# Wealth Distribution ( was Re: Interesting law)

[From Rick Marken (2005.10.18.0900)]

Marc Abrams (2005.10.18.0127)--

I say our GDP can and does grow, and you seem to think it does not. How do
you come to this conclusion?

Actually, I know that GDP grows. As I noted in my previous post, that has nothing
to do with whether or not the economy is a "zero sum game". I said:

[All economies a zero sum] even if the total size of the economy (the wealth)
constantly increases (in the example, if wealth goes from 10 to 20 to 100,
say). It's still true that if one person gets more of the total (what ever that
total value is) the other gets less.

At any instant an economy is a finite size (the size of GDP, say) and it is being
consumed by a population of finite size (N). If some subset of the population is
able to control an increasing proportion of GDP then there will be less and less
of that GDP available to the remainder of the population. For example, suppose
the GDP over four years grows as follows:

100 130 160 190

This is a 20% growth rate, which is higher than it's ever been in the US or
anywhere else as far as I know. But it's good for illustrative purposes. Also for
illustrative simplicity, assume that the population remains constant at 100 over
these four years. Let's say that 10 people in this population control an increasing
proportion of GDP each year, as follows:

.8 .85 .9 .95

So in year 1, the remaining 90 members of the population have access to .2*100 =
20 units of GDP or about .22 wealth units/person. The next year these 90 members
of the population have access to only 19.5 wealth units (despite the larger GNP)
or .21 wealth units/person. In the final two years the wealth units/person for the
90 members are .17 and .10. So as the "rich" control a larger and larger share of
the _growing_ GDP, the non-rich enjoy a smaller share. The rich get richer and
the rest get poorer.

The point is that economic growth does not stop the economy from being a zero
sum game (though a sufficient rate of growth can conceal this fact, to some extent).
The fact is that the more the rich have, the less the non-rich have. This shows
up pretty clearly in terms of measures of the distribution of wealth in an economy.
When the rich get richer, the rest of the population gets poorer. That's a zreo sum
game; it's just what happens when you are distributing finite resources to a
population. Whether that's a good thing or a bad thing depends on one's goals
regarding the kind of society one wants to live in: that is, it depends on what
system concepts one is controlling for.

Best

Rick

Rick Marken
310 729-1400

In a message dated 10/18/2005 12:11:11 P.M. Eastern Daylight Time, marken@MINDREADINGS.COM writes:

[From Rick Marken (2005.10.18.0900)]

Marc Abrams (2005.10.18.0127)–

I say our GDP can and does grow, and you seem to think it does not. How do
you come to this conclusion?

Actually, I know that GDP grows. As I noted in my previous post, that has nothing
to do with whether or not the economy is a “zero sum game”. I said:

[All economies a zero sum] even if the total size of the economy (the wealth)
constantly increases (in the example, if wealth goes from 10 to 20 to 100,
say). It’s still true that if one person gets more of the total (what ever that
total value is) the other gets less.

At any instant an economy is a finite size (the size of GDP, say)
Yes, so at any instant in time some will have and some will not.

and it is being consumed by a population of finite size (N).
Yes, at that instant of time. So far, so good

If some subset of the population is able to control an increasing proportion of GDP then there will be less and less of that GDP available to the remainder of the population.
And here is where your logic comes to a screeching halt. On what grounds do you assume that some subset of a finite population at an instant in time will get to control an increasing proportion of the GDP? How does this happen? How does the increase in control take place? What does it mean to ‘control’ a proportion of the GDP? You are no longer talking about an instant in time. You are talking about something that is moving through it when it increases or decreases. Things can only happen through time.

For example, suppose the GDP over four years grows as follows:

100 130 160 190
Over four years is not an ‘instant’ in time. It is an instant in time only according to your statistical methods which is one reason why econometrics is horsebleep. But lets assume this is not the case and we have your assertion that the GDP was at these levels over this time span. Remember, you are attempting to show how an economy is a zero-sum game.

This is a 20% growth rate, which is higher than it’s ever been in the US or
anywhere else as far as I know.
Yes, but is this is from one time period to the next, not in an instant in time.

But it’s good for illustrative purposes. Also for
illustrative simplicity, assume that the population remains constant at 100 over
these four years. Let’s say that 10 people in this population control an increasing
proportion of GDP each year, as follows:

.8 .85 .9 .95
How do you come by the notion that people control a portion of the GDP? The GDP is a composite index. It is representative of what is produced (within certain limits) You are making a leap that cannot be validly made here for a number of reasons;

1. The GDP does, not and cannot tell you how that wealth is distributed. It is an index of production for any given year.

2. Is it the same ten people who get to increase their proportion? If so, how did you make this determination? It is a well known fact that people in the US move up and down the income ladder from year to year. I don’t have the figures in front of me but I believe only 5% of the people who were in the lowest 20% income bracket were still there 3 years later, and in 16 years people in the lowest 20 % were then in the top 20% bracket. They moved up and were replaced by younger folks. Some of course move down. It seems age is best determinant of income. Do you have data to refute this?

So in year 1, the remaining 90 members of the population have access to .2*100 =
20 units of GDP or about .22 wealth units/person.
Ok, but how did you convert the GDP into ‘wealth units’ and how did you apply that to an individual?

The next year these 90 members of the population have access to only 19.5 wealth units (despite the larger GNP) or .21 wealth units/person.
Why? This assumes no change. What leads you to believe that the only thing that changes is the proportion of GDP one has access to? The GDP could increase and I could still lose my job.

In the final two years the wealth units/person for the
90 members are .17 and .10. So as the “rich” control a larger and larger share of
the growing GDP, the non-rich enjoy a smaller share. The rich get richer and
the rest get poorer.
Following your logic this would all be true but again, your premise is invalid so all these conclusions that follow are invalid as well. In a nutshell, you make several very big and key assumptions that you fail to illustrate;

1. that the GDP can be proportioned among individuals.

2. That the same exact people gain from year to year when in fact the statistics show something entirely different

3. The GDP concerns itself with yearly production, not with wealth accumulation.

If I were a business person and I owned a ten million dollar home and five cars, and I happen to have had a bad year for whatever reason and only ‘earned’ \$15,000 because I took some time off to decide what to do next, I would be classified according to the US government as poverty stricken if I had a family of four. If I am a full-time college student over 18 and don’t work I am considered ‘poor’ regardless of my families income

1. You make the assumption that businesses never fail or lose money from year to year and that all parts of the GDP increase from year to year as well when in fact the GDP is a composite
index and does not deal with the particulars of individuals.

The point is that economic growth does not stop the economy from being a zero
sum game (though a sufficient rate of growth can conceal this fact, to some extent).
No, it shows that the economy is not a zero-sum game. If I lose my job because there is a lack of sales and income. Where did my salary go (my loss) and who gains it if they don’t have the money to begin with?

My loss is clearly not someone else’s gain in this situation. In fact my ‘loss’ becomes someone else’s gain when I get a job with them. A scarce resource (me) gets utilized in a situation where he provides value.

The fact is that the more the rich have, the less the non-rich have.
No, one does not affect the other. There is nothing from stopping the poor from becoming rich. If I become rich, I do not make someone else poor.

This shows up pretty clearly in terms of measures of the distribution of wealth in an economy.
Wealth or income? As I showed above these are not the same thing.

When the rich get richer, the rest of the population gets poorer.
An unsubstantiated claim, and not a new one from you. I’m afraid your arguments, illustrations and models are not very convincing for me.

That’s a zreo sum game;
Yes it is, and thankfully that is not what our economy is

it’s just what happens when you are distributing finite resources to a
population.
Really? How do you know how ‘finite’ any resource is? But here you are mixing apples and oranges. If you are saying that all things are not available to all people I would agree. I’m suure most people would like to live on malibu beach, but you can only have so many houses in any one area. Who decides who gets what?

In a capitalistic society Price dictates how much someone is willing to pay to get those ‘scarce’ resources. Of course you can always have the government decide what is produced and who gets what but that didn’t work out to well in the former Soviet Union and currently in Red China.

Whether that’s a good thing or a bad thing depends on one’s goals
regarding the kind of society one wants to live in: that is, it depends on what
system concepts one is controlling for.
Yes, and I think a great deal more. What society one wants is not solely in the hands of one person, one group of people, or any number of coalitions of groups.

I think control has a great deal to say about all this and I’m saddened that this is not discussed more.

Rick, you confound a number of issues here and I think you do yourself a disservice by not having a better grasp on some fundamental economic issues.

It’s one thing to feel a centrally planned economy has advantages over a capitalistic one, but it’s an entirely different matter when you make assertions and assumptions about things you seem to have little grasp of.

I’m talking here specifically about your inferences about the GDP and what it represents. You also don’t seem to understand the differences between wealth and income. I just don’t understand how you get from here to there.

Regards,

Marc

From [Marc Abrams (2005.10.18.1439)]

Upon some reflection Rick I think I might have not been as clear as I might have been in my ending of the post.

Our thread started out as a discussion on whether the economy is a zero-sum game. You then changed the subject to focus on your main concern which is wealth distribution. But on further examination I found you were really talking about income distribution and confounding it with wealth.

You then tried to show that the ‘rich’ get richer and the ‘poor’ get poorer, which I believe was your main point and goal, but two very big longitudinal studies differ with your assessment. These were both long-term 20 year studies. One done by the University of Michigan and the other by the a government agency.

btw, that the ‘rich’ get richer and the ‘poor’ get poorer can be attributed to any number of reasons, if that is in fact what happens.

Your notion that the economy is a zer0-sum game is clearly false

Both studies showed much movement between income brackets from year to year and a persons income in any one year had very little correlation to a person’s wealth. Age seemed to have the highest correlation. It showed most folks who were in the bottom 20% bracket, in 16 years were then in the top 20%

Do you have data to refute any of this?

Regards,

Marc

[From Rick Marken (2005.10.18.1205)]

Marc Abrams to me:

It's one thing to feel a centrally planned economy has advantages over a
capitalistic one, but it's an entirely different matter when you make
assertions and assumptions about things you seem to have little grasp of.

I really would appreciate it if you would stop attributing beliefs to me
that I don't have and have never expressed in my posts. In an earlier post
you said that I didn't believe that GNP increases. And now you say that I
feel that a centrally planned economy has advantages over a capitalistic
one. For the record, these are things that you may believe that I believe
but, in fact, I don't believe them.

Regards

Rick

···

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Richard S. Marken
Home: 310 474 0313
Cell: 310 729 1400

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[From Rick Marken (2005.10.18.1340)]

Marc Abrams (2005.10.18.1439) --

Our thread started out as a discussion on whether the economy is a zero-sum
game. You then changed the subject to focus on your main concern which is
wealth distribution.

This is not a change of subject. How wealth is distributed depends on
whether or not the economy is a zero sum game. If the economy is a zero sum
game, then an increase in wealth for some "players" necessarily means a
decrease for others.

You then tried to show that the 'rich' get richer and the 'poor' get poorer,
which I believe was your main point and goal,

Yes. Because in a zero sum situation when the wealth of one player or set of
players increases the wealth of the other player (or players) necessarily
decreases. You can't talk about whether or not the economy is zero sum
means that when the rich get richer the poor necessarily get poorer. It also
means that when the poor get richer the rich necessarily get poorer. The
rich and the poor can't both get richer in a zero sum situation. It just
can't happen mathematically.

but two very big longitudinal
studies differ with your assessment. These were both long-term 20 year
studies. One done by the University of Michigan and the other by the a
government agency.

btw, that the 'rich' get richer and the 'poor' get poorer can be attributed to
any number of reasons, if that is in fact what happens.

Your notion that the economy is a zer0-sum game is clearly false

It would be false if they showed that when when one segment of the
population got richer (in the sense of getting a larger proportion of the
income or wealth produced by the economy) the remainder of the population
stayed the same or got richer as well. It doesn't look like they showed
this.

Both studies showed much movement between income brackets from year to year
and a persons income in any one year had very little correlation to a person's
wealth. Age seemed to have the highest correlation. It showed most folks who
were in the bottom 20% bracket, in 16 years were then in the top 20%

Do you have data to refute any of this?

Not at all. If that's what the data show then that's what the data show. But
these data have nothing to do with whether or not the economy is a zero sum
game.

Regards

Rick

···

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Home: 310 474 0313
Cell: 310 729 1400

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From [Marc Abrams (2005.10.18.1643)]

In a message dated 10/18/2005 3:08:15 P.M. Eastern Daylight Time, marken@MINDREADINGS.COM writes:

[From Rick Marken (2005.10.18.1205)]

Marc Abrams to me:

It’s one thing to feel a centrally planned economy has advantages over a
capitalistic one, but it’s an entirely different matter when you make
assertions and assumptions about things you seem to have little grasp of.

I really would appreciate it if you would stop attributing beliefs to me
that I don’t have and have never expressed in my posts.
Sure, but could you please point out to me where I attributed a certain behavior to you.

In the above quote you used I said “it’s one thing to feel…”, I do not see either “you feel…” or "Rick you feel… " I said it’s.

Is this your way of asking for clarification on something I said?

I don’t think so, I think you simply inferred that was my intent, felt is was obvious and had no reason to test it. Well, you are mistaken.

In an earlier post
you said that I didn’t believe that GNP increases.
Please show me these words. Again, I would like to see the specific words you refer too. Why? Because I used the expansion of the GDP as a way of illustrating that anything that expands can’t be zero-sum. I said noting about you. Another untested inference.

And now you say that I
feel that a centrally planned economy has advantages over a capitalistic
one.
Now you are not only attributing to me something I never did or said, but on top of that you are asserting I said you placed a value on it (better)

Another untested assumption.

But this seems par for the course. Of course I see nothing in this post about zer-sum economies, nor wealth distribution, or income levels, what happened to those topics?

If you got the wrong impression, I’m sorry, but you might want to check the next time before you think your perceptions are so obviously true.

For the record, these are things that you may believe that I believe
but, in fact, I don’t believe them.
No Rick, I only understand and know you have no real understanding of the GDP and what is represents; the false notion you hold that an economy is a zero-sum game; and that you get confounded with income and wealth measures without really understanding the significance of this error…

I also do believe you hold ‘winning’ over learning and I do believe you have a very difficult time saying you are wrong. Why do I say this? Because of these red herrings you presented in this post. Instead of a thanks for helping you out of some ignorance you decide a best defense is a good offense.

I don’t play that game any more, find another playmate.

Regards,

Marc

[From Bill Powers (2005.10.18.1539 MDT)]

Rick Marken (2005.10.18.1340) --

> Marc Abrams (2005.10.18.1439) --

> Our thread started out as a discussion on whether the economy is a zero-sum
> game. You then changed the subject to focus on your main concern which is
> wealth distribution.

Rick, I see you allowed yourself to get hooked again by outrageous leaps of logic and nasty remarks that just cry out for denial. Just thought I would call this to your attention.

Best,

Bill P.

···

This is not a change of subject. How wealth is distributed depends on
whether or not the economy is a zero sum game. If the economy is a zero sum
game, then an increase in wealth for some "players" necessarily means a
decrease for others.

> You then tried to show that the 'rich' get richer and the 'poor' get poorer,
> which I believe was your main point and goal,

Yes. Because in a zero sum situation when the wealth of one player or set of
players increases the wealth of the other player (or players) necessarily
decreases. You can't talk about whether or not the economy is zero sum
means that when the rich get richer the poor necessarily get poorer. It also
means that when the poor get richer the rich necessarily get poorer. The
rich and the poor can't both get richer in a zero sum situation. It just
can't happen mathematically.

> but two very big longitudinal
> studies differ with your assessment. These were both long-term 20 year
> studies. One done by the University of Michigan and the other by the a
> government agency.
>
> btw, that the 'rich' get richer and the 'poor' get poorer can be attributed to
> any number of reasons, if that is in fact what happens.
>
> Your notion that the economy is a zer0-sum game is clearly false

It would be false if they showed that when when one segment of the
population got richer (in the sense of getting a larger proportion of the
income or wealth produced by the economy) the remainder of the population
stayed the same or got richer as well. It doesn't look like they showed
this.

> Both studies showed much movement between income brackets from year to year
> and a persons income in any one year had very little correlation to a person's
> wealth. Age seemed to have the highest correlation. It showed most folks who
> were in the bottom 20% bracket, in 16 years were then in the top 20%
>
> Do you have data to refute any of this?

Not at all. If that's what the data show then that's what the data show. But
these data have nothing to do with whether or not the economy is a zero sum
game.

Regards

Rick

--
Richard S. Marken
Home: 310 474 0313
Cell: 310 729 1400

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may contain privileged information. Any unauthorized review, use,
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From [Marc Abrams (2005.10.18.1754)]

In a message dated 10/18/2005 4:43:47 P.M. Eastern Daylight Time, marken@MINDREADINGS.COM writes:

[From Rick Marken (2005.10.18.1340)]

Yes. Because in a zero sum situation when the wealth of one player or set of
players increases the wealth of the other player (or players) necessarily
decreases. You can’t talk about whether or not the economy is zero sum
means that when the rich get richer the poor necessarily get poorer. It also
means that when the poor get richer the rich necessarily get poorer. The
rich and the poor can’t both get richer in a zero sum situation. It just
can’t happen mathematically.
Rick, when you say E C O N O M Y, you are by definition talking about the W H OL E picture. Not any portion or segments.

Saying the US economy is a zero-sum game is flat out wrong. To say ASPECTS of wealth accumulation is zero-sum is a horse of a different color. But so what? There are aspects of life in general that are zero-sum, and aspects that are not.

Yes, I can accumulate wealth by taking it from someone else, but by definition ‘poor’ people have little to give, and capitalism is not about wealth accumulation it is about profitability. Like wealth and income. Wealth and profitability are not the same. You might want to think of profit as a derivative and wealth as an integrel

But you made an error by saying that as the rich get richer the poor get poorer, and this simply is not true for the general population although it is certainly true in certain instances. But saying the rich get poorer and the poor get richer is equally valid.

but two very big longitudinal
studies differ with your assessment. These were both long-term 20 year
studies. One done by the University of Michigan and the other by the a
government agency.

btw, that the ‘rich’ get richer and the ‘poor’ get poorer can be attributed to
any number of reasons, if that is in fact what happens.

Your notion that the economy is a zer0-sum game is clearly false

It would be false if they showed that when when one segment of the
population got richer (in the sense of getting a larger proportion of the
income or wealth produced by the economy) the remainder of the population
stayed the same or got richer as well. It doesn’t look like they showed
this.
Yes they did.

Both studies showed much movement between income brackets from year to year
and a persons income in any one year had very little correlation to a person’s
wealth. Age seemed to have the highest correlation. It showed most folks who
were in the bottom 20% bracket, in 16 years were then in the top 20%

Do you have data to refute any of this?

Not at all. If that’s what the data show then that’s what the data show. But
these data have nothing to do with whether or not the economy is a zero sum
game.
Huh? What did you just say above to my prior statement?

Regards,

Marc

[From Rick Marken (2005.10.18.1520)]

Bill Powers (2005.10.18.1539 MDT)]

Rick, I see you allowed yourself to get hooked again by outrageous
leaps of logic and nasty remarks that just cry out for denial. Just
thought I would call this to your attention.

Thanks. I needed that;-) Now if you could only save Charley Brown from
Lucy's yearly football spot.

Best

Rick

···

----
--
Richard S. Marken
Home: 310 474 0313
Cell: 310 729 1400

--------------------

This email message is for the sole use of the intended recipient(s) and
may contain privileged information. Any unauthorized review, use,
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From [Marc Abrams (2005.10.18.1814)]

Ah, I knew this was going to happen. Like clock work, Powers to the rescue with his ad hominem attacks and baseless innuendo’s.

In a message dated 10/18/2005 5:48:56 P.M. Eastern Daylight Time, powers_w@FRONTIER.NET writes:

[From Bill Powers (2005.10.18.1539 MDT)]

Rick Marken (2005.10.18.1340) –

Marc Abrams (2005.10.18.1439) –

Our thread started out as a discussion on whether the economy is a zero-sum
game. You then changed the subject to focus on your main concern which is
wealth distribution.

Rick, I see you allowed yourself to get hooked again by outrageous
leaps of logic and nasty remarks that just cry out for denial.
How thoughtful and kind.

Just
thought I would call this to your attention.
Yes, poor little Ricky has a very difficult time leading his own life without your supportive concern.

Yep Rick, I really suckered you into responding to me. Now go listen to papa and go have your milk and cookies.

I am glad you are reading my posts Bill, but I wonder why?

Regards,

Marc

[From Bryan Thalhammer (2005.10.18.1736 CDT)]

Marc,

Marc wrote:

"Yes, poor little Ricky has a very difficult time leading his own life without your supportive concern."
...
"Yep Rick, I really suckered you into responding to me. Now go listen to papa and go have your milk and cookies."

Please don't start again. It would be better if you attacked me, since I generally will not answer you much. I don't think there was any ad hominem there, not even intended. But your lines above are just stepping over the line.

Probably best not to look at CSG again, since the track record is that when you return, there is about a week of fairly civil discourse, then you do this.

I wish I could be helpful, but you best bet is to leave now before you get truly offensive.

--Bryan

Marc Abrams wrote:

···

From [Marc Abrams (2005.10.18.1814)]
Ah, I knew this was going to happen. Like clock work, Powers to the rescue with his ad hominem attacks and baseless innuendo's.
In a message dated 10/18/2005 5:48:56 P.M. Eastern Daylight Time, powers_w@FRONTIER.NET writes:

[From Bill Powers (2005.10.18.1539 MDT)]

Rick Marken (2005.10.18.1340) --

> > Marc Abrams (2005.10.18.1439) --
>
> > Our thread started out as a discussion on whether the economy
is a zero-sum
> > game. You then changed the subject to focus on your main
concern which is
> > wealth distribution.

Rick, I see you allowed yourself to get hooked again by outrageous
leaps of logic and nasty remarks that just cry out for denial.

How thoughtful and kind.

Just
thought I would call this to your attention.

Yes, poor little Ricky has a very difficult time leading his own life without your supportive concern.
Yep Rick, I really suckered you into responding to me. Now go listen to papa and go have your milk and cookies.
I am glad you are reading my posts Bill, but I wonder why?
Regards,
Marc

[From Rick Marken (2005.10.18.1340)]

> Marc Abrams (2005.10.18.1439) --

> Our thread started out as a discussion on whether the economy is a zero-sum
> game. You then changed the subject to focus on your main concern which is
> wealth distribution.

This is not a change of subject. How wealth is distributed depends on
whether or not the economy is a zero sum game. If the economy is a zero sum
game, then an increase in wealth for some "players" necessarily means a
decrease for others.

> You then tried to show that the 'rich' get richer and the 'poor' get poorer,
> which I believe was your main point and goal,

Yes. Because in a zero sum situation when the wealth of one player or set of
players increases the wealth of the other player (or players) necessarily
decreases. You can't talk about whether or not the economy is zero sum
means that when the rich get richer the poor necessarily get poorer. It also
means that when the poor get richer the rich necessarily get poorer. The
rich and the poor can't both get richer in a zero sum situation. It just
can't happen mathematically.

This of course dependends on what you mean by "richer". If the relative proportion of GFP going to the richest 10% and to the remaining 90% stay constant as the GDP increases, then both the richest 10% and the other 90% become wealthier ; if richer is the same as wealthier, then the rich can become richer while everyone else does as well. If "richer" means having a higher relative wealth, then the zero sum game arguement applies to richer, but not necessarliy to wealthier. Rising GDP with more or less constant propotional distribution is envisioned in the saying " a rising tide lifts all boats."

Of course, depending on relative rates, it is possible for both the top 10% and everyone else to have greater wealth and the top 10% to have increased proportional wealth for a time, but if the porportion owned by the top 10% is monotonically increasing, there will have to be an inflection point somewhere beyond which the absolute wealth of the reamining 90% will decrease.

···

On Tue, Oct 18, 2005 at 01:42:39PM -0700, Rick Marken wrote:

> but two very big longitudinal
> studies differ with your assessment. These were both long-term 20 year
> studies. One done by the University of Michigan and the other by the a
> government agency.
>
> btw, that the 'rich' get richer and the 'poor' get poorer can be attributed to
> any number of reasons, if that is in fact what happens.
>
> Your notion that the economy is a zer0-sum game is clearly false

It would be false if they showed that when when one segment of the
population got richer (in the sense of getting a larger proportion of the
income or wealth produced by the economy) the remainder of the population
stayed the same or got richer as well. It doesn't look like they showed
this.

> Both studies showed much movement between income brackets from year to year
> and a persons income in any one year had very little correlation to a person's
> wealth. Age seemed to have the highest correlation. It showed most folks who
> were in the bottom 20% bracket, in 16 years were then in the top 20%
>
> Do you have data to refute any of this?

Not at all. If that's what the data show then that's what the data show. But
these data have nothing to do with whether or not the economy is a zero sum
game.

Regards

Rick

--
Richard S. Marken
Home: 310 474 0313
Cell: 310 729 1400

--------------------

This email message is for the sole use of the intended recipient(s) and
may contain privileged information. Any unauthorized review, use,
disclosure or distribution is prohibited. If you are not the intended
of the original message.

--
Samuel Spence Saunders, Ph.D.
saunders@westriverresearch.com
Partner, West River Research Associates

[From Rick Marken (2005.10.18.1735)]

Rick Marken (2005.10.18.1340)--

Yes. Because in a zero sum situation when the wealth of one player or set of
players increases the wealth of the other player (or players) necessarily
decreases.

This of course dependends on what you mean by "richer". If the relative proportion of GFP going to the richest 10% and to the remaining 90% stay constant as the GDP increases, then both the richest 10% and the other 90% become wealthier ;

Righto. That's why it's the relative _proportion_ of the increasing GDP that is held by rich and poor that has to change for the rich to get richer at the expense of the poorer, and vice versa, of course.

Of course, depending on relative rates, it is possible for both the top 10% and everyone else to have greater wealth and the top 10% to have increased proportional wealth for a time, but if the porportion owned by the top 10% is monotonically increasing, there will have to be an inflection point somewhere beyond which the absolute wealth of the reamining 90% will decrease.

Yes. Exactly!

Best

Rick

···

On Tuesday, October 18, 2005, at 04:25 PM, Samuel Saunders wrote:

---
Richard S. Marken
Home 310 474-0313
Cell 310 729-1400

From [Marc Abrams (2005.10.18.2114)]

In a message dated 10/18/2005 8:31:32 P.M. Eastern Daylight Time, marken@MINDREADINGS.COM writes:

[From Rick Marken (2005.10.18.1735)]

Rick Marken (2005.10.18.1340)–

Yes. Because in a zero sum situation when the wealth of one player or
set of
players increases the wealth of the other player (or players)
necessarily
decreases.

This of course dependends on what you mean by “richer”. If the
relative proportion of GFP going to the richest 10% and to the
remaining 90% stay constant as the GDP increases, then both the
richest 10% and the other 90% become wealthier ;

Righto. That’s why it’s the relative proportion of the increasing GDP
that is held by rich and poor that has to change for the rich to get
richer at the expense of the poorer, and vice versa, of course.

Of course, depending on relative rates, it is possible for both the
top 10% and everyone else to have greater wealth and the top 10% to
have increased proportional wealth for a time, but if the porportion
owned by the top 10% is monotonically increasing, there will have to
be an inflection point somewhere beyond which the absolute wealth of
the reamining 90% will decrease.

Yes. Exactly!
This all sounds exciting. Maybe you or Dr. Saunders can fill me in on exactly what it is you found out that we did not know before.

What was confirmed?

Regards,

Marc

···

On Tuesday, October 18, 2005, at 04:25 PM, Samuel Saunders wrote:

[From Bjorn Simonsen
(2005.10.19.09:15 EuST)]

From Rick Marken
(2005.10.18.0900)

I would not mix me up in your discussion about Interesting law and
Wealth Distribution. You have brought about too many assertions. It would
better if the themes were limited.

But I mix me inn nevertheless.

You, Marc said: Capitalism is not a zero sum game. Marc Abrams
(2005.10.17.1543) –
Earlier you brought in a definition for Economics. (The one everybody learn the
first day they study Economics). From Marc Abrams (2005.09.26.0820)]. Economics is about how we as individuals allocate scarce resources that
have alternative uses
.

Capitalism is one way to allocate scarce
recourses.

I think therefore as Rick that all economics
are a zero sum game.

From
Rick Marken (2005.10.18.0900)

[All economies a zero
sum] even if the total size of the
economy (the wealth)

constantly increases (in
the example, if wealth goes from 10 to
20 to 100,

say). It’s still true that if one person gets more
of the total (what ever that

total value is) the
other gets less.

At any instant an economy is
a finite size (the size of GDP, say) and it is being

consumed by a population of
finite size (N). If some subset of the population is

able to control an increasing
proportion of GDP then there will be less and less

of that GDP available to the
remainder of the population.

I have problems when I try to
understand your last passage. At the instant the economy has a finite size (the
size of GDP, say) time for the transactions is passed. No subset of the population is able to
control an increasing proportion of that GDP. In this part you will find that a
subset of the population represent a lesser part then the subset is part of
population.

I think it is correct as Marc say
that both the rich part and the poor part of the population change. Mostly they
don’t represent the same part over time.

When you go to a new year, you
will again find that a subset of the population represent a lesser part of GDP
than another subset. These subset
represent other individuals than last year.

When you say the poorer become
more poor and the richer become more rich, the “poor” concept doesn’t represent
a group of people. The “poor” concept is a theoretical concept. (Of course some
people are poor their whole life, but not all. Lone mothers merry.)

Back to the zero sum Game.

Saying: Economics is about how we as
individuals allocate scarce resources that have alternative uses
,
indicate that Economics is a zero sum Game. But this definition may be a bad
definition, because the example below indicates something else.

I
think that definition was made to explain the theory about “offer and demand”.
There they talk about one widget.

My
example is from national economy, not a global economy.

If
the government one year makes it easier and cheaper to start a business, more
businesses starts. Unemployment is reduced and GDP becomes greater than if the
government didn’t make it easier to start a business.

Those
people who were unemployed become employed.

In
this example I think there was a zero sum Game before government decision and
another zero sum Game after the decision.

From Rick Marken
(2005.10.18.1340)

If the economy is a zero sum game,
then an increase in wealth

for some “players” necessarily means a decrease for others.

Yes. But in practice I don’t
think the economy must be a zero sum game. What do you say?

Bjorn

···

From [Marc Abrams (2005.10.19.0612)

A breath of fresh air, and for you Bjorn I respond.

In a message dated 10/19/2005 3:13:40 A.M. Eastern Daylight Time, bsimonsen@C2I.NET writes:

[From Bjorn Simonsen (2005.10.19.09:15 EuST)]

From Rick Marken (2005.10.18.0900)

I would not mix me up in your discussion about Interesting law and Wealth Distribution. You have brought about too many assertions. It would better if the themes were limited.

Yes, I agree. But I think Rick had a difficult time trying to ‘win’ an argument instead of trying to learn something.

By this I mean, instead of investigating a single point and coming to some understanding of why he and others (meaning me in this case) understood things to be one way or the other he continued to try some fancy foot work and ‘win’ an argument. Rick has no respect for my ideas or for me and clearly showed it, regardless of what he used later as a slimy excuse to attack me.

I was open and willing to change my mind in the face of evidence that showed I was not thinking clearly but Rick could not produce that evidence. Rick was not open to be influenced. He was only interested in ‘winning’ an argument.

This ‘teaching’ style as Dag brought up is disastrous, and has been for as long as Rick and Bill have practiced it. Rick unfortunately is blind to the consequences of his actions and more importantly is unwilling to look at it when it is pointed out by others who can see it. Rick has no inner courage to deal with the notion that he can and often is wrong, like we all are.

But I mix me inn nevertheless.

You, Marc said: Capitalism is not a zero sum game. Marc Abrams (2005.10.17.1543) –
Earlier you brought in a definition for Economics. (The one everybody learn the first day they study Economics). From Marc Abrams (2005.09.26.0820)]. * Economics is about how we as individuals allocate scarce resources that have alternative uses*.

Capitalism is one way to allocate scarce recourses.

I think therefore as Rick that all economics are a zero sum game.

Then at the end you say;

From Rick Marken (2005.10.18.1340)

If the economy is a zero sum game, then an increase in wealth
for some “players” necessarily means a decrease for others.

Yes. But in practice I donâ€™t think the economy must be a zero sum game. What do you say?

Which one is it Bjorn?

I’m not sure I follow your logic. What does alternative uses for scarce resources have to do with a zero-sum game?

First, a zero-sum game is about ‘winning’ and ‘losing’.

In an economy, any economy, the resources will flow to the demand and be used where the demand is highest.

For instance, lets take a national economy. Who decides how much milk production should be used for the productions of cheese, ice cream, and other dairy products?

In a centrally planned one (socialism) the state decides how much of a resource, in this case milk, to allocate to each product. In a capitalistic one, it is supposed to be the consumer by their purchase histories. In our economies it is a bit of both.

Now I suppose you could view it, and make the claim that what is ‘gained’ by ice cream is ‘lost’ by cheese, because you can’t use the same milk to make both. But to call that a zero-sum game is a bit of a stretch in my book, but if that is how you see it , fine.

But Rick and I were not talking about a limited resource with alternative uses. What it came down to was Rick’s assertion that what one person makes in income he necessarily takes away from someone else…

If this were so, as you yourself pointed out, among other things, people’s income’s are not the same from year to year number one, and I pointed out an ongoing University of Michigan study that has been going on since 1968; http://psidonline.isr.umich.edu/

Among other things, this study showed that in a 16 year period in the US, the vast majority of people who were in the lowest 20% bracket moved to the top 20%.

This clearly refutes Rick’s contention that the “rich get richer and the poor get poorer”.

Of course in certain cases this does happen, just as the rich get poorer and as the study showed the poor get richer. In either case it shows that one does not affect the other.

As I mentioned in another post, all this has nothing to do with wealth accumulation, where it could, and I did say, could be, a zero-sum game, and I think here is where a lot of confusion sets in.

Since capitalism provides the concept of ‘profits’, people equate profits to wealth, but they are not the same thing, as I tried pointing out to Rick with examples I don’t have to repeat here.

I think it is helpful to think of the analogy of ‘profits’ as the derivative and wealth as the integral.

Wealth can be accumulated without profits. Simply take it from someone else. That is a zero-sum game. But our economy is not based on people taking things from one person without their consent and giving it to another ‘legally’ unless you are the government.

Then, not only can you redistribute the wealth, you can also kill other people on its directives. But hey, that is one of he reasons we have governments in the first place. They help us do things collectively we would not think of doing individually. It’s wonderful when you can toss personal responsibility aside and hand it over to someone or thing else. At least for some. Ok, I’m of my soapbox.

From Rick Marken (2005.10.18.0900)

At any instant an economy is a finite size (the size of GDP, say) and it is being

consumed by a population of finite size (N). If some subset of the population is

able to control an increasing proportion of GDP then there will be less and less

of that GDP available to the remainder of the population.

I have problems when I try to understand your last passage. At the instant the economy has a finite size (the size of GDP, say) time for the transactions is passed. No subset of the population is able to control an increasing proportion of that GDP. In this part you will find that a subset of the population represent a lesser part then the subset is part of population.

Proportioning out the GDP to individuals is akin to any other statistical method that purports to represent an individual with some averaged composite and is akin to making psychological attributions about an individual with a population study. Which means it’s just about worthless.

As the author of a psychological research methods text I guess old habits die hard for Rick.

When you say the poorer become more poor and the richer become more rich, the â€œpoorâ€? concept doesnâ€™t represent a group of people. The â€œpoorâ€? concept is a theoretical concept. (Of course some people are poor their whole life, but not all. Lone mothers merry.)

The actual % of ‘permanent’ poverty stricken people, at least here in the US is very small. By permanent I mean being under the poverty line for 10 or more years.

But again we must be very careful. Income does not necessarily equate to wealth, as I showed examples of college kids, retirees, and people having bad years in business all being classified as living in ‘poverty’ when they are in fact not.

Back to the zero sum Game.

Saying: _* Economics is about how we as individuals allocate scarce resources that have alternative uses* _, indicate that Economics is a zero sum Game. But this definition may be a bad definition, because the example below indicates something else.

I think that definition was made to explain the theory about â€œoffer and demandâ€?. There they talk about one widget.

Do you mean ‘supply’ and demand? If not, what? I’m not trying to be cute here just cautious. I don’t like assuming

My example is from national economy, not a global economy.

If the government one year makes it easier and cheaper to start a business, more businesses starts.

You have this reversed. A government cannot make it ‘easier’ or ‘cheaper’. It can only make it more expensive and more difficult.

Government makes things ‘easier’ & cheaper by not doing anything.

Unemployment is reduced and GDP becomes greater than if the government didnâ€™t make it easier to start a business.

Business does not need government.

Those people who were unemployed become employed.

In this example I think there was a zero sum Game before government decision and another zero sum Game after the decision.

Who were the ‘winners’ and who were the ‘losers’? Remember, you must show a ‘loser’ tied to every ‘winner’, and what was ‘won’ and ‘lost’ in each case?

Regards,

Marc

[From Fred Nickols (2005.10.19.0840 EDT)] --

From [Marc Abrams (2005.10.19.0612)

snip <

If this were so, as you yourself pointed out, among other things, people's
income's are not the same from year to year number one, and I pointed out an
ongoing University of Michigan study that has been going on since 1968;
_http://psidonline.isr.umich.edu/_ (http://psidonline.isr.umich.edu/)
Among other things, this study showed that in a 16 year period in the US,
the vast majority of people who were in the lowest 20% bracket moved to the top
20%.
This clearly refutes Rick's contention that the "rich get richer and the
poor get poorer".

snip <

The 20 percent statement above caught my attention so I went to the web site. I poked around but could not find the data you cite. Can you provide a more specific link?

I did find some stats on the study itself. It is a longitudinal study of 8,000 families. It might be the case that 20 percent of those 8,000 families (1,600 families) did indeed move from the lowest 20 percent bracket to the highest 20 percent bracket but your statement suggests that such a shift took place for the entire population. That seems a stretch to me.

Regards,

Fred Nickols
nickols@att.net

I think it is correct as Marc
say that both the rich part and the poor part of the population change.
Mostly they don�t represent the same part over
time.
[From Bill Powers (2005.10.19.0614 MDT)]
Bjorn Simonsen
(2005.10.19.09:15 EuST) –
This is true, but it is only part of the truth. It’s always brought up by
those who want to preserve or excuse the disparities between the rich and
the poor. While there are poor people who end up not so poor (certainly
no poor adult is as poor as a poor baby), there are very few who change
from one category to the other. If you follow the lifetime tracks of
those who are born to rich families and those who are born to poor ones,
they do not end up equal; I suspect that on the average they end up more
as they began, with one still far more affluent that the other, and maybe
even more so considering that the rich continue to get richer relative to
the poor.
But affluence itself is not the point. The point is the ability one has
to control what happens to himself or herself. You can eat only so much,
drive only one car at a time, buy only as much education as you can
assimilate. The true disparity shows up in who gives the orders and who
has to follow them. That is the whole point of being wealthy – it is the
power that wealth provides that people want. What a heady rush it is to
say, “You’re fired!” It’s the same sort of rush some people get
out of torturing or raping other people: I can do anything I want to you,
deprive you, hurt you, step on you, even kill you, and there is nothing
you can do about it. You have to be nice to me and do what I say; I do
not have to be nice to you or do what you say. I can take away what you
have; you can’t take away what I have. I live in luxury, which would not
be nearly so sweet if you did not live in squalor. I speak in educated
tones about higher matters, by way of contrast with your crude speech and
interests. I know I am rich because you are poor. How else would
Donald Trump know who he is?

I’m sure that even if this kind of sickness were magically cured, there
would still be rich people and poor people. I would be relatively poor
because my interests were not economic, and what thrilled me was not
seeing how many possessions I could accumulate. Others, to whom money is
a way keeping score, would still try to get very rich for the fun of it,
say at the World Series of Poker. But the sane rich man wouldn’t see
himself as any better than the poor man, and wouldn’t try to buy power
over anyone else. I don’t think that many people would find getting rich
very interesting any more. It’s a pretty dull pursuit when you remove the
dimension of power over others. Wow, tell me more about how you turned
\$100 into \$103. Being very very rich is just another of the many ways we
find of not growing up. Imagine having as your highest goal not having to
accomplish anything worthwhile in life – that is, not having to
“work.”

Best,

Bill P.

[From Bill Powers (2005.10.19.0710 MDT)]

Fred Nickols (2005.10.19.0840 EDT) --

I did find some stats on the study itself. It is a longitudinal study of 8,000 families. It might be the case that 20 percent of those 8,000 families (1,600 families) did indeed move from the lowest 20 percent bracket to the highest 20 percent bracket ...

Yes, when you start by knowing what you want to prove, it's a lot easier to work with numbers. It would be interesting to know what percentage of the families moved into the top 1% or so, where most of the wealth and power are concentrated. I don't think many in the bottom 1% moved into the top 1%. I suspect that by far most of the families in that top bracket started in that bracket.

What's confusing here is that the "top 20%" doesn't refer to the people in this study, but to the whole population, whereas the bottom 20% refers, as you say, to 1600 families, 20% of the families in this study. This says that 80% of the people in the top 20% of the whole population did NOT come from the lowest 20%, if the sample was representative. And what happened to the people who were formerly in the top 20%? They couldn't all have been in the top 20% at the end of the study, could they?

But somehow this misses the point. Suppose every family started dirt poor and ended up filthy rich. Would that fix the problem of power being concentrated in the hands of the richest, who use it to control the poorest? It would just say that everyone in this society is -- well, whatever that signifies. Not a design for the long term, in my opinion.

Best,

Bill P.

From [Marc Abrams (2005.10.19.1023)]

In a message dated 10/19/2005 8:49:47 A.M. Eastern Daylight Time, nickols@att.net writes:

[From Fred Nickols (2005.10.19.0840 EDT)] –

From [Marc Abrams (2005.10.19.0612)

snip <

If this were so, as you yourself pointed out, among other things, people’s
income’s are not the same from year to year number one, and I pointed out an
ongoing University of Michigan study that has been going on since 1968;
http://psidonline.isr.umich.edu/ (http://psidonline.isr.umich.edu/)
Among other things, this study showed that in a 16 year period in the US,
the vast majority of people who were in the lowest 20% bracket moved to the top
20%.
This clearly refutes Rick’s contention that the “rich get richer and the
poor get poorer”.

snip <

The 20 percent statement above caught my attention so I went to the web site. I poked around but could not find the data you cite. Can you provide a more specific link?
Massive isn’t it? I honestly don’t know when or where I first heard of this study and numbers but I do know it was cited in Basic Economics , Thomas Sowell, Basic Books, 2004.

I do know that there were two and only two longitudinal studies done. One was the one I cited another was by a government agency that I can’t recall.

I provide you with a snippet of the pertinent text in Basic Economics, a book btw I would highly recommend to all;

Pg. 143

"Although people in the top income brackets and the bottom income
brackets-“the rich” and “the poor,” as they are often called-may be discussed as if they were different classes of people, often they are the very same people at different stages of their lives. An absolute majority of those Americans who were in the bottom 20 percent in income in 1975 were also in the top 20 percent at some point over the next 16 years. This is not surprising.

After 16 years, people usually have had 16 years more experience, perhaps
including on-the-job training or formal education. Those in business or the
professions have had 16 years in which to build up a clientele. It would be
surprising if they were not able to earn more money as a result. It is not uncommon for most of the people in the top 5 percent of income-earners to be 45 years old and up.

None of this is unique to the United States. A study of eleven European
countries found similar patterns. One-half of the people in Greece and two thirds of the people in Holland who were below the poverty line in a given
year had risen above that line within two years. A study in Britain found
similar patterns when following thousands of individuals over a six-year period.

At the end of six years, nearly two-thirds of the individuals who were
initially in the bottom 20 percent in income had risen out of that bracket.
Thirty-nine percent moved up and out of it in just one year and only 5 percent remained in the bottom 20 percent in income for the whole six years.

Studies in New Zealand likewise showed significant rises of individuals out
of the bottom 20 percent of income earners in just one year and of course
larger numbers rising out of this bracket over a period of several years. There are similar patterns in Canada.

When some people are born, live, and die in poverty, while others are
born, live, and die in luxury, that is a very different situation from one in
which young people have not yet reached the income level of older people,
such as their parents. But the kind of statistics often cited in the media, and
even in academia, typically do not distinguish these very different situations.

I did find some stats on the study itself. It is a longitudinal study of 8,000 families. It might be the case that 20 percent of those 8,000 families (1,600 families) did indeed move from the lowest 20 percent bracket to the highest 20 percent bracket but your statement suggests that such a shift took place for the entire population. That seems a stretch to me.
The point I was trying to make was that the economy as a whole is not a zero-sum game and Rick’s assertions:

1. The fact is that the more the rich have, the less the non-rich have.

2. When the rich get richer, the rest of the population gets poorer.

Are simply not true. The study was cited to show that unlike Ricks assertion #2, there is upward movement in the income brackets.

I also believe an economy is not a zero-sum game. Others disagree, and that is fine.

Rick also confounded the notion of ‘poverty’ with income level and income level and wealth.

Hope this helped,

Marc