Hackonomics, Part II

A quick follow up to last week’s Hackonomics discussion, where we looked at how little alleged wealth inequality there is in America.

Part of our critique was that dividing the US into quintiles was a variation of the median/average error, and only served to hide the exhorbitantly greater wealth, income and consumption of the top few percent. To that end, there are two peices of evidence I want to point you towards: One anecdotal, and one data driven.

The first one is THE ONE PERCENT, to be shown Thursday night on Cinemax, at 6:30pm Eastern (and throughout the month). The film is directed by Jamie Johnson (yes, Johnson as in the Johnson Johnson & Johnson). Its his follow up to his "Born Rich,” shown on HBO in 2003.

Here’s the Cinemax description:

Four years after turning his camera on himself and other affluent
youths in his documentary Born Rich, filmmaker Jamie Johnson presents
this look at the "wealth gap": the growing divide between the rich and
the poor in America. In this film, the 27-year-old heir to the Johnson
& Johnson fortune explores the political, moral and emotional
rationale that enables a tiny percentage of Americans–the one
percent–to control nearly half of the wealth in the entire country.
Along the way, Johnson collects the points of view from a wide variety
of Americans, ranging from media mogul Steve Forbes and Kinko’s founder
Paul Orfalea to Florida taxi drivers and Chicago residents in danger of
losing their low-income homes. (TVG) (NA)

Looks to be rather intriguing.

One last thing: In the original Hackonomics, I buried the detailed spending habits of the of the upper echelon of wealth in America. I suspect you will find this data a bit more unequal than the quintile nonsense we saw from Alm and Cox.

Here is how this group spent their money as follows:

Dollars Spent Category - 2007 Spending per Affluent Elite Household
                    Category           Category
                    Spending           Spending
Summer Spending        *       2007       *      2005    Change 2007/2005
Activity               %      $ Spent     %     $ Spent  $Change %Change
Yacht Rentals        10.60%  $384,000    9.50% $317,000  $67,000  21.14%
Redecorating         44.90%  $129,000   30.90%  137,000  ($8,000) -5.84%
Villa Rentals        15.70%  $106,000   13.80%  $79,000  $27,000  34.18%
Excursions          25.80%  $103,000   22.70%  $79,000  $24,000  30.38%
Jewelry/watches      73.70%  $94,000    63.20%  $63,000  $31,000  49.21%
Luxury Cruises       47.50%  $92,000    43.10%  $71,000  $21,000  29.58%
Charitable Giving    97.50%  $82,000    98.40%  $52,000  $30,000  57.69%
Vacation Home
Rentals             12.10%  $82,000    11.80%  $64,000  $18,000  28.13%
Out-of-Home Spa
Services            67.70%  $61,000    48.70%  $49,000  $12,000  24.49%
Entertaining        93.90%  $56,000    92.40%  $39,000  $17,000  43.59%
Luxury Hotels        95.50%  $48,000    93.40%  $36,000  $12,000  33.33%
Luxury Resorts       84.80%  $41,000    82.60%  $23,000  $18,000  78.26%
At-Home Spa
Services            53.50%  $38,000    47.40%  $26,000  $12,000  46.15%
Apparel/accessories  92.40%  $34,000    86.80%  $16,000  $18,000 112.50%
Audio/visual         51.50%  $31,000    50.70%  $14,000  $17,000 121.43%
Wines and Spirits
for Social
Entertaining        86.90%  $24,000    77.00%  $19,000   $5,000  26.32%
Wines and Spirits
for Personal
Consumption         84.80%  $17,000    74.30%  $11,000   $6,000  54.55%

                                  2007             2005     $Change  %Change
    Total Luxury Summer
    Spending/Household       $622,202.02        $399,187.50 $223,015  55.87%

    *Percentage of those surveyed spending in this category
Survey of Households with Net Worth $10 Million +

Prince & Associates (2007)

Yeah, that consumption spending looks pretty egalitarian to me! I got your top quintile RIGHT HERE.


A Gaping Divide: Straddling Capitalism’s Fault Line
NYT, February 21, 2008

The One Percent
Jamie Johnson 
February 19, 2008 | 06:31 PM (EST)

see also

Borrow and Spend   
Floyd Norris
NYT, February 11, 2008,  12:42 pm

Consumption and Income Inequality
Economist’s View February 10, 2008


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Blog Spotlight: naked capitalism

Its been quite a while since our last edition of Blog Spotlight: Tonite, I am pleased to present Yves Smith’s naked capitalism.

Yves is a refugee from a big Wall Street iBank, and has put serious time into a well known consulting firm. I have been particularly impressed with Yves coverage of the monoline insurers (Ambac (ABK), MBIA, FGIC). As you will see, her thoughtful post below reflects both his sharp wit, worldly banking experience and insight into this sector.

This is part of our ongoing short list of excellent but somewhat overlooked
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Posted by Yves Smith at 8:55 AM, Feb 19, 2008

Ever since Eliot Spitzer threatened the troubled monoline insurers
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But this talk of a split reminds me of movies about Hollywood, where someone buttonholes a producer with his pet idea:

it’s like Flashdance, except you reverse it: the girl is a Hispanic
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Like the film proposal, the break up notion is still at the high
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