OECD Report: Linking Income Distribution With Growth
By Barry Ritholtz - January 27th, 2012, 11:30AM
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Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
16 Responses to “OECD Report: Linking Income Distribution With Growth”
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January 27th, 2012 at 11:47 am
Interesting trend – were all those countries with growing 1% populations tilting conservative (reducing social spending) or more liberal (more social spending). If liberal policies are supposed to reduce the 1% ratio, then we should see the % going down in the countries going more liberal, right? The % of US social spending has risen from 32 to 49% since 1980. Is gub’mint “spreading the wealth” around spreading just a bit more to the 1%? How about those other countries? I bet everyone of them has much higher social spending.
http://www.whitehouse.gov/omb/budget/Historicals – SS and DHS budgets by %, Table 4.2
Wheat-Joe-Dude-Krugman – what’s going on here? This is the opposite of what you promise.
It must be those nasty corporations again. Imagine that – corporations paying their execs more when then do the government’s business than when they do private business.
January 27th, 2012 at 11:48 am
It would be nice if that lower graph had also shown (with little x marks) the GDP/person for each of those countries (perhaps with an extra bonus of correlation statistics). The upper panel should perhaps better show % change (in 1% share) vs. % change in GDP.
January 27th, 2012 at 11:54 am
When you normalize these graphs by the number of earners in a household, many of these so-called wealth effects go away. We Americans are just more tolerant of single-income families, which is the #1 predictor of household poverty.
As more and more old folks move back in with the kids, etc., we will become as poor as the rest of the world.
January 27th, 2012 at 11:59 am
Not sure about Chile´s income distribution. If you consider government subsidies lower income groups, Chile is as equal as many European countries.
January 27th, 2012 at 12:37 pm
The United States experiment on “How to Create a Third-world Country From a First-World Country” continues.
January 27th, 2012 at 12:52 pm
Rd, that was take too. seemed like a decade ago, we wanting to go back to the early 1900s. in the gilded age. not really sure why that was. there wasn’t any thing good about that time in the US
January 27th, 2012 at 12:57 pm
ENVY. It’s just green envy. Nothing wrong with system.
January 27th, 2012 at 12:58 pm
Forgot to add the “sarcasm” emoticon to my last comment… :)
January 27th, 2012 at 1:32 pm
On one hand making these kind of invidious comparisons (hats off to Thorstein Veblen) does invite an accusation of anti-capitalism, since these results are the product of our Free Market System, so if even appearing to question such outcomes then it must mean you are a Socialist or otherwise engaged in class warfare. On the other hand, statistics of this kind have certainly received a much wider circulation since Sept 2008: would we really care, if the economy was perking along OK?
January 27th, 2012 at 3:43 pm
reedsch:
One of the primary differences between a capitalist society and a third-world country is that the wealthy are permitted to destroy themselves in capitalism.
We have entered an era where the wealthy that exhibit a massive financial death wish are not granted it. Instead, they are handed more money because they are “systemically important”.
If the top 1% and their companies that were over-leveraged and insolvent in 2001 and 2008 were allowed to go bankrupt, we would not have seen anywhere close to the growth of the group’s income. 2008 would probably look like 1980 in both graphs.
We give the top 1% preferential tax rates to allow them to build the wealth which they then use to lobby for government support to maintain that wealth when their own actions are about to make themselves much poorer. That is a hallmark of a third-world country, not capitalism.
January 27th, 2012 at 4:01 pm
Interesting trend – were all those countries with growing 1% populations tilting conservative (reducing social spending) or more liberal (more social spending). If liberal policies are supposed to reduce the 1% ratio, then we should see the % going down in the countries going more liberal, right? The % of US social spending has risen from 32 to 49% since 1980. Is gub’mint “spreading the wealth” around spreading just a bit more to the 1%? How about those other countries? I bet everyone of them has much higher % social spending now than they did in 1980.
http://www.whitehouse.gov/omb/budget/Historicals – SS and DHS budgets by %, Table 4.2
January 27th, 2012 at 4:45 pm
1) I don’t see the “link to growth” in those charts. Is there some other chart missing?
2) If you look at the first chart, it just shows: 1) all Scandinavia has less income disparity; 2) the UK and its spinoffs have the most (except for NZ for some odd reason); and 3) continental europe with all the PIIGS except Greece for some reason occupies the middle. What conclusions one can draw from this, Idk. I doubt there would be much of a link to growth.
2) In the second chart, some of the highest growing countries – Turkey, Chile, have the widest disparity in income. Again, maybe there is a chart missing, or maybe a political bias supplies the link to growth in some people’s minds, but being incredibly literal minded, I don’t see anything.
January 27th, 2012 at 8:47 pm
It is a testament to U.S. style capitalism that, despite being victimized by three decades of brutal class warfare waged against it by 99%, the 1% not only survived, but also thrived, more than doubling 1%’s proportionate share of national income from 8% to 18%. Only here in U.S. can free markets, left unfettered by regulation, successfully transfer such massive amounts of redistributed income and concentrated wealth into the hands of 1%.
We should be proud of 1% eating more and more pie, while paying less and less for it. After all, they are much, much smarter and work much, much harder than everyone else. For three years President Obama either liked the trend or forgot it existed until OWS reminded him about it a few weeks ago. Now he talks about maybe 1% should be asked to pay more. Now he talks about maybe 1% should be asked to pay the same rate as the pie maker. Now he talks about it maybe because he knows talking about it is the only thing left he can do.
(What’s wrong with the Netherlands? It’s the only country where 1% saw its share of national income go down during the past 30 years. Didn’t the Dutch invent capitalism?)
January 27th, 2012 at 10:23 pm
rd:
Very well stated!
Someone please help me with the interpretation of the post. I’m not making a connection with the title of the post “Linking Income Distribution with Growth”. I’m not sure what “growth” I’m supposed to make conlusions about. I was assuming it would be income distribution related to a GDP metric.
January 28th, 2012 at 11:05 am
It clearly indicates that the rich got richer everywhere.
And trickle-down economics says… those at the bottom will eventually see gains… the downpour will start when the system fails.
January 28th, 2012 at 5:38 pm
These charts actually understate the issue, I’m thinking, because they exclude capital gains, except in Australia and Finland. Given that the preponderance of capital gains go to high-income people, the change since 1980 is likely to be even bigger.