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Monday, March 31, 2014

Terrifying Inequality

The French economist Thomas Piketty is concerned about growing income and wealth inequality:
[I]f current trends continue, “the consequences for the long-term dynamics of the wealth distribution are potentially terrifying.”
We're doomed! Doomed, I tell you, Dooooomed!!!

Errr, well, what are these terrifying consequences?  Scanning the article, I don't see any terrifying consequences at all.

The article above is in a nice liberal rag, The New Yorker, so I decided to go to that bastion of conservative thought, the New York Times, which summarizes the current understanding of inequality's effects thusly:
For all the brain power thrown at the problem since then, however, specific evidence about inequality’s effects has been hard to find.
Apparently, terrifyingly hard to find. As a result, folks like Piketty seem to have decided they might as well jump on every little terrifying possibility:
“People that worry about inequality for normative reasons have been very quick to jump on plausible hypothesis and a little bit of evidence to make sweeping conclusions about its consequences,” Professor Kenworthy told me.
Professor Kenworthy himself had been hoping to write a terrifying book on inequality's impacts, but disappointingly (for him), couldn't really find anything that would hold up to close scrutiny:
To avoid misleading correlations and better isolate inequality’s impact, Mr. Kenworthy studied its evolution over time, comparing how changes in income concentration across the world’s industrialized nations related to changes in a whole set of social and economic outcomes, from growth and employment to health and educational attainment.He came up mostly empty-handed: “My tests suggest it seems to be a small player in the overall story.”
Professor Stiglitz notes that the United States grew faster during the decades of low inequality immediately after World War II than it did after inequality started rising in the 1980s. But Mr. Kenworthy finds no meaningful impact of inequality on growth one way or the other. “Income inequality isn’t the only thing that differed between these two periods,” he said.
Similarly, Mr. Kenworthy found no significant relationship between increasing inequality and life expectancy, infant mortality or college graduation rates, among others. Even when some patterns do mesh — teenage pregnancy rates fell a little more slowly in countries where the share of income going to the top 1 percent grew fastest — the relationship is weak. If you take the United States and Britain off the list, the relationship disappears.
The relationship between inequality and the alleged stagnation of others' incomes is also not yet terrifying according to a colleague of Kenworthy:
“Most economists don’t feel there’s a logical mechanism that really is persuasive” linking the rise of the 1 percent and the stagnation of incomes for the rest, Professor Jencks said.
Even though hardly terrifying, Mr. Jencks still thinks we should take action:
Mr. Jencks describes the state of the debate between friends and foes of inequality in these terms: “Can I prove that anything is terrible because of rising inequality? Not by the kind of standards I would require. But can they prove I shouldn’t worry? They can’t do that either.”
That, alone, is enough to spur action. “Something that looks bad is coming at you,” he said. “Saying that we shouldn’t do anything about it until we know for sure would be a bad response.”
So not terrifying, but hey, something looks bad. So. We. Must. Do. Something!

And there's no doubt in my mind that "something" involves reduced freedom, bigger government, and more taxes. What a surprise!

92 comments:

Howard said...

More apocaholics trying to scare people into being manipulated.

Clovis e Adri said...

I invite you, Bret, and any other of our friends here, to come and pay me a visit in Brazil.

I can give you a special tour in one of the most unequal countries of the world.

After that, we can talk inequality.

Bret said...

Clovis,

Thank you for your kind and generous offer. Perhaps I'll take you up on that someday. If your offer is actually serious, my wife and I would definitely be tempted.

So you're saying we can't talk inequality before such a visit? (Note that Brazil isn't all that much more unequal than Mexico according to Gini and other statistics and I've been to Mexico quite a number of times - though nobody ever gave me a "special tour").

Annoying Old Guy said...

I had a close friend who lived in Brazil for several years (she's in London now) but I never managed to get down there to visit. Maybe I'll drop in on Clovis instead :-).

Clovis e Adri said...

Bret & AOG,

The offer is quite sincere - it would be a pleasure to show you guys around. Of course, Brasilia is not the highest point for tourists, but it makes a nice stop in between the South and the North, e.g. for people who would like to stop by coming from Rio de Janeiro or Iguacu Falls and going to the Amazon forest, which are indeed top destinations.


Back to inequality, I am not trying to silence anyone. But when I see you citing economists guesses on the topic, I can't stop thinking how inequality is such an obvious drag for anyone living where your lying eyes see it all around.

The kind of really deleterious inequality is the one coming from rent-seeking, and that's the kind we have here since year 1500. AFAIK, the main driver of inequality in the US is still the one coming from innovation (and that's not bad), but one of the main points Piketty and others have been making is that the US is under a transition, where rent-seeking is getting more and more space.

Hence my offer: if you have no worries about becoming a rent-seeking society, come and I'll show you the future, much like Dicken's Ghost of Christmas Future... :-)

Peter said...

OK, everyone, Bret wants us all to meet behind City Hall at 6:00a.m. to begin the March For Inequality.

Clovis, Bret isn't talking about penury or destitution or oppression or corruption or even garish conspicuous consumption. Real people can reasonably get upset about all those things, but it takes an intellectual to get all lathered about abstract inequality. Remember the quip of my liberal friend about Cuba--"It's true they are all poor, but at least they are equally poor."

Annoying Old Guy said...

Yes, this "inequality" is between the middle class and the super-rich. The actual poor are ignored by the liberals who go on about this stuff.

As for the increase in rent-seeking, that's a side effect of the shift from free markets to socialist / collectivist / regulatory state. I am very worried about becoming such a society, but you were just telling me a few comments ago that it's cyclic and I shouldn't be such a pessimist.

erp said...

The problem isn't poverty per se (sorry Clovis, I can't help myself), the problem is that apparently in Brazil and much of the world, there is no avenue out of it.

What made the U.S. and other free market societies so attractive to people was the chance to use their innate talents to make something of their lives and that’s why we got the best from every country in the world and became the most prosperous country that ever existed.

It’s always been a mystery to me why other countries didn’t go down the same path.

The point is probably moot now because most immigrants come for the welfare and almost half of our home-grown able-bodied citizens have the same mindset.

Bret said...

The New Yorker article is concerned about the terrifying "consequences" of inequality. The concept is that inequality is a "cause" of other bad (terrifying) things.

The problem is that the data doesn't support inequality, by itself, "causing" much of anything at all. Just because someone else is richer than you, doesn't make you worse off, except possibly because of envy, which isn't a great basis for a moral argument either.

So the real problem, and really the only problem, is the poverty end of inequality. If people are poor because of policy, societal attitudes, etc., well, fix them!

Focusing on inequality is probably a misdirection. Politically, it probably is useful to get the poor to focus on inequality instead of the many things politicians do to hold people back. "Yes, I know you're poor, it's all the fault of the rich, so we'll make them less rich!"

And sure, looting the rich and giving to the poor can work to some extent for awhile, especially politically. But if you don't fix the underlying policies and attitudes that keep people poor in the first place, the misery of the poor will have no end.

That's why I don't like the inequality discussion. It's political smoke and mirrors, distractions, and lies. Inequality may actually cause other bad, even terrifying, things, but focusing on it is hugely counterproductive in my opinion.

Fix the causes of poverty and inequality will take care of itself. Or nobody, except the envious, will care.

erp said...

Back before the left controlled the media completely, a man on the street (I don't remember the country) was asked what he thought of the poor people rioting in Watts. The man's reply was that he was astonished the poor in America have nice clothes, expensive sneakers, live in houses with yards, have cars, TV's, air-conditioning, and here's the amusing part, were fat! The clip was actually aired. I very much doubt it still exists.

His unspoken question was why did they think they were poor? We know the answer. Other people had more and better stuff and they were convinced by their leaders that the "rich" got rich on the backs of the "poor" and that they deserve a piece of the pie.

Unless we resort to a "Harrison Bergeron" society, there will be no income or any other kind of equality. All we were promised is equality under the law and that notion has been sadly perverted, so there's little chance of that as well.

Clovis e Adri said...
This comment has been removed by the author.
Clovis e Adri said...

Peter,
---
Clovis, Bret isn't talking about penury or destitution or oppression or corruption or even garish conspicuous consumption.
---
He may not to you, but that's exactly what I associate to extreme levels of inequality. Not because I have an economic model to prove that, but only because that's what I observe every single day out there in the streets.


AOG,
---
As for the increase in rent-seeking, that's a side effect of the shift from free markets to socialist / collectivist / regulatory state.
---
And where is the guarantee that in ideal free markets no rent-seeking dominance may happen?


Bret,
---
Fix the causes of poverty and inequality will take care of itself.
---
That sounds a bit naive for me. Have you considered the possibility that the actors behind greater inequality are the same ones not interested in fixing the causes of poverty?


Erp,
---
All we were promised is equality under the law [...]
---
And if we down here were promised not even that?

The point you guys overlook is that great inequality points to great unchecked powers. Those powers have the levers to change the game as they like. IOW, they make sure no equality under the law will happen.


The original sin, down here, goes along this way: the Portuguese King, in his quest to colonize and populate Brazil, divided it in hereditary fiefs. Each Lord who received one was himself a little king at his fief, and responsible for bringing in people (and slaves) and so on. Over time, those fiefs came to be what we call our States today, with little change from the original configuration.

In many of those States, you can trace up to this day the main political families, big businessmen, big farmers and media owners to those first "Lords". Even the Judges come in very large numbers from those same families.

When economic historians compare Brazil and US - both large nations that started at the same colonization drive - it is evident how land was so much more evenly distributed in the US. Basically all land here was, for a long time, in the hands of a few dozen families who inherited those fiefs.

One of the main reasons behind the military Dicatorship of 1964 (today it celebrates exactly 50 years) is that, in an effort to emulate the more advanced economies, the civil President then was favoring an agrarian reform. The idea was not to "take land away from the rich" in arbitrary ways - only non-used land would be electable for large government buyouts for later redistribution of it; i.e. productive land would not be touched and people would get paid for the non-productive one they would lose.

The people more benefiting from all this rent-seeking inequality, obviously, were not happy. It was not hard for them to kick democracy out and sell it to you guys as an anti-communist measure.

I like to compare that to Australia, in the same period a poorer country than Brazil. They did their proper agrarian reform just in that same period, with no brake of their democracy, and now they are a much richer (per capita) country. I believe that is as good an example as possible of how great rent-seeking inequality can be a drag for your economy in the long run, Bret.

erp said...

Clovis, I understand all that. It's the same scenario throughout Central and South American, but you left out what I think was the major reason the "lords" could maintain their stranglehold and keep the peasants down and docile -- the Catholic church and the Jesuits in particular and now one of their own is in the papacy. A tragic mistake IMO and one that will be rued possibly for centuries to come.

You have a big problem and I'm not downplaying the difficulty. All I'm saying is worrying about income inequality and redistribution even you could pull it off, will backfire. People get used to handouts and lose their humanity. Even if you had a magic wand, it's virtually impossible to change people's life view from servitude and dependence to self-reliance and independence in a short period of time.

I can't see any similarity at all between Brazil and Australia other than they are both in the southern hemisphere. Everything about their history and people seem completely different.

Clovis e Adri said...

Erp,

---
All I'm saying is worrying about income inequality and redistribution even you could pull it off, will backfire. People get used to handouts and lose their humanity. Even if you had a magic wand, it's virtually impossible to change people's life view from servitude and dependence to self-reliance and independence in a short period of time.
---

Well, I am in the strange position of completely agreeing with you. :-)

Maybe I've never made it clear enough here, but I see our present welfare state as the least worst option. Had I a magic wand, I would do exactly that: "change people's life view from servitude and dependence to self-reliance".

As I have no wand, magic or not, I've chosen to support the "handouts" established by our very dysfunctional welfare state as a much better option than to let people starve to death (as used to happen not long ago, yet in my lifetime).

erp said...

Clovis, if that is the case, why do you agree with Harry that the welfare state here with its breakdown of family and community, its violence and vulgarity, make for a "better life" than the perhaps poorer in material things, but richer in things that matter like family and tradition that it replaced?

There was no starving in streets here except perhaps substance abusers who passed out in the elements.

We took care of our own regardless of how the rabble rousers have tried to rewrite history to promote the narrative.

Many people have said of their childhood, when growing up, they didn't know they were poor. Now the inequality of income is drummed into the weak minds of the rabble, but instead of encouraging them to work hard to attain what they want, they are encouraged to think they are entitled to the labor of others.

Peter said...

No, erp, we didn't always "take care of our own", which is why the basic social welfare system was instituted across the West almost on a consensus basis, especially after the war. Feast your eyes. It didn't come about because the musings of Harvard profs in their faculty clubs were so persuasive, it came about because poverty, sickness and destitution were there for all to see and were widely considered to be either morally offensive or dangerous to the civil order or both.

Bret is right that abstract inequality doesn't have terrifying consequences. Neither, I suspect, does a basic social safety net. I find the argument that today's urban dysfunctions can all be blamed on welfare to be unpersuasive given the history of urban poverty before the welfare state and even today in many mega-cities without one. There is a lot more at play here than government cheques and food stamps.

Granted the push for more and more welfare has proven to be an unstoppable and unsustainable train, but if you are talking about overall economic success and prosperity, there are more important factors like government ownership and management of enterprise (a.k.a. socialism, erp), civil peace, corruption, I'm-all-right-Jack unions, competitive taxation, ease of entry into business, and culture. If you were right, Scandinavia would be hopeless economic basket cases, and they aren't.

Annoying Old Guy said...

where is the guarantee that in ideal free markets no rent-seeking dominance may happen?

The same place the guarantee you will never get sick if you eat healthy and exercise.

You should pose that to the guy who talked about how it's a continuum, not just perfection and perdition.

The point you guys overlook is that great inequality points to great unchecked powers.

That's purely a presumption on your part, and not one I agree with. What unchecked power did Steve Jobs use to become so much richer than I am?

I would also say that if that's your concern, the best approach is to limit the power of the state which also limits the abilities to change the rules effectively.

When your economy is suffering from the deleterious effects of rent seeking, making it easier for the powerful to do that by providing more rent seeking opportunities seems counter-productive. Maybe I'm just more cynical than you, but in my view if you give the government power, that power will be captured by exactly the people you wanted those powers to stop in the first place.

erp said...

Peter, you seem to think my position is there was no poverty before welfare. Of course, there was, but even so people were better off because of the reasons I give and they are also worse off now because of the reasons I give ... and we did take care of own, perhaps not to your high standards.

... children are still starving, so we are told schools must provide three meals a day even on weekends, holidays and summer vacation because their families can't afford to feed them although there are myriad plans and programs and agencies costing tax payers trillions of dollars for that purpose alone. Where is that money going? Who cares as long as some people can feel better about doing "something."

Sweden and Denmark, always used in these discussions, have absolutely no relation to our cities teeming with immigrants from all over the world speaking many languages with few skills and yet most of them actually overcame and prospered by working hard, saving their money, sending their kids to school ... an old story, but a good one.

Scandinavia had a homogeneous population with a strong Protestant work ethic and even so, they couldn't sustain it more than a few generations because their young people became addicted to handouts as we all probably would be if we didn't know better and they opened their borders to immigrants whose culture was the polar opposite of theirs in every imaginable way.

Our indigenous peoples were treated shabbily mostly because we meddled and devalued in their traditional culture and tried to make their lives "better" by "helping" them. Slavery is another subject well covered on these strings. Just how much better off are the people living in ghettoes like Detroit than southern slaves. At least then, there was hope of freedom.

Naturally this tirade will be seen as my endorsing slavery and usurpation of indian lands, letting children starve, etc.

So be it.

Barry Meislin said...

"So. We. Must. Do. Something!"

Well there's always the Gerard Depardieu Solution (TM).

(Emulated with much less fanfare by hundreds if not thousands of wealthy and/or enterprising French---to the benefit of, gasp!, the UK and the US, and I imagine that Quebec is getting some of the "action".)

Clovis e Adri said...

Barry,

You are right, there is always the possibility of taking your money elsewhere.

That's why Piketty has been getting much attention: Bret does not comment about it, but one of the main proposals he has is something like a common taxation framework for all the world, in order to prevent leakages.

You know, it is NSA times, soon enough no one will get away from anything. Wait a little bit and soon enough another US President will send drones upon tax evaders. Not to pay taxes will be an act of terrorism. How will you like that, Skipper? :-)

Clovis e Adri said...

Erp,

Short answer: I believe Peter is right, your welfare state is not the menace you say it is and, at some point in past, it was as necessary for saving lives as it has been now in Brazil.

Or maybe I really know nothing and the left-wing media led me to believe that. Maybe if we just let the market as free as possible, things would work out themselves. What I can tell you is, we had never a real free market in Brazil, but we had not long ago a negligible welfare state. People were definitely not better off back then.

Barry Meislin said...

"...a common taxation framework for all the world..."

Yes, we've seen that sort of eutopia before. The Third Reich tried mightily, as did the USSR.

And they even succeeded, at least to some extent. And Robert Mugabe is trying his best, to be sure.

No doubt, many will clamor, "Scandinavia, Scandinavia!"

(Alas, once you've got the collection problems ironed out---carrying a very big (electrified?) stick (motivator?) will probably be very helpful---there is that nagging problem of distribution.)

On the other hand, it may well spur R&D for the colonization of outer space to a major extent....

Which some will find most appealing.

Clovis e Adri said...

AOG,

---
[Clovis] The point you guys overlook is that great inequality points to great unchecked powers.
[AOG] That's purely a presumption on your part, and not one I agree with. What unchecked power did Steve Jobs use to become so much richer than I am?
---
It is a presumption grounded in my reality. You answer if a case grounded in yours.

Why are your billionaires better than ours? Tough question. You hardly hear about our rich guys donating millions to any university, ONG, or whatever.

Maybe it has to do with the fact that people who are rich by inheritance tend to value less the levers that move society forward. They hardly worked any of them, right?

Or maybe that's just my envious inner devil speaking, after all inequality is only about envious mean people who can't be happy with their lot in life, no?


---
Maybe I'm just more cynical than you, but in my view if you give the government power, that power will be captured by exactly the people you wanted those powers to stop in the first place.
---
And I concede you may be right.

But put yourself in my position a little bit: I have no hope of changing the environment of my country to a free market ideal, were I to adopt your view that is the best possible order. So much corruption and vetted powerful interests, it is impossible for now.

So what's the next best option? Should I defend taxes as low as possible and turn my eye away from famine and morally repulsive poverty? Or should I erect a strong Federal Govt. in the hope it can, sometimes, alleviate some of the problems that at state/local level are obvious hopeless failures?

You know, confronted with those hard questions, it is no wonder many Brazilians decide to get the easy way out: they move, even illegally, to your country or Europe. It is not only poor people with no opportunity that want to emigrate, middle class types tired of the vitiated environment take that option too.

erp said...

Clovis, I don't comment on things I know nothing about like the fate of the poor in other countries, but I do know that welfare made things much worse for the poor here by institutionalizing poverty and turning it into a power grabbing ploy by the left.

You may not be aware of the trillions spent on the war on poverty which resulted in a major increase of those getting handouts and a humungus addition to the bottom lines of poverty pimps in and out of government.

Bret said...

Clovis wrote: "Bret does not comment about it, but one of the main proposals he has is something like a common taxation framework for all the world..."

Bret didn't comment about it because, in my opinion, Piketty falls short on making the case that Inequality has terrifying consequences. Just stating it doesn't make it so. Therefore, taking action makes little sense to me.

Bret said...

Clovis wrote: "Have you considered the possibility that the actors behind greater inequality are the same ones not interested in fixing the causes of poverty?"

Yes, absolutely true.

Then, if you want to be pessimistic, you can say that you won't succeed in fixing either.

Nonetheless, the things to focus on, in my opinion, are those policies (attitudes and rhetoric as well) that cause poverty. If you succeed in fixing those, you will either fix Inequality, or make it so only those who are particularly envious care about it.

Fixing inequality by making the rich less well off and leaving the poor equally poor is wildly counterproductive.

What's more, pretending to address inequality is the easy political path. Make noise about "taxing the rich," while instead taxing the middle class and lower middle class and giving a bit to the poor after the politicians and bureaucrats take a huge cut. That's what's been happening here for many decades.

Note that the supposed taxes on the rich are income taxes so, say a doctor just out of medical school with $200,000+ in debt and no assets will pay a huge amount of taxes. Is that doctor rich? Are people incented to become doctors?

The rich are able to protect their money. They can park it offshore, put it into investment vehicles that are protected from taxes, etc. It's everyone else who pays the price.

Hey Skipper said...

[Clovis:] I invite you, Bret, and any other of our friends here, to come and pay me a visit in Brazil.

I can give you a special tour in one of the most unequal countries of the world.

After that, we can talk inequality.


Over the last couple years I have been to Buenos Aires, Peru, and Costa Rica.

The inequality was most glaring in Buenos Aires — going from a prosperous urban area to appalling slums was only a matter of a mile or so. (To be fair, going from mansions of Grosse Pointe to post-apocalyptic-without-an-apocalypse Detroit is a journey of almost exactly the same distance.)

But there is a huge difference in both magnitude and kind between Piketty's inequality apocaholism and the deeply entrenched and systemic deprivation in Brazil. (Nice explanation, BTW.)

In Brazil, the poor are destitute. However, in the US, that isn't the case. At the same time inequality has risen, consumption has flattened. Forty years ago, the rich had many things even the middle class did not (air conditioning, dishwashers, mobile phones, etc.) Now, except for the very poorest — whose poverty is almost always not a consequence of economic policy — the rich have almost nothing the much less well off do not. The top 1% have larger houses and fancier cars, but their houses and cars are scarcely more comfortable or functional than the rest of us.

Despite increasing inequality and "income stagnation" the less well off have become much better off.

AFAIK, the main driver of inequality in the US is still the one coming from innovation (and that's not bad), but one of the main points Piketty and others have been making is that the US is under a transition, where rent-seeking is getting more and more space.

Innovation is a significant, but not the main driver. The inequalitists base their argument on household income, then aim at CEOs. In doing so they fail to either notice, or mention, that family breakdown, spreads the same income over more households is much more common down the income ladder. An NYT article on the subject (going on memory) attributes roughly 40% of the increase in inequality to that fact alone.


[Bret:] Just because someone else is richer than you, doesn't make you worse off, except possibly because of envy, which isn't a great basis for a moral argument either.

Of the seven deadly sins, why do progressives wallow in the only one that isn't any fun?

[Peter:] No, erp, we didn't always "take care of our own", which is why the basic social welfare system was instituted across the West almost on a consensus basis, especially after the war …

Yes, with a couple quibble. The Scandinavian economic model is coming apart, because it subsidizes idleness and penalizes industry far too much. Any social welfare system must do that to some extent, but the Scandinavian countries have taken that inherent problem beyond the point of sustainability. (And it is worth noting that Scandinavian-Americans are, in material terms, indistinguishable from Scandinavian-Scandinavians.

Peter said...

The Scandinavian economic model is coming apart

Maybe, although I've heard that prediction almost as many times as the prediction America would be overtaken by the USSR, Japan, the EU, China...whatever. They are doing better than most of the rest of Europe. I suspect one of their strengths is that they are as resilient as the Anglosphere and are able to adjust without huge political dislocations.

I'm not a leftist and nobody has to convince me welfare-as-a-way-of-life is an issue. A lot of that can be addressed through changes to the schemes without dreaming of unravelling the whole thing and going back to the future. Poverty has been with us since Genesis, but welfare and socialism didn't get going until the 19th century when urbanization and free markets broke up the old feudal, rural order that did have some aspects of the inter-dependency erp is nostalgic for. Let's not bury the truth about the era of the Robber Baron and the reality of life in 19th century factories and mines. It was one accident or sickness or recession away from destitution for many.

Clovis: Culture counts. Big time. Arguably as much as economic theory.

Clovis e Adri said...

Bret,
---
Nonetheless, the things to focus on, in my opinion, are those policies (attitudes and rhetoric as well) that cause poverty.
---
OK, Bret. It is a perfectly valid point.

But when I read most opinions here, they basically say there is no problem. Any poverty still left in the USA is only the poor's fault. Consequence of laziness or mental illness.

So should I assume all the other people complaining about difficult conditions of life in the US are just lazy or envious? Poverty is gone and they are only talking it to grab power? Is it all that simple?

Because if I believe other of your countrymen around, they have been saying that life is getting harder and harder to the bottom and middle class, while getting easier and easier to the upper one. Are they utterly wrong?

Clovis e Adri said...

Hey Skipper,

---
The inequality was most glaring in Buenos Aires — going from a prosperous urban area to appalling slums was only a matter of a mile or so.
---
They were not like that only a few years ago.

Last time I have been to Argentina, in 2005 (see, after their 2001 crisis), I was impressed on how they were much more of an egalitarian society than Brazil.

I hear that almost all slums you now see in Buenos Aires did not exist before 2001. In Brazil, we have them since, like, always. Argentina is still way behind us in inequality - I know, it is quite a sad competition.

But it is worth to comment: Argetina basically expelled their blacks after slavery, and persecuted indigenous population too. Quite easier to slash inequality this way, no?

---
Despite increasing inequality and "income stagnation" the less well off have become much better off.
---
We have been over this argument here before. There again, many people look to disagree with you.



Peter,
---
Clovis: Culture counts. Big time. Arguably as much as economic theory.
---
Sure it does. Yet, it is much easier to draw new economic plans than to redefine your culture over.

And if we care to pay attention how culture and economics are related over a long time frame, the plot thickens.

The first region of Brazil to be colonized - the Northeast - is the poorest one. There the effects of the hereditary fief is most strongly felt in the economy up to this day. The South of Brazil was developed later on, with less influence of slavery and much more use of migration (Europeans, Japanese, etc). It is much more ticher and egalitarian than the Northeast, looks like even another country in some ways.

How much of that was the different cultural mix? Northeast main initial mix (startin in the 1600's): portuguese, local indians, blacks; South main mix: portuguese (~1700), than later on Italians, Germans, Japanese, East Europeans (they start coming after the end of slavery, ~1890, stop ~1950).

And how much was economic opportunity? People arriving in the Northeast: no land but to a very few. People arriving at the South: huge land distribution for free (or almost free).

You see, in this case - colonization - culture was in formation, making the initial economic setup all the more influential IMHO.

Annoying Old Guy said...

Clovis;

But when I read most opinions here, they basically say there is no problem

Do you mean here, the USA, or here, this weblog? Because I don't recall any one on this weblog writing anything like that.

they have been saying that life is getting harder and harder to the bottom and middle class, while getting easier and easier to the upper one

I agree with that statement. I think it's because of the increasingly socialistic behavior of our governments.

Bret said...

Clovis wrote: "So should I assume all the other people complaining about difficult conditions of life in the US are just lazy or envious? Poverty is gone and they are only talking it to grab power? Is it all that simple?"

Nothing (that aggregates human behavior) is ever simple.

Ignoring those who use poverty as a tool to advance their power, those who really are lazy, those who feel good about chanting "we must do something about the poor!", those who are confused, those who are envious, and on, and on, and on, brings us to the question of what exactly those "difficult conditions" are?

In the 1970s and 1980s, driving from San Diego across the border into Mexico, there was a hill visible from the road that was covered with thousands of people living in cardboard boxes in the mud. Whole (large) families living in constructions of cardboard boxes, an occasional scrap of wood, a few nails, and tape. In the dirt or mud. They looked underfed and not very healthy. It was bad for tourism so the Mexican government made all those people move, but I rather doubt the Mexican government made them better off.

I assume that when you talk about poverty in Brazil, you have stuff like that, maybe even worse.

We don't have anything like that in America. Oh sure, we have homeless, and there's no doubt a small number of people living in cardboard boxes somewhere, but that's an extreme outlier, and there's nothing so concentrated or as widespread as that hill in Mexico. Well, with the possible exception of poor white folk in pockets of Appalachia, but nobody cares about the poor white in America, not even the poor white, but then they're not quite starving.

Given that the vast majority of Americans aren't starving, sleep in something better than a cardboard box, have clothes, and other than the white folks in Appalachia, have access to indoor plumbing and indoor toilets, and almost certainly have access to TV for entertainment, basic survival and life is not "difficult" in America.

So which specific "difficult conditions of life" are you referring to? The list of possibilities is long, but I'd like to know which ones you are referring to.

Clovis wrote: "Because if I believe other of your countrymen around, they have been saying that life is getting harder and harder to the bottom and middle class, while getting easier and easier to the upper one."

Again, specifically in what way is life getting harder and harder? Are there ways in which it is also getting easier and easier for the bottom and middle class? Or is absolutely everything harder and harder? How do you weight the "harders" and "easiers" (if any)? Harder and harder just since the 2008 recession? Or which time frame for harder and harder are you referring? Is it really getting easier and easier for the upper class? In what way(s) (for example, one can only eat so much food and own so many cars and houses) is it getting easier and easier? Is it getting harder and harder for everybody in the lower and middle classes, or just some? Is it getting easier and easier for everybody in the upper class, or just some?

It's easy to make statements like yours, and many people do, but they don't have much meaning without detail here in the US. They're good slogans to try and run for office, but not good for much else.

So details and specifics, please.

Clovis e Adri said...
This comment has been removed by the author.
Clovis e Adri said...

AOG,

---
[Clovis] they have been saying that life is getting harder and harder to the bottom and middle class, while getting easier and easier to the upper one
[AOG] I agree with that statement. I think it's because of the increasingly socialistic behavior of our governments.
---
So I invite you to answer Bret's above questions. In which senses that phrase you agree with is right?


Bret,
---
Given that the vast majority of Americans aren't starving, sleep in [...] basic survival and life is not "difficult" in America [...]
So details and specifics, please.
---
Thanks for your detailed answer. I suppose it may look obvious to you, but it was enlightening for me.

When I read reports of hardship in US, they mostly come in the abstract (like Krugman gives in his blogs, e.g. unemployement numbers), just like the inequality numbers I get.

Which means that I have no way to give you details and specifics. Other than few weeks driving through California and Florida, I have no other first hand experience with your country to grasp much of the big picture.

I ask myself if the main reason you have no people in cardboard boxes is, well, the same welfare our guys here would prefer to dismantle. But then again, I have little knowledge to answer that too.

I also must say that, watching from here, it is extremely confusing to see people (a lot of your media, and even your president) repeating so frequently that phrase about hardships getting harder, and yet the definition of that "harder" be something not obvious at all.


By the way...
---
Well, with the possible exception of poor white folk in pockets of Appalachia,
---
What's the matter with folks at Appalachia? Why are they any different from the rest of the country?

Bret said...

Clovis wrote: "Which means that I have no way to give you details and specifics."

You mentioned unemployment, and that's somewhat specific, at least specific enough to start a discussion.

Unfortunately, like everything else, the causes of unemployment are myriad. I think Schumpeter's Creative Destruction is accelerating and this is making it difficult for the not particularly adaptable human animal to keep up. I think that many of the economic policies are extremely counterproductive when it comes to job creation, which in the current environment requires absorbing a great deal of risk and therefore needs a high after regulatory cost, after tax rate of return. I think that a lot of people aren't motivated to work (and I don't blame them, by the way). And there are a gazillion other reasons as well.

So let's take one popular measure. The "Employment-Population Ratio" which is the number of people over 16 who have jobs divided by the total population. Since WWII, that number has stayed in the moderately narrow band of 55% to 65%. It's currently at 59%. So overall, it's hard to say that getting a job is harder for everybody over the long term. It's as easy as it's ever been or even easier for a woman to get a job. Perhaps the hardest it's ever been (since post WWII) for a young, uneducated male to get a job. There are always winners and losers.

So let's say we want more jobs for young uneducated males. Where do jobs come from? Public sector jobs come by legislation and/or decree and poof!, like magic (from the jobs fairy), some agency suddenly has jobs for people, hopefully of the target type. They don't need to be productive jobs and, in my opinion, are generally less productive than private sector jobs. They can be just digging and filling in holes, for example. Perfectly fine if the idea is just to employ people.

Private sector jobs are a lot more complex. Ultimately, it has to make sense from a revenue and profit standpoint to create a job. I look at today's regulatory and tax structure and I'm not at all surprised the private sector isn't creating jobs very quickly and is, in fact, shedding them as quickly as potential automation becomes available. Minimum wages, worker's insurance, health insurance, employment regulations, constant threats of being sued, etc. make it very expensive and risky to hire anyone. Much, much better to just buy a machine instead whenever possible. Add in high taxes and much better just to stay the same size and not bother expanding production. This story just doesn't have a happy ending.

So's there's a brief and extremely limited glimpse at employment, and the lack thereof in the United States.


Clovis wrote: "I ask myself if the main reason you have no people in cardboard boxes..."

I think we're moving to where an awful lot of people will live in a smallish apartment and watch TV all day (and perhaps digging then filling in holes day after day). Better than boxes, but seems like a rather empty existence. Or rather, seems like existence, rather than life.

Bret said...

Clovis wrote: "What's the matter with folks at Appalachia?"

The Scots-Irish immigrated to Appalachia to farm and mine coal. Even at its peak, it was a meager existence.

Now, the farms aren't competitive for a number of reasons, and many of the coal mines are closed, also for a variety of reasons.

Those that had ambition and/or talent promptly left for greener pastures, leaving the less competent and less motivated. With that not-so-good labor force and meager natural resources, nobody in their right mind would invest in the area.

The only solution, in my opinion, is to relocate the residents in a spread out fashion, and level the towns and let them revert to wilderness. In other words, treat the area as a natural disaster and the occupants as refugees.

But the occupants are happy enough with their welfare checks, their alcohol and drugs, and have no interest in moving on.

Proof that many people can be happy enough with a life that looks to me as existing and not quite living.

Annoying Old Guy said...

Clovis;

I basically agree with Bret's comments. I was thinking of a time period from roughly 2007 on for the USA, but longer for Europe and Venezuela.

What concerns me is not that things have gotten enormously worse, but the derivatives seem negative and I don't see what will change to prevent a repeat of, say, Argentina 1850-1940.

Hey Skipper said...

[Clovis:] But when I read most opinions here, they basically say there is no problem. Any poverty still left in the USA is only the poor's fault. Consequence of laziness or mental illness.


But it is worth to comment: Argentina basically expelled their blacks after slavery, and persecuted indigenous population too. Quite easier to slash inequality this way, no?

Yet two more reasons why inequality in Argentina is a far different beast than in the US. The problems Brazil faces are far worse than the US, and our own problems with entrenched black poverty are easily bad enough.

[Hey Skipper:] Despite increasing inequality and "income stagnation" the less well off have become much better off.
---
[Clovis:] We have been over this argument here before. There again, many people look to disagree with you.


On what basis do they disagree? In the last 40 years, the U.S. average lifespan has increased by 8 years .

All Americans drive safer, more comfortable and more economic cars. They live in larger houses which far more often have air conditioning, dishwashers and garbage disposals.

Airline travel is within reach of virtually all Americans.

I don't mean to imply that all is well, only that in strictly materialistic terms, it is hard to find a way in which Americans are worse off now than 40 years ago.

Relying upon a very simplistic measure — income after inflation adjustments — does yield that conclusion that Americans' incomes have stagnated, or even declined, over that same period. Fine. But as is typical for simplistic measures, relying upon it requires absolutely ignoring everything else.

What's the matter with folks at Appalachia? Why are they any different from the rest of the country?

I don't know, but as a guess I would put most of it down to geography. Applachia is sufficiently rugged that access remains difficult. Yes, there are roads, all paved, but while beautiful, they are narrow and windy enough to render a lot of business activity uneconomical. And, that geography has also encouraged a significant degree of isolation.

And what Bret said.

Clovis e Adri said...

AOG,

I have little idea what you are talking about at this point. Europe, Venezuela, Argentina, all in the same bucket?

If any of those days you get to expand things a little bit more for the non initiated like myself, I thank you thee.

Clovis e Adri said...

Bret & Skipper,

Well, I went to look for an opinion on poverty and welfare that would be contrary to yours, which means, of course, I went for Krugman. He has something on this from this year:

http://www.nytimes.com/2014/01/10/opinion/krugman-the-war-over-poverty.html?ref=paulkrugman&_r=0

You and him look to live in different countries. Leftland and Rightland must be their names.

Clovis e Adri said...

Skipper,

---
[On Appalachia] I don't know, but as a guess I would put most of it down to geography.
---
You of all people, Skipper, give us this one.

Gosh, how come you explain people living in Alaska then?

Bret said...

Clovis,

Which part specifically are you referring to. As usual, Krugman has lots of rhetoric, but not much meat. And, if you ignore the spin, opinion, and preferences, I don't think there's that much difference.

For example,

Krugman: "They have decided that inequality is a winning political issue."

Bret: "Politically, it probably is useful to get the poor to focus on inequality..."

Looks like agreement to me.

But anyway, point me to specific data, not just the writings of a political campaigner like Krugman. I mean, if you can actually find real data in his article, fine, but otherwise I didn't see anything in particular that's hard fact that useful to respond to.

Annoying Old Guy said...

Clovis;

I was answering the question you asked me here. [I could link better if Bret would fix his templates :-(].

"So I invite you to answer Bret's above questions. In which senses that phrase you agree with is right?"

As for Krugman, basically what Skipper said. The conflation of income inequality, the "1%", and the welfare state is a typical Krugman mishmash of mostly independent issues to keep readers keep from noticing he's not really saying anything.

Bret said...

aog wrote: "I could link better if Bret would fix his templates..."

What's wrong with the template?

Clovis e Adri said...

Bret,

Hey, that column has a lot of opposite views from what I am presented to in this blog.

Take this part:

---
The narrative went like this: Antipoverty programs hadn’t actually reduced poverty, because poverty in America was basically a social problem — a problem of broken families, crime and a culture of dependence that was only reinforced by government aid. And because this narrative was so widely accepted, bashing the poor was good politics, enthusiastically embraced by Republicans and some Democrats, too.
---

The first part of the phrase is just what's been written here thousands of times.

And the second is the opposite of what you have meant with political use of poverty: he says to blame the poor made for good politics, while you have said that to pose as defender of them is political manipulation.

I can believe both positions have been put to political use, probably you both are right.


And if you wanted numbers, he provided links. For example:

http://www.epi.org/blog/real-hourly-wage-growth-last-generation/

It is quite clear in that graphic that, in terms of wages, life has got harder for the bottom and easier for the upper side.

Skipper argues that things got way cheaper, due to technology and scale, so wage decay is not much of a problem. I have no way to judge that from here. Part of your media points out that many people only close the gap, to keep all that, by makings debts or resorting to welfare - if true, I'd say Skipper is being disingenuous.

One thing both you and Krugman implicitly agree is that the war on poverty "worked": you both think poverty is quite alleviated, with the difference that he cheers this up, while you look to think those people are having no life worth to be called so.


Quite frankly, I am sure whatever your present situation is, from what I am used to down here, it is not that bad. Still, no one answered directly my question: you say that basic "survival and life is not "difficult" in America". Would it keep being true after turning off welfare? And I mean in the long run (for sure people used to paychecks will suffer in the short run, that's not the point).

erp said...

Bret, I don't know if it's the fault of the template, but when I click "Post a comment" on my email, it goes to the top of the post, not to the comment itself. Minor point, but if you're fixing it ...

Correction: It will occasionally go to directly to the comment, but I haven't been able to figure out if I've done something differently.

Clovis e Adri said...

AOG,

I understand you were answering me, I am just saying you did not so in clear ways.

What, specifically, makes you believe you are in a downward path just like Argentina from the 19th to 20th century?


---
The conflation of income inequality, the "1%", and the welfare state is a typical Krugman mishmash of mostly independent issues [...]
---

Wait a bit. I understand what they call "the rise of the 1%" has been happening just at the same time when (i) more people are resorting to welfare, (ii) income inequality has been growing.

Sure, it does not grant him to be right, but don't you think it at least makes for a legitimate question if those things are strongly correlated?

Clovis e Adri said...

BTW, I think the topic invites us to read this Charles Koch recent piece:

http://online.wsj.com/news/articles/SB10001424052702303978304579475860515021286?mod=WSJ_Opinion_LEADTop&mg=reno64-wsj

I sincerely felt I was reading this blog.

Apparently, he is only interested in the greater good of society, and his prescriptions for it are selfless.

Annoying Old Guy said...

Clovis;

Just about every subject we've discussed on this weblog. If you want a particular example, the re-election of President Obama.

No, all three of those things (presuming the "rise of the 1%" is even real) have been tracking along their own timelines, and there's no unifying underlying mechanism.

Did you have any actual objections to the Koch piece except snark? Do you support Senate Majority Leader's Reid's crusade against the Kochs founded on explicit lies? That's what prompted the Koch editorial you read.

Annoying Old Guy said...

Bret;

A couple of template things -

1) See here - there's no way to go to further comments.

2) Your DD elements have an ID, but not all browsers will use the anchor tag to find that. You should have an explicit A element.

Clovis e Adri said...

AOG,

---
[...] and there's no unifying underlying mechanism.
---
Interesting. I guess you have some good economics papers to prove that, right?

---
Did you have any actual objections to the Koch piece except snark?
---
None at all. It is as well written as some of the posts in this weblog. I think one is being very influenced by the other, I can't guess which though.

Bret said...

Clovis wrote: "...that column has a lot of opposite views from what I am presented to in this blog."

Views and subjective preferences, certainly spin, but not necessarily fact.

Clovis wrote: "Krugman wrote:The narrative went like this: Antipoverty programs hadn’t actually reduced poverty, because poverty in America was basically a social problem — a problem of broken families, crime and a culture of dependence that was only reinforced by government aid."

and

"The first part of the phrase is just what's been written here thousands of times."

I don't think so. First, I can't speak for anybody else who writes or comments here, but I've written things that apparently look similar to you, but if you consider it more carefully, you'd see that it's quite a bit different. I would write something like:

Poverty rates were falling rapidly PRIOR to President Johnson declaring the War on Poverty, and thereafter poverty rates flattened out and remained more or less constant until the present day. While some people benefited from the hugely expensive War on Poverty, certain programs, such as AFDC (Aid to Families with Dependent Children) seemed to have initiated a substantial increase in broken families, crime and a culture of dependence that was reinforced over time by that government aid, where these specific problems were minimal prior to the War on Poverty.

I can see that someone (such as you) could read what Krugman wrote and what I might write or have written and interpret them as being the same. I, however, think they are materially different, and yet not different enough, unless someone points to the specific paragraph, to bother with.

That's the genius of Krugman, he can spin what I say or might say and make you and others take it in a much different and much more negative light, even though it's not really what I said (or would say) and I agree that the "narrative" exactly as he states it is untrue - therefore I'm a liar.

Clovis wrote: "And the second is the opposite of what you have meant with political use of poverty: he says to blame the poor made for good politics, while you have said that to pose as defender of them is political manipulation."

"Good politics" versus "political manipulation." Those are different, how?

Clovis wrote: "It is quite clear in that graphic that, in terms of wages, life has got harder for the bottom..."

Note that wages and compensation are two different things and the picture is different for total compensation. Of course, Krugman picks the one (wages) that makes his narrative look better, even though it's misleading.

Clovis asks: "Would it keep being true [poverty alleviated] after turning off welfare?"

You ask about the long run specifically. There are two answers. The first is that you have to survive the short run to get to the long run and just like the alcoholic who might die in the short run without alcohol, the US is addicted to the welfare state and may not be able to survive now without it. Unfortunately, like the alcoholic or any addict, the US will be damaged by its addiction and the addiction may even kill it eventually (many decades or hundreds of years, in my opinion - Rome was a mess for centuries before it finally fell).

The second answer is that if the welfare state was dismantled, communities would deal with local problems such as their poor and once the transition was complete, poverty would remain adequately alleviated and the United States would be much stronger and a much better place to live for everybody in the long run.

erp said...

Bravo Bert...

And why are we continually talking about Krugman who has about as much credibility as Nostradamus.

Bret said...

erp,

I'm happy enough to address Krugman and what he writes when asked. Krugman is easily the best propagandist in the world for at least the last half-century. He's also the voice of liberal America. He's also seems to Clovis' main reference for US politics.

So Krugman will continue to be a topic.

Annoying Old Guy said...

Clovis;

The burden of proof is on the one making the claim of the existence of the mechanism.

erp said...

... I don't object if you guys have the patience to read his drivel and respond to it, but it apparently doesn't sink in that he isn't creditable no matter how many times he's refuted by actual reality.

I am anxious to see the new and improved GGW.

Clovis e Adri said...

AOG,

The burden of proof is on anyone making claims, be it for the existence or the non-existence of it.

I understand you can't prove your denial of the mechanism, so you shouldn't claim it.

Hey Skipper said...

Clovis:

I read the Krugman link. Below are two quotes from it that epitomize why when I read his articles, all I can hear is axe grinding>

The bottom third of the American work force has seen little or no rise in inflation-adjusted wages since the early 1970s; the bottom third of male workers has experienced a sharp wage decline. This wage stagnation, not social decay, is the reason poverty has proved so hard to eradicate.

This epitomizes what I criticized above: reliance upon exactly one simplistic measure requires ignoring everything else. Not once in his article, or anything he has ever written, will you find any reference to all the ways in which poorer Americans are, in material terms, becoming more like richer Americans.

The other problem with his point of view is that it is implicitly about relative, not absolute, poverty.

Now, that is fine, in the sense that there are arguments for thinking of poverty in relative terms. But there are also plenty against, and his reluctance to make his position clear, and argue for it, means he is being economical with the truth.

We don't live in different countries. Rather, he in particular, and American progressive in general, show an amazing inability to seriously consider any arguments that aren't their own. Progressive ideas are good and true merely due to the fact that progressives hold them. Compare Ross Douthat at the NYT to Krugman. One of those is seriously trying to come to terms with competing considerations. The other is a ideological hack.

At this point, the rise of the 1 percent at the expense of everyone else is so obvious that it’s no longer possible to shut down any discussion of rising inequality with cries of “class warfare.”

How, exactly, did the rise of the top 1% come at the expense of everyone else? I don't recall the rich robbing the poor at gunpoint. And, while he is excoriating the top 1%, he makes the pervasive progressive mistake of focusing on characteristic while completely ignoring composition.

I'll bet entertainers and athletes comprise a decent proportion of that top 1%. Please, Mr. Krugman, explain how what they did came at the expense of everyone else. Or surgeons. Or engineers. In fact, he owes us an explanation for how all these occupations come at the expense of everyone else.

Here is a progressive that disagrees with Krugman.

Hey Skipper said...

[Hey Skipper, on Appalachia] I don't know, but as a guess I would put most of it down to geography.
---
You of all people, Skipper, give us this one.

Gosh, how come you explain people living in Alaska then?


Geography. In 1950, Alaska (1/5th the size of Brazil) had 150,000 people, divided pretty much between indigenous Alaskans and descendants of the gold rush. Now it has 750,000 people (half in the Anchorage metropolitan area). And they are here mostly due to geography — north slope oil, one of the largest cargo airports in the world (due to Anchorage being directly under the great circle route between Asia and the Continental US — that accounts for why I live here) and military.

Hey Skipper said...

(Forgot to add -- there is a great deal of rural poverty in Alaska in which geography plays the same role as it does in Appalachia.)

Hey Skipper said...

[Krugman:] The narrative went like this: Antipoverty programs hadn’t actually reduced poverty, because poverty in America was basically a social problem …

[Clovis:] The first part of the phrase is just what's been written here thousands of times.

And the second is the opposite of what you have meant with political use of poverty: he says to blame the poor made for good politics, while you have said that to pose as defender of them is political manipulation.


I'm with Peter on this. Life itself is unfair. Without redistributing some assets from those who are lucky to those who are very unlucky, then we would have people in straits that we will not tolerate. I am sympathetic to the thinking that welfare has supplanted charity, and that the latter is preferable to the former.

However, charity has its limits. It tends to be in-group focused. That's fine, except that if an entire group (African Americans, say) have few resources to begin with, and other groups are unlikely to extend charity to them, then without the coerced re-distribution of welfare, the problem is bound to be self-perpetuating.

To take a look at the coin's other side, focusing on relative poverty, particularly during an extended period of technological that has very much flattened consumption, must have the result of subsidizing inactivity. Around 1996, there was great kerfuffle over reforming welfare by ending lifetime entitlements. Progressives were aghast. And wrong.

I happen to think that most poverty in the US is due to social, not economic, problems. Addiction, mental illness, single motherhood, and horrid inner city schools are all social issues. If we could magically strike them from the face of the earth, then poverty would plummet. OK, that isn't possible. But acknowledging that rather requires explaining how taxing the wealthy is going to fix problems that aren't, at their core, monetary.

Hey Skipper said...

Real hourly wage growth over the last generation.

This illustrates perfectly why I dislike relying on the CPI to demonstrate much of anything. The expenses due to owning and operating a motor vehicle today represent about 10% of a typical family's budget. Yet the amount of hours a wage earner has to work in order to own and operate a motor vehicle has gone down by 23% since 1975. (I'm working from reasonably accurate memory).

Where is that reflected in the change in real wages? (And there are many more examples) If hourly wages drop by 15% over forty years, but the monetary units boy 23% more, has life gotten harder for the bottom of the income scale?

It isn't that I don't think that wage decay isn't a problem; rather, that it isn't nearly as much of a problem as the single-factor focused make it out to be. Beyond that, supply and demand isn't just a good idea, it is the law.

(As an aside, the EPI, as is its progressive wont, attributes this all to the decline of unions, etc. Not once do they mention exogenous factors, like the ignominious collapse of the collectivism of which they are so fond.)

Clovis e Adri said...

Bret,

---
I can see that someone (such as you) could read what Krugman wrote and what I might write or have written and interpret them as being the same. I, however, think they are materially different, and yet not different enough, unless someone points to the specific paragraph, to bother with.
---
Thas was unfair of you, Bret. You've written six lines where he has written three. You gave more information at the cost of more space.

Were you to slash three lines of yours in order to represent your overall opinion, do you think Krugman's would be still so deceptive as you imply? Keep in mind that he also needs to do so in a way that lets the text flow.

You nearly dismiss welfare as either unnecessary or too expensive to be worth it, and producing dependence and more poverty where it was supposed to fix it. Krugman opinion is quite not the same at this matter. So I keep convinced that you and him have opposite views here, in substance, not only in spin.


---
Good politics" versus "political manipulation." Those are different, how?
---
When I've written the phrase you quote, I used both as synonymous. I understand Krugman used it in the same way.


---
Note that wages and compensation are two different things and the picture is different for total compensation. Of course, Krugman picks the one (wages) that makes his narrative look better, even though it's misleading.
---
It is a good point, and one I would not be aware of (for me both words translate as the same thing). If you have a better picture to link, I would be glad to take a look.



---
The second answer is that if the welfare state was dismantled, communities would deal with local problems such as their poor and once the transition was complete, poverty would remain adequately alleviated and the United States would be much stronger and a much better place to live for everybody in the long run.
---
Quite an optimistic outlook this second option, in contrast to the first one. It does sound too good to be true - and it looks to have zero precedence in world present and past history - but no one's going to accuse you of never dreaming a better world.

Bret said...

Clovis wrote: "You've written six lines where he has written three."

So it's ok to write fewer lines, even if they are misleading, as long as it saves space?

Annoying Old Guy said...

Bret;

Just like Krugman can make any claim he wants without evidence, and it's up to us to disprove it.

Bret said...

Clovis wrote: "...while you look to think those people are having no life worth to be called so."

"The World Health Organization reports that suicide rates have increased 60 percent over the past 50 years, most strikingly in the developing world, and that by 2020 depression will be the second most prevalent medical condition in the world."

Clovis e Adri said...

Bret,

I disagree Keynes lines were misleading.

You can either blame my English skills or my political bias, but your six lines keep being a lot like his three ones. The shades of difference are too small compared with the absolute value of the message.

had I to reqrite your opinion in three lines, I would probably do no better than Krugman. And I can assure you I, at least, would do so without any guile. So that's why I can't see any Krugman's foul play at that point.

AOG,

For someone with alledged training in science, you struck me as very forgetful of what you (should) have learned.

Clovis e Adri said...

Bret,

I think you could not have chosen a worse indicator.

Suicide dynamics is very complex. The correlations it has with poverty are just so varied that to focus on welfare as the cause of it is no small guess.

Bret said...

Clovis,

I was more thinking of the depression statistics than the suicide portion.

And I agree that it's not necessarily directly caused by welfare, but by something of which welfare is a subset: lack of control, destruction of community, curtailed opportunity (more so for those not in poverty), etc.

Almost by definition, conservatives and progressives will disagree on what's going on here because they are depressed by totally different things. Rich and poor are also depressed by different things.

Nonetheless, depression being "the second most prevalent medical condition in the world" should elicit some concern over the direction of things. My personal opinion is that the welfare nanny state is causing at least some of that depression. I know it depresses me.

erp said...

Gee. Perhaps Maslow didn't go far enough and depression, not self-actualization, is the logical final step.

Clovis e Adri said...

Bret,

My only advice is: man up and toughen up. You have no right to be depressed living in such a miriad of opportunities as you do.

You really need that special tour down here.

Hey Skipper said...

The World Health Organization reports that suicide rates have increased 60 percent over the past 50 years, most strikingly in the developing world ...

Hmmm.

There are good arguments (not many that I particularly agree with, but that doesn't make them bad) for the upwardly mobile bar of relative poverty.

This might be another.

The ever-expanding reach of the intarwebtubez is bringing the marvels of post-industrial life to those who haven't even reached industrial.

Which might well account for the increasing suicide rate.

Ignorance, after all, is supposed to be at the root of bliss.

Annoying Old Guy said...

Clovis;

It's not forgetting. I was never taught in any science class that claims were presumed true until explicitly disproven. I was taught "correlation is not causation", which I have also not forgotten.

Clovis e Adri said...

AOG,

You can't be serious. Please read our altercation up above and see if your last answer fits in any of it.

erp said...


Hey Great Guys.

The link from the email to the correct comment is working!!!

Clovis e Adri said...

Since we are in the topic, take a look at this:

http://www.nytimes.com/2014/04/03/opinion/were-not-no-1-were-not-no-1.html?src=rechp&_r=0

Ok, Bret, you may have the right of a little bit of depression. Peter, on the other side, must be the biggest smile here.

erp said...

Wow. I clicked and here I am!

Clovis, I don't read the Times, so why not paraphrase their pearls of wisdom.

Hey Skipper said...

Nicholas Kristoff is much better at linking than reading.

What is in his article:

Even in access to cellphones and the Internet, the United States ranks a disappointing 23rd, partly because one American in five lacks Internet access.

What is in the link he cites for that humiliating fact:

As of May 2013, 70% of American adults ages 18 and older have a high-speed broadband connection at home ...

What Kristoff certainly doesn't know, and is probably too much of a journalist to find out is that broadband connections come in one of two forms: DSL, or cable.

Many people in the U.S. don't live close enough to the local switch, or in densely enough populated areas to get either.

But why let facts on the ground -- geography itself -- get in the way of his narrative.

Annoying Old Guy said...

Clovis;

It fits perfectly. I complained of Krugman conflating various things, and your response was my complaint was bogus unless I had "some good economics papers to prove that". I say, no, Krugman is conflating them it's his burden to demonstrate that there is causation in his correlation. That's what I was taught in science, that claims require evidence.

How about this as a resolution - I'll consider Krugman's conflation of those trends when *he* provides "some good economics papers to prove that". Until then, we'll take it as unproven and simply his opinion.

Clovis e Adri said...

AOG,

Actually, you went beyond than just saying Krugman had no proof. Yourself declared:

"No, all three of those things (presuming the "rise of the 1%" is even real) have been tracking along their own timelines, and there's no unifying underlying mechanism."

To explicitly state "there's no unifying underlying mechanism" asks for a proof itself. It is different from saying "I see no proof of an unifying underlying mechanism".

Either you own up your statements, or you correct them.

Clovis e Adri said...

Skipper,

---
The ever-expanding reach of the intarwebtubez is bringing the marvels of post-industrial life to those who haven't even reached industrial. Which might well account for the increasing suicide rate.
---
I wonder from where come this idea that suicide is a post-industrial thing.

I could even bet that half of the developing world increase in suicide rates is due to someone actually counting it now, whence in past their statistics were surely useless.

In 2009 I was in Paris, in a conference in the UNESCO building, not far from the Eiffel Tower. A girl went up in the famous tower and jumped. Not one word was heard in the News that day, or any other. They have a rule of not publishing minors suicide in fear of copycats.

I assure you it never crossed my mind: was that girl in welfare, hence depressed?

Hey Skipper said...

Clovis:

But wasn't the point increasing suicide rate in the developing world?

As we have seen with progressives, envy is miserable.

Annoying Old Guy said...

Clovis;

Fine, I'll go with "I see no evidence for any unifying mechanism".

Clovis e Adri said...

Skipper,

Sorry, I did not finish my thought in explicit ways: if even in Paris the topic is treated in shades (no news on that teenager, although they will compute her in the statistics), what to say of "less advanced" places?

I raise my bet, more than half of the developing world increase in suicide rates must come from changes in culture of counting/statistical procedures.

erp said...

So this is from my I-Pad, it brought me to the comment, but the comment box didn't automatically open.

Just reporting from the field.

Annoying Old Guy said...

I have to agree with Clovis on such statistics from less-developed nations that are becoming more developed.

Bret said...

An interesting article about Piketty's book:

http://reason.com/archives/2014/04/26/living-with-inequality

An excerpt:

"As Piketty reminds us, human beings can be pretty bad at living with economic inequality. But when it comes to capital, simple economic theory is right: the more, the merrier. And if we can reduce covetousness, we can say the reverse: the merrier, the more."

Clovis e Adri said...

It is interesting how in the 21th Century we still keep going back to the basics, like the ten commandments. So the central suggestion of his piece

"That's why I propose the creation of the Tenth Commandment Club. The tenth commandment—"You shall not covet"—is a foundation of social peace. The Nobel Laureate economist Vernon Smith noted the tenth commandment along with the eighth (you shall not steal) "

sounds to me more than a bit naive. I mean, it is not like people have been repeating those commandments for a few thousand years by now...

We may as well ask why he did not prescribe attention to the other 8 commandments too. He could also ask himself why the people who prescribed those commandments concluded that usury was a breach of them.

But to pick and choose what commandment better suits you is another thing going on for thousand years, isn't it?

Peter said...

What is interesting is how this new leftist icon can inspire and persuade by skipping over 20th century history and appealing to 19th century novels.

I agree with Clovis that the Reason article is pretty weak and defensive. The left is making headway with a neo-feudal understanding of the economy. For them, it's all about a fixed pie and how it is divided. A dollar more for my neighbour is a dollar less for me. To respond to that fallacy by urging everyone not to covet as they watch the rich grab more of the pie is not very promising.

Bret said...

Well, that didn't work.

I was mostly just trying to save a link to an article that I thought had a couple of good points on the inequality topic and thought I could sneak it into this somewhat older post without anybody noticing. I agree it's not a great article overall.

Oops. Sorry about that. I won't do it again.

Bret said...

Peter wrote: "What is interesting is how this new leftist icon..."

What is interesting to me is how this book is easily the most discussed book in economics since I've been following economics closely starting 30 years ago. (Can anybody think of another one that caused such widespread debate? Howard? Harry? Anybody?)

Scary!

Hey Skipper said...

That Reason article is weak. Here is one that is much stronger.

The WSJ has a review that, unsurprisingly, isn't friendly.

Much more surprising is this Foreign Affairs review, which nearly rubbishes the book.

The Nation's version is the flip side of the WSJ's, and a reminder of how leaden collectivist writing is -- you will need to scroll through more than 3/4 of a far too long article to get to the review itself.

Not having read the book, I'm reluctant to criticize it, but from all the reviews I have read, he appears to focus on characteristic at the expense of composition.

When talking about the very wealthy in the US, it is makes no sense to consider only CEOs, because to do so ignores the globalization of the entertainment industry, and free agency.

Over the period in question, the incomes for entertainers and athletes have skyrocketed. One would think that worth mentioning (as one review noted), but he didn't.

Although he did manage to further reveal the left's fetish for looting.