth disparity are economic, not moral. In my model of the economy, the economy works better when wealth disparity is relatively small. How small “small” is is a question for research.

In a message dated 12/1/2010 12:40:54 A.M. Eastern Standard Time, rsmarken@GMAIL.COM writes:

···

[From Rick Marken (2010.11.30.2140)]

Kenny Kitzke (2010.11.30.23:00EST)–

Doctor Rick, how about taking your own advice and medicine? Instead of
fussing and writing about the wealth disparity you wail about
on CSGNET

I fuss, write and wail about the wealth disparity in the US because I
find it not only morally repugnant but also economically disastrous
and completely unnecessary

MartinT · December 8, 2010, 4:47am

[Martin Taylor 2010.12.07.23.15]

            [From Kenny Kitzke

(2010.12.07)]

  It is essential to distinguish between earnings from labor and
wealth. I recall that Martin T. was questioning Martin L. about
his definition of wealth. I think you and Martin T. should also
define wealth and how the charts you have been presenting relate
to wealth.

I don't see why you ask me to provide a definition of wealth. I've

been asking for a definition, because I don’t think I know of a
satisfactory one. Is wealth related to money at all, completely, or
partially? I give my answer at the end of this message.

  Is
GDP a measure of wealth or of income?

Technically, I believe neither. If I understand it correctly, it is

an agreed statistic that represents the volume of non-barter
transactions reported to the government statisticians, and it is
measured in dollars.

  Are we discussing a disparity in weatlh or in income?  Which one
touches most on morality? Which one touches most on economics?

Good questions. To answer them requires some preliminary work,

including an agreed definition of wealth and of principles of
morality. There’s no point arguing whether X is moral if the
contestants disagree on what to be moral means. (Personally, I think
that when a person’s power to control their perceptions is largely
deepndent on their interactions with the society as a whole, as is
the case for everyone in an industrialized area, it is immoral for
any one person to have a very much greater power than any other. I
also realize that for the development of the structures that
increase the power of everyone, it is necessary for some people to
have much more power than others. Does that mean thatthe powerful
people are more wealthy? Is that a component of Martin L’s hedonic
components of wealth? I don’t know).

I realize most versions of economics deal primarily with money, but

I’m not sure that this emphasis will ultimately prove reasonable.

              Statistically, dealing with the relative wealth or
income of the distribution’s dispersion tails (in a
relatively normal curve distribution) is a rather
phantom issue. The wealth of a nation is measured by
central tendency or mean. If the 20% of the
population around the mean (the middle class),
increase their wealth by some known %, the effect on
the mean will be far greater than an effect of a
similar % increase in one or even both distribution
extremes.

If wealth refers to the ability to direct the flow of money, the

distribution is very far from normal. I doubt it’s normal even on a
logarithmic scale. The mean is a measure you could use, but it would
be about as much affected by a Bill Gates adding 1% to his income
than by a million people at the bottom of teh scale adding 1% to
theirs. If you want a central tendency measure, the median is
better. But more fundamentally, on what basis would you say that the
wealth of a nation is measured by a central tendency at all?

              While governmental control or coercion can decrease
the wealth disparity by taking wealth from the high
end population and redistributing it to the low end,
that will not change the mean one twit.

One whit, I suspect you mean. But I'm not at all sure you are right.

All those people who would add a little to their disposable income
might create demand, which creates jobs, which would regenerate the
“wealth” taken from the rich in taxes. At least that’s a plausible
outcome, even if we have no way to tell whether you are right, this
alternative is right, or something else entirely would happen.

Anyway, if you want my answer to "what is wealth", I have to give a

very crude first approximation to an answer: that wealth is the
ability to control your perceptions and the power to do so. The more
perceptions you are able to control, the wealthier you are. This
answer correlates strongly in an industrialized country with the
ability to get one’s hands on money, but it intrinisically
incorporates Martin L’s hedonic variables. As an answer, I’m sure it
needs a lot of refinement, but it will have to do for a start. If my
answer comes anywhere near being useful, then wealth is
indistinguishable from freedom, since freedom is explicitly the
ability to control one’s perceptions.

I suspect that most people, whether you call them socialist,

conservative, libertarian, or whatever, woudl agree that more
freedom for more people is a good thing. The only ones I would
expect to differ would be those who already have great freedom –
the rich, the dictators, the power-brokers. All most of us disagree
on is what kind of social structure leads to more freedom for more
people. But I suspect we agree on the objective.

Martin

rsmarken · December 8, 2010, 5:38am

[From Rick Marken (2010.12.07.2140)]

Kenny Kitzke (2010.12.07)]

Will the real Rick Marken please stand up?

Here I am, Kenny. Over here, by the Darwin fish;-)

On December 12 you claimed to Martin L. that, "But my objections to wealth
disparity are economic, not moral." But, on November 30 you wrote to me
that, "I fuss, write and wail about the wealth disparity in the US because I find
it not only morally repugnant but also economically disastrous and completely
unnecessary"

Sounds serious. What's the charge?

You went on to question my moral beliefs that a Xtian
(taken as an insult)

Gee, I'm sorry. I had no idea that you would take my assumption that
you are a Christian as an insult. Or was it my abbreviation, Xtian,
that was insulting? Do you find it insulting when people refer to
Xmas?

could not be concerned about such a disparity by
saying, "But what I would really like to know is why you -- a confessing
Xtian no less -- seem to be, if not positively pleased, at least perfectly
comfortable with the level of wealth disparity in the US."

What's wrong with that? I've read the gospels (and seen "Jesus Christ
Superstar") I guess I developed this image of Jesus as a person who
was not a particularly big fan of greed.

I answered that from a Biblical standpoint.

Yes, and thank you.

You did not ask me further about the economic impact of Wealth Disparity in
the US which you now seem to perceive as your prime gripe. Since you keep
grinding away at Martin L's (did I get the possessive right Bill?) economic
and moral interpretations, I will jump back in.

Great to have you.

Here are a few observations:

It is essential to distinguish between earnings from labor and wealth.

Excellent point! Earnings from labor (and I include all management
and CEO pay in that category) is "income"; "wealth" is income plus
assets.

The graph I presented was "income" disparity varying over time. A
graph of wealth disparity would probably look pretty similar (in terms
of time changes in the proportion of wealth controlled by the top
.01%, though the top .01%, which currently gets about 6% of income,
probably controls considerably more that 6% of the wealth (since lower
income people have little or no wealth).

I recall that Martin T. was questioning Martin L. about his definition of
wealth. I think you and Martin T. should also define wealth and how the
charts you have been presenting relate to wealth.

I just did. I'll try to find some charts of wealth (rather than
income) discrepancy changing over time. My guess (as I said above) is
that the increase in wealth discrepancy over time will be quite a bit
more egregious than that of income discrepancy.

Is GDP a measure of wealth or of income?

Income.

Are we discussing a disparity in wealth or in income?

Both, but it's harder to find measures of wealth. Measures of wealth
will probably be proportional to measures of income, though not
perfectly proportional. There are things that could make them differ a
bit. For example, older people do have more wealth than income;
younger people have more income than wealth. So there could be some
interesting differences between wealth and income. But since income is
what is easiest to measure (as GDP) then I think we should generally
be focusing on income. It's what matters most to the largest portion
of the population.

Which one touches most on morality?

Both.

Which one touches most on economics?

Both. But it's easier to deal with income since GDP measures are
readily available. I don't know of any aggregate measures of wealth.
Do you?

In any society or nation of people, there has always been a disparity in
income and in wealth among individuals within the society or nation....A
measured fact that 20% of the USA population owns 80% of the wealth or earns
80% of the income would not be any surprise.

Right, but that proportion varies over time. That's what my graph
(I've reattached it) shows (but in terms of just the upper .01% of the
population). The graph shows that the income going to the upper .01%
went from about a pretty constant 1% from 1943-1980 to 6% currently.
That's a 6 fold increase for just .01% for the population.

Nor would it be anything requiring forced redistribution by government primadonnas
as Rick contends will yield a greater economy for that nation

But government primadonnas have been redistributing it very
aggressively from the bottom 99.99% to the top .01% since 1980. But
they are not called government primadonnas when they are Republicans
(they are called "serious people") and it's not called redistribution
when it goes from the bottom and middle to the top.

The wealth of a nation is measured by central
tendency or mean. If the 20% of the population around the mean (the middle
class), increase their wealth by some known %, the effect on the mean will
be far greater than an effect of a similar % increase in one or even both
distribution extremes.

This is precisely the opposite of what is true. The mean is pulled by
extremes; the median is not. That's why average income is typically
reported as a median. The median (or 50th percentile) household income
in the US is something like $50,000. The mean household income is
close to $70,000. The mean is brought up by those .01% of households
whose income is in the hundreds of millions.

While governmental control or coercion can decrease the wealth disparity by
taking wealth from the high end population and redistributing it to the low
end, that will not change the mean one twit.

Actually, it will. Look how much government control or coercion
increased the mean by taking wealth from the low end and
redistributing it to the high end (as has happened since 1980).

If by freedom of action,
including working harder, being more innovative and creative, or
by investing smarter, the middle class can increase their income and wealth,
the mean can rise whether the wealth disparity at the extremes increases or
decreases.

Gee, I guess the middle class really fell down on the job starting in 1980.

I think this freedom, found in this national experiment called the USA to a
greater degree than socialized or communistic economic systems, is a
significant reason for how the USA could become the wealthiest nation in the
world in a couple hundred years with less than ten generations of people.

Actually, the socialist people's republics of Norway, Denmark and
Sweden have higher per capita wealth than the US. And I venture to say
just as much or more freedom.

So the bottom line seems to be that you're OK with redistribution as
long as it's from the bottom to the top and I prefer redistribution
that goes from top to bottom. I think that Jesus would be running with
me on this. He was a real mensch.

Best

Rick

···

--
Richard S. Marken PhD
rsmarken@gmail.com
www.mindreadings.com

Content-Type: image/jpeg; name="WealthDiscrepancy.jpg"
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X-Attachment-Id: f_ghfsarv30

Martin_Lewitt · December 8, 2010, 1:21pm

[Martin Lewitt Dec 8, 2010 MST]

[From Rick Marken (2010.12.07.2140)]
Actually, it will. Look how much government control or coercion
increased the mean by taking wealth from the low end and
redistributing it to the high end (as has happened since 1980).

Which government action took wealth from the low end and gave it to the high end, that began (or increased) in 1980? Are you making the static assumption again?

-- Martin L

···

On 12/7/2010 10:38 PM, Richard Marken wrote:

Best

Rick

Kenneth_Kitzke_Value · December 8, 2010, 1:31pm

[From Kenny Kitzke (2010.12.08.8.30EST)]

Thank you Martin. You beat me to the punch.

In a message dated 12/8/2010 8:22:22 A.M. Eastern Standard Time, mlewitt@COMCAST.NET writes:

···

[Martin Lewitt Dec 8, 2010 MST]
On 12/7/2010 10:38 PM, Richard Marken wrote:

[From Rick Marken (2010.12.07.2140)]
Actually, it will. Look how much government control or coercion
increased the mean by taking wealth from the low end and
redistributing it to the high end (as has happened since 1980).

Which government action took wealth from the low end and gave it to the
high end, that began (or increased) in 1980? Are you making the static
assumption again?

– Martin L

Best

Rick

Kenneth_Kitzke_Value · December 8, 2010, 2:50pm

[From Kenny Kitzke (2010.12.08.8:45EST)]

In a message dated 12/7/2010 11:48:08 P.M. Eastern Standard Time, mmt-csg@MMTAYLOR.NET writes:

[From Kenny Kitzke (2010.12.07)]

It is essential to distinguish between earnings from labor and wealth.  I recall that Martin T. was questioning Martin L. about his definition of wealth.  I think you and Martin T. should also define wealth and how the charts you have been presenting relate to wealth.
[Martin Taylor 2010.12.07.23.15]

I don’t see why you ask me to provide a definition of wealth. I’ve been asking for a definition, because I don’t think I know of a satisfactory one. Is wealth related to money at all, completely, or partially? I give my answer at the end of this message.
I guess I misunderstood your own words when you showed how the same wealth disparity has occurred in Canada that Rick says has incurred in the USA. Here is what you said:

[Martin Taylor 2010.12.04.13.15]

[From Rick Marken (2010.12.04.0940)]

Wealth disparity was at its lowest and virtually constant from
1943-1980. During that time the top marginal tax rate was never lower
than 70%. Then came 1980 and the top marginal rate started going down
precipitously. Between 1980-2008 the rate was never higher than 50%
and was typically about 35%. That's the policy change that coincided
with the increase in wealth disparity.

The same thing happened in Canada, though not so dramatically. The top marginal rate was 67%, and now it is about 43% give or take a couple of points. The wealth disparity is (surprisingly to our conservative financial commentators) increasing dramatically.

Your claim is that wealth disparity increased dramatically. Yet, you now claim that you don’t know what wealth disparity really means? How would you change your comment to reflect something you do understand about the graph Rick presented? Hint: it is about income disparity.

Trying to write an accurate model of the economy would seem to demand that words used have clear meanings. Yet, we have economic policy critics who confuse income and wealth in their rants. The misrepresentation of data bothers me more than what the data actually reveals. And, that data may well contradict what some politicians, talking head commentators and even economists say that Rick tests. Sound-bite statements like, raising tax rates on the “rich” will hurt the economy, need to be tested. I doubt that this is always true. But factors like tax rates, versus taxes, whether small business owners with a $250,000 income are “rich” or whether the effect on the economy of higher tax rates on individuals with a $250,000 income from the pizza shop business or the retired widow who made $250,000 income from dividends on her stock in Canadian gold producers are the same must all be considered. Understanding the economic system of the USA does not lend itself to one variable versus another correlations. And, thinking the fundamentals of the USA economy can be characterized, modeled, understood and improved by comparing the actions of aggregate producers and aggregate consumers in the USA or by a mysterious leakage of money flow are simply out of touch with the global economic system we must act within.

Is GDP a measure of wealth or of income?
Technically, I believe neither. If I understand it correctly, it is an agreed statistic that represents the volume of non-barter transactions reported to the government statisticians, and it is measured in dollars.
Technically, you are right. It is more a measure of national production output. And, it has so many rules and exclusions in its calculation, and changes over time, that I doubt it is accurate for the purposes most people, including economists, use it. Fits for Rick too.

Are we discussing a disparity in weatlh or in income?  Which one touches most on morality?  Which one touches most on economics?
Good questions.
Thanks. Before I would spout off about the negative impacts of population disparity in income or weath, either morally or economically, and what governmental policy and actions should be, I’d want to have clearly defined meanings and not to treat them as similar, which is still what Rick speculates. Speculation is fun but it is full of risks for what we perceive as the real world. From your words below, you seem to understand this in a similar way. I have no hope there will be an agreement on this CSGNet or from PCT as to what behavior is moral. Indeed, what is moral is not the same as what is ethical. I prefer what is ethical.

  Statistically, dealing with the relative wealth or income of the distribution's dispersion tails (in a relatively normal curve distribution) is a rather phantom issue.  The wealth of a nation is measured by central tendency or mean.  If the 20% of the population around the mean (the middle class), increase their wealth by some known %, the effect on the mean will be far greater than an effect of a similar % increase in one or even both distribution extremes.
To answer them requires some preliminary work, including an agreed definition of wealth and of principles of morality. There’s no point arguing whether X is moral if the contestants disagree on what to be moral means. (Personally, I think that when a person’s power to control their perceptions is largely deepndent on their interactions with the society as a whole, as is the case for everyone in an industrialized area, it is immoral for any one person to have a very much greater power than any other. I also realize that for the development of the structures that increase the power of everyone, it is necessary for some people to have much more power than others. Does that mean thatthe powerful people are more wealthy? Is that a component of Martin L’s hedonic components of wealth? I don’t know).

I realize most versions of economics deal primarily with money, but I’m not sure that this emphasis will ultimately prove reasonable.

If wealth refers to the ability to direct the flow of money, the distribution is very far from normal. I doubt it’s normal even on a logarithmic scale. The mean is a measure you could use, but it would be about as much affected by a Bill Gates adding 1% to his income than by a million people at the bottom of teh scale adding 1% to theirs. If you want a central tendency measure, the median is better. But more fundamentally, on what basis would you say that the wealth of a nation is measured by a central tendency at all?
Mode, median and mean are all valid measures of central tendency. The best measure to use depends upon the purpose. The mean income of the USA times the number of income producers gives an aggregate income. Does either the mode or the median give us a way to get the aggregate? Knowing the income of the top 1% of the population similarly won’t let you know the aggregate. Show me otherwise if you can.

  While governmental control or coercion can decrease the wealth disparity by taking wealth from the high end population and redistributing it to the low end, that will not change the mean one twit.
One whit, I suspect you mean. But I’m not at all sure you are right. All those people who would add a little to their disposable income might create demand, which creates jobs, which would regenerate the “wealth” taken from the rich in taxes. At least that’s a plausible outcome, even if we have no way to tell whether you are right, this alternative is right, or something else entirely would happen.
Come on, get with it Martin. Are you not on Twitter? It’s not Whitter! The idea that redistributing income from the rich to the poor will drive up the economy, demand, jobs and the economy because the poor will spend it has a fly in the ointment. The rich also spend their income. I know of no rich people that have their $ sitting under their pillow. They invest it for a greater return down the road. And, that produces a gain in income and wealth whereas a trip to Disney World is a short term consumption expenditure that produces no return and no growth and increase in the economy. I think having rich people in our nation is a positive element in the economic growth for the nation.

Anyway, if you want my answer to “what is wealth”, I have to give a very crude first approximation to an answer: that wealth is the ability to control your perceptions and the power to do so. The more perceptions you are able to control, the wealthier you are. This answer correlates strongly in an industrialized country with the ability to get one’s hands on money, but it intrinisically incorporates Martin L’s hedonic variables. As an answer, I’m sure it needs a lot of refinement, but it will have to do for a start. If my answer comes anywhere near being useful, then wealth is indistinguishable from freedom, since freedom is explicitly the ability to control one’s perceptions.
That is too abtuse for me. In the parlance of economics, personal net worth is monetary measure of wealth. That is net assets less net liabilities. What is wrong with that? Isn’t it easy to understand? Actually, it is often used for companies, states and even nations. On that basis, the USA is becoming less wealthy as liabilities are outstripping assets by terribly high and increasing deficits in income. Check how the deficits have increased in the last two years and are expected to continue to increase in the years ahead.

I suspect that most people, whether you call them socialist, conservative, libertarian, or whatever, would agree that more freedom for more people is a good thing. The only ones I would expect to differ would be those who already have great freedom – the rich, the dictators, the power-brokers. All most of us disagree on is what kind of social structure leads to more freedom for more people. But I suspect we agree on the objective.

Martin
I sure like the freedom in the USA but not the freedom that can be used to harm other people. I don’t think the yacht my rich friends have, or their second and third homes, harm me one bit. And, I don’t covet what they have that I don’t have. I think that is wrong…ethically.

You are a good thinker Martin and I appreciate how you can keep the ridicule out of your posts here.

Kenneth_Kitzke_Value · December 8, 2010, 3:27pm

[From Kenny Kitzke (2010.12.08.10:00EST)]

The charge is to be consistent and honest when you want a serious dialogue.

The insult was calling me a Xtian. If you are sorry, and you want to put me in a category, Christian works pretty well from now on.

I don’t celebrate Christmas as a holy day on December 25. So, if someone mocks it with X-mas, it is not a disturbance to me. As a PCTer, this should make behavioral sense to you. Right?

I guess you can’t comprehend that greed is a human attitude as applicable to the poor as to the rich. That superstar of yours calls it coveting. Do you get that?

I told Martin what a standard definition of economic wealth is: net assets less net liabilities, usually called net worth. I can live with it. But, the superstar, unlike you, when He expressed concern for the poor, He often meant those poor in spirit. What could that refer to do you suppose?

In a message dated 12/8/2010 12:39:10 A.M. Eastern Standard Time, rsmarken@GMAIL.COM writes:

[From Rick Marken (2010.12.07.2140)]

Kenny Kitzke (2010.12.07)]

Will the real Rick Marken please stand up?

Here I am, Kenny. Over here, by the Darwin fish;-)

On December 12 you claimed to Martin L. that, “But my objections to wealth
disparity are economic, not moral.” But, on November 30 you wrote to me
that, “I fuss, write and wail about the wealth disparity in the US because I find
it not only morally repugnant but also economically disastrous and completely
unnecessary”

Sounds serious. What’s the charge?

You went on to question my moral beliefs that a Xtian
(taken as an insult)

Gee, I’m sorry. I had no idea that you would take my assumption that
you are a Christian as an insult. Or was it my abbreviation, Xtian,
that was insulting? Do you find it insulting when people refer to
Xmas?

could not be concerned about such a disparity by
saying, “But what I would really like to know is why you – a confessing
Xtian no less – seem to be, if not positively pleased, at least perfectly
comfortable with the level of wealth disparity in the US.”

What’s wrong with that? I’ve read the gospels (and seen “Jesus Christ
Superstar”) I guess I developed this image of Jesus as a person who
was not a particularly big fan of greed.

I answered that from a Biblical standpoint.

Yes, and thank you.

You did not ask me further about the economic impact of Wealth Disparity in
the US which you now seem to perceive as your prime gripe. Since you keep
grinding away at Martin L’s (did I get the possessive right Bill?) economic
and moral interpretations, I will jump back in.

Great to have you.

Here are a few observations:

It is essential to distinguish between earnings from labor and wealth.

Excellent point! Earnings from labor (and I include all management
and CEO pay in that category) is “income”; “wealth” is income plus
assets.

The graph I presented was “income” disparity varying over time. A
graph of wealth disparity would probably look pretty similar (in terms
of time changes in the proportion of wealth controlled by the top
.01%, though the top .01%, which currently gets about 6% of income,
probably controls considerably more that 6% of the wealth (since lower
income people have little or no wealth).
Until you have a definition of wealth (it certainly is not income + assets), I suggest you discuss your views about income disparity. That is what the data is about.

I recall that Martin T. was questioning Martin L. about his definition of
wealth. I think you and Martin T. should also define wealth and how the
charts you have been presenting relate to wealth.

I just did. I’ll try to find some charts of wealth (rather than
income) discrepancy changing over time. My guess (as I said above) is
that the increase in wealth discrepancy over time will be quite a bit
more egregious than that of income discrepancy.
When you have some understandable data about wealth distribution, then we can discuss that. Until then, why not quit speculating on your perceptions?

Is GDP a measure of wealth or of income?

Income.
Nope. See the response from Martin T. Can you accept the idea that he seems to understand economics better than you do?

Are we discussing a disparity in wealth or in income?

Both, but it’s harder to find measures of wealth. Measures of wealth
will probably be proportional to measures of income, though not
perfectly proportional. There are things that could make them differ a
bit. For example, older people do have more wealth than income;
younger people have more income than wealth. So there could be some
interesting differences between wealth and income. But since income is
what is easiest to measure (as GDP) then I think we should generally
be focusing on income. It’s what matters most to the largest portion
of the population.
Is earned income more appropriate for your observations about the evil of income disparity?

Which one touches most on morality?

Both.

Which one touches most on economics?

Both. But it’s easier to deal with income since GDP measures are
readily available. I don’t know of any aggregate measures of wealth.
Do you?
Yes, net worth. But it is not collected or reported privately that I know about.

In any society or nation of people, there has always been a disparity in
income and in wealth among individuals within the society or nation…A
measured fact that 20% of the USA population owns 80% of the wealth or earns
80% of the income would not be any surprise.

Right, but that proportion varies over time. That’s what my graph
(I’ve reattached it) shows (but in terms of just the upper .01% of the
population). The graph shows that the income going to the upper .01%
went from about a pretty constant 1% from 1943-1980 to 6% currently.
That’s a 6 fold increase for just .01% for the population.

And, until Obama took over, it was less than what we had during a war. Are you aware that we are in a war now?

Nor would it be anything requiring forced redistribution by government primadonnas
as Rick contends will yield a greater economy for that nation

But government primadonnas have been redistributing it very
aggressively from the bottom 99.99% to the top .01% since 1980. But
they are not called government primadonnas when they are Republicans
(they are called “serious people”) and it’s not called redistribution
when it goes from the bottom and middle to the top.

See my post to Martin L. Please explain why you express such a claim.

The wealth of a nation is measured by central
tendency or mean. If the 20% of the population around the mean (the middle
class), increase their wealth by some known %, the effect on the mean will
be far greater than an effect of a similar % increase in one or even both
distribution extremes.

This is precisely the opposite of what is true. The mean is pulled by
extremes; the median is not. That’s why average income is typically
reported as a median. The median (or 50th percentile) household income
in the US is something like $50,000. The mean household income is
close to $70,000. The mean is brought up by those .01% of households
whose income is in the hundreds of millions.

I agree. I know all that. My statement was central tendency OR mean. Mean has some advantages as well as median or mode. The mean can be pulled up by the dispersion, but it can also be pulled up by those in the middle of the distribution. It would take an analysis to know which has more impact and why.

While governmental control or coercion can decrease the wealth disparity by
taking wealth from the high end population and redistributing it to the low
end, that will not change the mean one twit.

Actually, it will. Look how much government control or coercion
increased the mean by taking wealth from the low end and
redistributing it to the high end (as has happened since 1980).

Explanation requested. Then Martin L or I can discuss it with you.

If by freedom of action,
including working harder, being more innovative and creative, or
by investing smarter, the middle class can increase their income and wealth,
the mean can rise whether the wealth disparity at the extremes increases or
decreases.

Gee, I guess the middle class really fell down on the job starting in 1980.

Or, perhaps they were prevented or discouraged from working harder and longer when their fruits are transferred to those who prefer to collect unemployment rather than work. How would you know what the rich or poor do or why? Best I can tell, you are living the life of either.

I think this freedom, found in this national experiment called the USA to a
greater degree than socialized or communistic economic systems, is a
significant reason for how the USA could become the wealthiest nation in the
world in a couple hundred years with less than ten generations of people.

Actually, the socialist people’s republics of Norway, Denmark and
Sweden have higher per capita wealth than the US. And I venture to say
just as much or more freedom.

The last time I checked, this is NOT true. Do you have the data? I’ll did out mine. It is only a couple of years old. Are you describing wealth or income? Can you be accurate please?

So the bottom line seems to be that you’re OK with redistribution as
long as it’s from the bottom to the top and I prefer redistribution
that goes from top to bottom. I think that Jesus would be running with
me on this. He was a real mensch.

Best

Rick

Richard S. Marken PhD
rsmarken@gmail.com
www.mindreadings.com

Putting your words and characterizations of intent in my life or Christ’s won’t impress me much.

rsmarken · December 8, 2010, 4:57pm

[From Rick Marken (2010.12.08.0900)]

ï¿½Martin Lewitt (Dec 8, 2010 MST)--

Rick Marken (2010.12.07.2140)--

RM: Actually, it will. Look how much government control or coercion
increased the mean by taking wealth from the low end and
redistributing it to the high end (as has happened since 1980).

ML: Which government action took wealth from the low end and gave it to the high
end, that began (or increased) ï¿½in 1980?

It was many actions. The main one was probably was the change in
income tax rates that started with Reagan, making them much more
regressive. But weakening of financial regulations, stagnating
national minimum wage and government policies that weakened unions
(also all courtesy of Reagan) surely contributed as well. NAFTA
(courtesy of Clinton) was also a contributor I'm sure.

Are you making the static assumption again?

I don't know what that is? I don't think I am. What makes you think I am?

Best

Rick

···

--
Richard S. Marken PhD
rsmarken@gmail.com
www.mindreadings.com

MartinT · December 8, 2010, 4:57pm

[Martin Taylor 2010.12.08.11.28]

[From Kenny Kitzke (2010.12.08.8:45EST)]

      In a message dated 12/7/2010 11:48:08 P.M. Eastern Standard

Time, writes:

                    [From

Kenny Kitzke (2010.12.07)]

          It is essential to distinguish between earnings from
labor and wealth. I recall that Martin T. was questioning
Martin L. about his definition of wealth. I think you and
Martin T. should also define wealth and how the charts you
have been presenting relate to wealth.
[Martin
Taylor 2010.12.07.23.15]
        I don't see why you ask me to provide a definition of
wealth. I’ve been asking for a definition, because I don’t
think I know of a satisfactory one. Is wealth related to
money at all, completely, or partially? I give my answer at
the end of this message.
      I guess I misunderstood your own words when you showed how
the same wealth disparity has occurred in Canada that Rick
says has incurred in the USA.

I accept your criticism, and offer an exculpatory statement.

In saying the same thing has happened in Canada, I considered the

same kind of money-based statistics usually used when discussing
such matters. However, when I asked Martin L what he meant by
wealth, I thought he must be meaning something else because of some
of his statements about it. When you asked me what I meant by
wealth, I had to think what I would mean by it, and came up with the
thought that real wealth refers to the range of perceptions one can
control, the range of disturbances against which one can control
them, and the accuracy with which one can control them.

In a highly industiralized society, but not in a rural agrarian

society, this concept of wealth seems to correlate strongly with
one’s ability to direct the use of large sums of money. The quote
ascribed to somebody in the early 20th century goes something like
“You aren’t rich if you have a million dollars; you are rich if you
owe a million dollars.” Why would he say that? I think it was
because if you have a million dollars, you can spend up to that
limit, but if you owe a million dollars, you know people trust you
to spend that, and more if you need to, because they think that what
you do with it will be useful to them. So I don’t really go along
with subtracting liabilities from assets as a measure of wealth,
even though when we use government statistics, they are mostly
stated in such terms, so that’s all we have to work with.

That's why I have some sympathy with Martin L. when he talks about

the wealth of having a good family and a pleasant place to live, and
so forth. But on the other hand, in a society so interdependently
connected as ours, the freedom associated with great wealth and the
lack of freedom associated with great poverty strikes me as being in
only a small part connected with differences in ability or of value
to other people. So, ethically, it seems to me quite wrong that the
range of wealth/freedom should be so variable, and that so many
people should have so little freedom while so few have so much. In a
rural, self-sufficient society (if any such exist), I would not find
such disparities unethical. Here, I do. But I guess that’s just me.

  Before
I would spout off about the negative impacts of population
disparity in income or weath, either morally or economically, and
what governmental policy and actions should be, I’d want to have
clearly defined meanings and not to treat them as similar, which
is still what Rick speculates. Speculation is fun but it is full
of risks for what we perceive as the real world. From your words
below, you seem to understand this in a similar way. I have no
hope there will be an agreement on this CSGNet or from PCT as to
what behavior is moral. Indeed, what is moral is not the same as
what is ethical. I prefer what is ethical.
              While governmental control or coercion can decrease
the wealth disparity by taking wealth from the high
end population and redistributing it to the low end,
that will not change the mean one twit.
…

        One whit, I suspect you mean. But I'm not at all sure you
are right. All those people who would add a little to their
disposable income might create demand, which creates jobs,
which would regenerate the “wealth” taken from the rich in
taxes. At least that’s a plausible outcome, even if we have
no way to tell whether you are right, this alternative is
right, or something else entirely would happen.
Come on, get with it Martin. Are you not on Twitter? It’s
not Whitter!

No, I've never jointed Twitter (or Facebook, for that matter). But

why do you ask?

      The idea that redistributing income from the rich to the
poor will drive up the economy, demand, jobs and the economy
because the poor will spend it has a fly in the ointment. The
rich also spend their income. I know of no rich people that
have their $ sitting under their pillow. They invest it for a
greater return down the road. And, that produces a gain in
income and wealth whereas a trip to Disney World is a short
term consumption expenditure that produces no return and no
growth and increase in the economy. I think having rich
people in our nation is a positive element in the economic
growth for the nation.

Your view is just as much specualtion as mine. When a family goes to

Disney World, quite a lot happens. For one thing, Disney world might
hire another Mickey Mouse character, or decide to develop another
animatronic attraction. The family is happier than they would have
been had they wanted to go but not been able to afford it, and happy
people often are more energetic than sad, hopeless people, so they
might themselves contribute more to the economy. Come on. Let’s
speculate to our heart’s content about what might or might not
happen. It doesn’t mean anything apart from our social interaction,
does it?

        Anyway, if you want my answer to "what is wealth", I have to
give a very crude first approximation to an answer: that
wealth is the ability to control your perceptions and the
power to do so. The more perceptions you are able to
control, the wealthier you are. This answer correlates
strongly in an industrialized country with the ability to
get one’s hands on money, but it intrinisically incorporates
Martin L’s hedonic variables. As an answer, I’m sure it
needs a lot of refinement, but it will have to do for a
start. If my answer comes anywhere near being useful, then
wealth is indistinguishable from freedom, since freedom is
explicitly the ability to control one’s perceptions.
That is too abtuse for me. In the parlance of economics,
personal net worth is monetary measure of wealth. That is net
assets less net liabilities. What is wrong with that? Isn’t
it easy to understand?

Could it be that "easy to understand" is what is wrong with it? "Why

are you looking for your keys underthat lamppost when you dropped
them over there?" “I can see better over here.”

I don't see what is abstruse about acknowledging that in an

industrialized society nobody can do very much without relying on
all the structures and cultural patterns involving many other
people. There’s no sense in which anyone can claim that “I earned
all this by my own efforts alone”.

      Actually, it is often used for companies, states and even
nations. On that basis, the USA is becoming less wealthy as
liabilities are outstripping assets by terribly high and
increasing deficits in income. Check how the deficits have
increased in the last two years and are expected to continue
to increase in the years ahead.

Looking back over history, this seems to matter only because pundits

to whom politicians (and the public) listen say it matters. Pundits
generate fear (and enhance their own wealth thereby). Fear, as
Roosevelt said, is what we should fear. Not deficits. Whether
deficits are bad depends a lot on circumstances such as who owns the
debt, and whether they use that freedom in such a way as to reduce
one’s own freedom.

        I suspect that most people, whether you call them socialist,
conservative, libertarian, or whatever, would agree that
more freedom for more people is a good thing. The only ones
I would expect to differ would be those who already have
great freedom – the rich, the dictators, the power-brokers.
All most of us disagree on is what kind of social structure
leads to more freedom for more people. But I suspect we
agree on the objective.
        Martin
      I sure like the freedom in the USA but not the freedom that
can be used to harm other people. I don’t think the yacht my
rich friends have, or their second and third homes, harm me
one bit. And, I don’t covet what they have that I don’t
have. I think that is wrong…ethically.

I agree. I don't think I have said anything, ever, that I expected

to be interpreted as disagreeing with that.

      You are a good thinker Martin and I appreciate how you can
keep the ridicule out of your posts here.

Sometimes it’s hard, and I don’t always manage it. But I try.

Martin

···

mmt-csg@MMTAYLOR.NET

Martin_Lewitt · December 8, 2010, 5:32pm

[Martin Lewitt Dec 8, 2010 1016 MST]

[From Rick Marken (2010.12.08.0900)]

Martin Lewitt (Dec 8, 2010 MST)--

Rick Marken (2010.12.07.2140)--

RM: Actually, it will. Look how much government control or coercion
increased the mean by taking wealth from the low end and
redistributing it to the high end (as has happened since 1980).

ML: Which government action took wealth from the low end and gave it to the high
end, that began (or increased) in 1980?

It was many actions. The main one was probably was the change in
income tax rates that started with Reagan, making them much more
regressive.

So "taking wealth from the low end" was just spin, the government actually took less from them as well.

But weakening of financial regulations, stagnating
national minimum wage and government policies that weakened unions
(also all courtesy of Reagan) surely contributed as well. NAFTA
(courtesy of Clinton) was also a contributor I'm sure.

Once again, the"taking" by the government during the Reagan administration from the low end actually decreased. Inflation probably did erode minimum wage laws, but that didn't begin in 1980, the Carter years had double digit inflation. The weakening of unions did not involve government "taking", but instead actually reduced union "taking" as the tarriff protections for the textile industry actually were costing consumers 4 times the amount that the textile jobs paid.

How can weakening financial regulations be a concern, when a tax system that favors debt and risk of bankruptcy in its basic structure? Favoring equity instead debt would do far more for financial stability than any micro-regulation of the economy. But uh-oh, stock holders might actually own something instead of just a highly mortgaged speculative instrument, and that might make them "wealthy".

-- Martin L

···

On 12/8/2010 9:57 AM, Richard Marken wrote:

Are you making the static assumption again?

I don't know what that is? I don't think I am. What makes you think I am?

Best

Rick

rsmarken · December 8, 2010, 7:00pm

[From Rick Marken (2010.12.08.1100)]

Kenny Kitzke (2010.12.08.10:00EST)--

KK: I guess you can't comprehend that greed is a human attitude as applicable to
the poor as to the rich.ï¿½ That superstar of yours calls it coveting.ï¿½ Do you
get that?

Yes, I remember that great sermon of Jesus' where he harangued the
poor for their greed. Thanks for reminding me;-)

KK: I told Martin what a standard definition of economic wealth is:ï¿½ net assets
less net liabilities, usually called net worth.ï¿½ I can live with it.

Me too. Again, it's probably proportional to GNP. In fact, I bet GNP
takes assets (minus liabilities) into account by counting depreciated
assets.

KK: But, the superstar, unlike you, whenï¿½He expressed concern for the poor,
ï¿½He often meant those poor in spirit.ï¿½ What could that refer to do you suppose?

Well I would certainly count as being poor in spirit those who would
hold benefits for the unemployed hostage to maintaining low taxes on
those with high incomes.

RM: Excellent point!ï¿½ Earnings from labor (and I include all management
and CEO pay in that category) is "income"; "wealth" is income plus
assets.

KK. Until you have a definition of wealth (it certainly is not income + assets),
I suggest you discuss your views about income disparity.ï¿½ That is what the
data is about.

OK, if you say so. By the way, when I said "assets" I meant
assets-liabilities. The asset value of a home is obviously the market
value of the home minus any encumberances (mortgages, etc). And I
think you will see that most "real" economists often use the term
"wealth" when talking about GDP. The distinction between income and
wealth is not one that is made a big real of in economics, as far as I
can tell. Actually, "wealth" is often used to refer to the goods and
services symbolized by the dollar value of GDP.

When you have some understandable data about wealth distribution, then we
can discuss that.ï¿½ Until then, why not quit speculating on your perceptions?

Because I don't want to. And because it upsets you so;-)

KK: Is GDP a measure of wealth or of income?

RM: Income.

KK: Nope. See the response from Martin T.ï¿½ Can you accept the idea that he seems
to understand economics better than you do?

No. I think Martin understand economics just as well as I do.

RM: The graph shows that the income going to the upper .01%
went from about a pretty constant 1% from 1943-1980 to 6% currently.
That's a 6 fold increase for just .01% for the population.

KK: And, until Obama took over, it was less than what we had during a war.

I have no idea that you're talking about here. Which war? You can see
stayed constant through Korea, the Cold War and Viet Nam. When Obama
took over the top .01% had already moved from receiving 1% of GDP in
1980 to receiving 6% of GDP in 2006. I don't know what the disparity
was in 2009 (when Obama came in) but given the stock market crash it
probably had gone down a bit; it's probably back up to 6% or so by
now. The disparity will probably continue to increase now that the
Bush cuts are going to be extended for all.

Are you aware that we are in a war now?

Of course. Actually it's two unfunded wars, right. And at least one
(if not both) of them completely unnecessary. Welfare for the
military-industrial complex.

RM: But government primadonnas have been redistributing it very
aggressively from the bottom 99.99% to the top .01% since 1980.

KK: See my post to Martin L.ï¿½ Please explain why you express such a claim.

See my reply to the Martin L. post to which you replied. The
redistribution has been done by changing a progressive to a regressive
income tax rate.

RM: This is precisely the opposite of what is true. The mean is pulled by
extremes; the median is not. That's why average income is typically
reported as a median. The median (or 50th percentile) household income
in the US is something like $50,000. The mean household income is
close to $70,000. The mean is brought up by those .01% of households
whose income is in the hundreds of millions.

KK: I agree.ï¿½ I know all that.

Then why do you keep saying things that indicate that you don't know it at all.

KK:My statement was central tendency OR mean.

What? The mean is one measure of central tendency (the others being
median and mode). Central tendency is not an alternative to the mean,
which your "OR" implies.

KK:Mean has some advantages as well as median or mode.ï¿½ The mean
can be pulled up by theï¿½dispersion,

No, the mean is pulled up by extreme high scores. If dispersion of
scores is symmetrical, an increase in dispersion (measured as an
increase in the variance of the scores, say) has no effect at all on
the mean.

KK: but it can also be pulled up by those inï¿½the middle of the distribution.

This can be true in some circumstances. But an increase in the extreme
high scores will _always" increase the mean.

KK: It would take an analysis to know which has more impact and why.

Well, it's really pretty simple. Middle and lower wage income has been
stagnant since 2000. This means that any increase in average income
must come from the increase in the extreme high incomes.

RM: Look how much government control or coercion
increased the mean by taking wealth from the low end and
redistributing it to the high end (as has happened since 1980).

KK: Explanation requested.

Taxes are coercive. Starting in 1980 the government went from coercing
a progressive to coercing a regressive tax regime.

RM: Gee, I guess the middle class really fell down on the job starting in 1980.

KK:Or, perhaps they were prevented or discouraged from working harder and
longer when their fruits are transferred to those who prefer to collect
unemployment rather than work.

That seems unlikely since middle class taxes went down as well in 1980
(so if taxes discourage work there was less discouragement after 1980)
and Reagan was all about not transferring the fruits of their labor to
those lazy bums collecting unemployment. By the way, how do you
explain the sudden increase in laziness (unemployment) that started in
2008?

RM: Actually, the socialist people's republics of Norway, Denmark and
Sweden have higher per capita wealth than the US. And I venture to say
just as much or more freedom.

KK: The last time I checked, this is NOT true.

Check again. http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita

RM: So the bottom line seems to be that you're OK with redistribution as
long as it's from the bottom to the top and I prefer redistribution
that goes from top to bottom. I think that Jesus would be running with
me on this. He was a real mensch.

KK: Putting your words and characterizations of intent in my life or Christ's
won't impress me much.

Darn!!

Rick

···

from my graph that wealth disparity actually went down during WWII and
--
Richard S. Marken PhD
rsmarken@gmail.com
www.mindreadings.com

Martin_Lewitt · December 8, 2010, 8:33pm

[Martin Lewitt Dec 8, 2010 1301 MST]

[From Rick Marken (2010.12.08.1100)]

Kenny Kitzke (2010.12.08.10:00EST)--

RM: Actually, the socialist people's republics of Norway, Denmark and
Sweden have higher per capita wealth than the US. And I venture to say
just as much or more freedom.

KK: The last time I checked, this is NOT true.

Check again. http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita

By that chart, it isn't true for Sweden. Comparing these countries to individual states might be a better comparison. GDP per capita is different than per capita income, and we might not want to compare on a per capita basis given the differing population age structures. The US has a higher percent of children in its population and perhaps a higher percentage of housewives. These bring down the per capita figures but reflect choices in how to expend wealth. The US wealth production per worker and per hour was higher than Japan or any European Union nation and Switzerland. It doesn't beat Norway which is dominated by the high productivity oil industry.

http://www.cbsnews.com/stories/2007/09/03/business/main3228735.shtml

Given the size many of these nations, they might be more comparable in diversity to individual states. And some of those states might do better if allowed to produce their oil. Few other countries can afford the luxury of leaving such wealth in the ground.

-- Martin L

···

On 12/8/2010 12:00 PM, Richard Marken wrote:

Kenneth_Kitzke_Value · December 9, 2010, 4:45am

[From Kenny Kitzke (2010.12.08)]

The reason I asked you from where you got the data to make that claim about the socialist nations like Sweden is that I did a seminar in 2009 for a global company headquartered in the USA on global competitiveness. Since Sweden was of interest to this client, I remembered including Sweden as well as Canada and the USA where they have large operations. My recollection was that the USA was ahead of Canada but that Canada was ahead of Sweden.

I used IMF data on GDP and Population in 2008. I divided the two numbers to get a GDP/person which I characterized as personal productivity for a measure of national competitive strength. The results from my presentation for the top five or so nations showed:

USA $46,500

Hong Kong $43,200

Canada $38,700

Sweden, UK, Germany, Japan $36,800-34,000.

I can tell from the references you used that how these numbers are expressed, including such factors as exchange rates can move these comparisons around significantly. But, we can’t pick a basis that gives us the answer we prefer and ignore the others. It would take more time than I could spend to sort it all out in a comprehendible manner.

One thing seemed true and disturbing to me. Even if the USA is still at or near the top in the world, its relative advantage is declining. The reasons for that are so complex, I am not sure anyone can get an air tight explanation.

But, in fairness, there are other credible data bases that refute your claim. Try looking at http://data.worldbank.org/indicator/NY.GDP.PCAP.CD?cid=GPD_57

2008: Sweden $52,884, USA $47,210

2009: Sweden $43,654, USA $46,436

So, by the data, the USA has spurted ahead again! Now, don’t go claiming it is because of Obama!

BTW, there is another data base that may be more relevant to the issue of earned income also found on Wipekedia. Its title is Average Full Time Wages:

#2 USA $49,483 (#1 is Luxemburg also in the $49T level)

#9 Norway $40,742

#10 Denmark $39,777

#14 Sweden $34,186

This says to me that the poor working stiffs slaving under those overpaid USA capitalistic executives do a lot better (over 20%) than those lucky workers in socialist Scandinavia.

Anyway, there are interesting phenomena in all this if we could ever figure it out. I would just urge you to say “One study shows Sweden is doing better than the USA” rather than use one study you find to make a declarative statement as though it is obviously fact.

Unfortunately, this tangent has pulled me away from responding to what I think are interesting perceptions that you express. I have a tough balance of the week and probably will not have time to think and respond to my LA LA PCT friend, Rick.

In a message dated 12/8/2010 12:39:10 A.M. Eastern Standard Time, rsmarken@GMAIL.COM writes:

···

Actually, the socialist people’s republics of Norway, Denmark and
Sweden have higher per capita wealth than the US. And I venture to say
just as much or more freedom.

MartinT · December 9, 2010, 2:40pm

[Martin Taylor 2010.12.09.09.22]

[From Kenny Kitzke (2010.12.08)]

          The reason I asked you from where you got the data to
make that claim about the socialist nations like Sweden…

I know you wrote this in response to Rick, but I want to make a

personal observation about the value of comparing income rates and
so forth.

Back in the 1970s and 1980s I used to spend a fair amount of time

each year in Denmark with friends in the Copenhagen suburbs. At that
time, by any exchange rate measure, wages in Denmark were
appreciably lower than in Canada, and taxes were higher. I couldn’t
understand how my friends (and other people I encountered) could
have a lifestyle that seemed to indicate more disposable income than
people of similar socio-economic status (such as me) would have in
Canada. I asked a few questions, and found that a lot of my income
went on things I considered necessities, leaving not all that much
for expenditures of personal choice, whereas their necessities were
largely paid by their high taxes, leaving most of the rest for
expenses of personal taste. As a result, they seemed wealthier than
me, despite earning less when comparing either exchange rates or
purchasing power parity (Denmark seemed expensive to me at the
time).

I know this is purely anecdotal, and not evidence, but it is a

question that bothered me at the time, because it seemed so
counterintuitive but was so obvious to the (slightly more than)
casual visitor. To a large extent it is why I became interested in
the workings of different economic regimes (despite that a couple of
decades earlier I had devoted part of my bachelor’s essay in 1955 to
the reasons why deficits and inflation were necessary to a stable
economy – the essay and the paper it was based on are at
, because both
ring true to me today).
Just an observation, which may suggest that comparing income levels
doesn’t get at the question of real wealth.
Martin

···

http://www.mmtaylor.net/Economics/index.html

chadtgreen · December 9, 2010, 3:33pm

[Chad Green 2010.12.09.10.32EST]

"And while the United States may be the richest and most powerful country, when it comes to happiness, it is only No. 23."

Source: http://abcnews.go.com/2020/story?id=4086092&page=1

Chad

Chad Green, PMP
Program Analyst
Loudoun County Public Schools
21000 Education Court
Ashburn, VA 20148
Voice: 571-252-1486
Fax: 571-252-1633

Martin Taylor <mmt-csg@MMTAYLOR.NET> 12/9/2010 9:40 AM >>>

[Martin Taylor 2010.12.09.09.22]

[From Kenny Kitzke (2010.12.08)]
The reason I asked you from where you got the data to make that claim
about the socialist nations like Sweden...

I know you wrote this in response to Rick, but I want to make a personal
observation about the value of comparing income rates and so forth.

Back in the 1970s and 1980s I used to spend a fair amount of time each
year in Denmark with friends in the Copenhagen suburbs. At that time, by
any exchange rate measure, wages in Denmark were appreciably lower than
in Canada, and taxes were higher. I couldn't understand how my friends
(and other people I encountered) could have a lifestyle that seemed to
indicate more disposable income than people of similar socio-economic
status (such as me) would have in Canada. I asked a few questions, and
found that a lot of my income went on things I considered necessities,
leaving not all that much for expenditures of personal choice, whereas
their necessities were largely paid by their high taxes, leaving most of
the rest for expenses of personal taste. As a result, they seemed
wealthier than me, despite earning less when comparing either exchange
rates or purchasing power parity (Denmark seemed expensive to me at the
time).

I know this is purely anecdotal, and not evidence, but it is a question
that bothered me at the time, because it seemed so counterintuitive but
was so obvious to the (slightly more than) casual visitor. To a large
extent it is why I became interested in the workings of different
economic regimes (despite that a couple of decades earlier I had devoted
part of my bachelor's essay in 1955 to the reasons why deficits and
inflation were necessary to a stable economy -- the essay and the paper
it was based on are at <http://www.mmtaylor.net/Economics/index.html>,
because both ring true to me today).

Just an observation, which may suggest that comparing income levels
doesn't get at the question of real wealth.

Martin

Martin_Lewitt · December 9, 2010, 4:13pm

[Martin Lewitt Dec 9, 2010 0858 MST]

[Chad Green 2010.12.09.10.32EST]

"And while the United States may be the richest and most powerful country, when it comes to happiness, it is only No. 23."

Source: http://abcnews.go.com/2020/story?id=4086092&page=1

I've wondered if the Mansen family was happy during group sex, or how happy Osama bin Laden was when he saw the twin towers go down, or how happy a male dog is when he finds a bitch in heat, or a how happy male lion is when having sex to exhaustion over the course of 3 days. It probably is much cheaper for a society to achieve happiness by inculcating nonmaterialistic values in state run schools. The footprint on the earth is certainly smaller. We look down on people getting high on recreational drugs and consider it self-indulgent and unproductive. But aren't the same number of hours watching an escapist film or listening to music or drinking with friends, equally unproductive? What if we want things that can't be achieved by happiness, but instead require productivity and striving, and perhaps unmet needs and disatisfaction e.g., medical research, space exploration, etc.? There probably are happy people in the United States, but perhaps the unhappy ones are more interesting and productive.

-- Martin L

···

On 12/9/2010 8:33 AM, Chad Green wrote:

Chad

Bill_Powers1 · December 9, 2010, 4:18pm

[From Bill Powers (2010.12.09.0745 MDT)]

CSGnet is involved in a lot of squabbling over economic theories, but
once in a while someone says something of importance that interests me.
Here’s one, and I’m cc-ing the consequences to others who aren’t
subscribers.

Martin Taylor 2010.12.09.09.22

MMT: I asked a few questions [in
Denmark], and found that a lot of my income [in Canada] went on things I
considered necessities, leaving not all that much for expenditures of
personal choice, whereas their necessities were largely paid by their
high taxes, leaving most of the rest for expenses of personal taste. As a
result, they seemed wealthier than me, despite earning less when
comparing either exchange rates or purchasing power parity (Denmark
seemed expensive to me at the time).

BP: That is a most interesting proposition, which makes immediate sense
to me. I’ve always thought it peculiar that here in the Land of Plenty we
seem to begrudge doing anything for other people that we don’t absolutely
have to do to save face or avoid prosecution. We treat each other more
like enemies than friends. All this localized “We’re Number
One!” stuff is pretty embarrassing to me, not to mention revealing
of the controlled variables of those waving the big foam-rubber hands
with thrusting finger. I’m surprised whenever I see that it’s the index
finger.

When I was young and innocent, I wished that our world could be set up so
that everyone was guaranteed at least the basic comforts: enough to eat,
a comfortable place to rest and sleep, warmth and protection against wind
and weather, and so on. That way, even those like me without
“competitive” virtues could enjoy life. As you say. Martin, the
need for disposable money would be reduced considerably and the quality
of life would generally improve. It wouldn’t improve (except
cosmetically) for those who already have far more than they can actually
use even with their conspicuous consumption, but who cares about that,
other than they?

Of course for this utopia to exist, people would have to be willing to
pay enough taxes or in some way guarantee contributions enough to make
such a world possible. Enlightened economists apparently don’t think
that’s possible, and of course those who are enjoying the fruits of
everyone else’s labors don’t think it’s desirable, either. How can you
know you are well-off if everybody else is well-off, too? To be
above average, you need a lot of people to be below average, the more and
the farther below the better. The poor are always with us because they
are needed for contrast. Those who like to be photographed giving turkeys
to homeless people need not only turkeys they can give away, but homeless
people to receive them. Heartwarming.

I still wish the world could be as I envisioned it as a child, but I’m
not young and innocent any more. Well, still innocent, but not young any
more. I don’t think that world can exist when the human race is still
totally screwed up privately and socially. Yes, Kenny, I agree with you
about that, but I don’t think there’s anything original about sin, or
about conflict. What we need is for everyone to understand human nature,
the real human nature and not the accidents of history and
belief.

It occurs to me now that there is a reason for the hostility among
fellow-Americans, and within any extended group of human beings (as
opposed to the idealized myths we pretend to worship). The most
threatening competitors are not the lower life-forms, who are relatively
easy to manage, but members of our own species. We are so similar to each
other that we compete for exactly the same resources. We do not compete
with maggots or dung beetles for food, or with cats or whales for mates,
or with dogs or baboons for social dominance. The only competitors who
want what we want are just like us. If we know that there are others who
want for themselves what we have, we must treat them as enemies,
fortifying and arming ourselves to be safe from them. We have to perceive
ourselves as more deserving, more intelligent, more skilled, more
justified, more moral than they are.

All this is very frustrating, since none of it is necessary and most of
it accomplishes the exact opposite of what is wanted at the highest
levels: peace of mind, happiness, fun, satisfaction. The way we’re doing
it on this small planet, we simply can’t get no satisfaction because we
deny it to others and they deny it to us. If I have to go down, I’m
taking you with me. So down we all go.

Economics is not a natural phenomenon we can only hate or admire. It’s
whatever we decide it shall be. The reasons for choosing one form rather
than another are not logical or natural; they are simply means to an end
other than economic life. If the means aren’t accomplishing the ends we
really want, we need to change the means, not redouble our efforts to
make things worse.

What the world needs is not a better economic system, but a bit of
MOL.

Best,

Bill