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Thread: Top 1% Up $21 Trillion. Bottom 50% Down $900 Billion.

  1. Top | #11
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    Quote Originally Posted by ZiprHead View Post
    Just read their report. This is from their abstract ffs:

    The bottom 90% wealth share first increased up to the mid-1980s and then steadily declined. The increase in wealth concentration is due to the surge of top incomes combined with an increase in saving rate inequality.
    Or this section:

    The second key result involves the dynamics of the bottom 90% wealth share. There is a widespread view that a key structural change in the US economy has been the rise of middleclass wealth since the beginning of the twentieth century, in particular because of the rise of pensions and home ownership rates. And indeed our results show that the bottom 90% wealth share gradually increased from 20% in the 1920s to a high of 35% in the mid-1980s. But in a sharp reversal of past trends, the bottom 90% wealth share has fallen since then, to about 23% in 2012. Pension wealth has continued to increase but not enough to compensate for a surge in mortgage, consumer credit, and student debt. The key driver of the declining bottom 90% share is the fall of middle-class saving, a fall which itself may partly owe to the low growth of middle-class income, to financial deregulation leading to some forms of predatory lending, or to growing behavioral biases in the saving decisions of middle-class households.
    Or this section:

    The average net wealth per family is close to $350,000, but this average masks a great deal of heterogeneity. For the bottom 90%, average wealth is $84,000, which corresponds to a share of total wealth of 22.8%. The next 9% (top 10% minus top 1%), families with net worth between $660,000 and $4 million, hold 35.4% of total wealth. The top 1%—1.6 million families with net assets above $4 million—owns close to 42% of total wealth and the top 0.1%—160,700 families with net assets above $20 million—owns 22% of total wealth, about as much as the bottom 90%.
    This is where Sanders (and Occupy Wall Street) got his bumper sticker, but note what it actually says:

    For the bottom 90%, average wealth is $84,000, which corresponds to a share of total wealth of 22.8%...and the top 0.1%...own 22% of total wealth, about as much as the bottom 90%.
    22.8% compared to 22% or "about as much." Based on those exact same numbers, I could just as easily say that the bottom 90% owns MORE than the top .1%, but that doesn't fool people into voting for me.

    It's all in how you word it.

    Plus, note the use of the misleading term "total wealth." What they mean by that is in relation to the people they included in their study--iow, how much a hundred people in a room have in their pockets is the "total wealth" of those hundred people in a room--not in relation to the idea that "wealth" is some sort of finite pie that only has a certain number of slices and someone else is getting YOUR slice. But that is precisely the implication Sanders used to his advantage, but it's not what Zucman and Saez were talking about.

    It is indeed a big pile of dinosaur shit.
    Last edited by Koyaanisqatsi; 10-07-2019 at 05:07 PM.

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    Quote Originally Posted by Koyaanisqatsi View Post
    Iow, the solution to the issues they discovered--and Sanders deliberately misconstrued and made into a bumper sticker--are, basically, forced ("nudged") savings/investment!
    Like social security where the government makes you pay FICA taxes....or like a defined pension where the company does pretty much the same thing?

    I believe a lot of the problem has more to do with the fed than Adam Sandler. The fed basically has told me my whole working life that my dollars are going to get cheaper tomorrow. And that I am better off buying something real with them today, because after inflation those dollars are going to be worth less even with the interest added.

  3. Top | #13
    Loony Running The Asylum ZiprHead's Avatar
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    Koy, your links seems to be at odds with your post that I replied to.
    ITMFA

    When conservatives realize they cannot win democratically, they will not abandon conservatism. They will abandon democracy.

    You submit to tyranny when you renounce truth. - Timothy Snyder

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    Quote Originally Posted by ZiprHead View Post
    Koy, your links seems to be at odds with your post that I replied to.
    How so?

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    Quote Originally Posted by RVonse View Post
    Quote Originally Posted by Koyaanisqatsi View Post
    Iow, the solution to the issues they discovered--and Sanders deliberately misconstrued and made into a bumper sticker--are, basically, forced ("nudged") savings/investment!
    Like social security where the government makes you pay FICA taxes....or like a defined pension where the company does pretty much the same thing?
    They were evidently recommending something more like a 401K, only mandatory and government managed (I guess). As they put it:

    First, a fraction of earnings (e.g., 3 or 4% of pay up to $100,000 of annual earnings) could be directed by default to individual tax-deferred savings accounts that can only be used for retirement, home purchase downpayment (to build housing wealth), and education expenses (to build human capital) as in the existing automatic IRAs proposals. Second, such accounts could be invested in a broad fund delivering a rate of return r close to the global return on capital, ensuring that even modest accounts earn substantial returns.

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    Loony Running The Asylum ZiprHead's Avatar
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    Quote Originally Posted by Koyaanisqatsi View Post
    Quote Originally Posted by ZiprHead View Post
    Koy, your links seems to be at odds with your post that I replied to.
    How so?
    You ranted about the big problem is people don't save money. Then you post a link and quote a source that says many, many people simply don't make enough money to acquire savings, living from paycheck to paycheck.
    ITMFA

    When conservatives realize they cannot win democratically, they will not abandon conservatism. They will abandon democracy.

    You submit to tyranny when you renounce truth. - Timothy Snyder

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    Quote Originally Posted by RVonse View Post
    The fed basically has told me my whole working life that my dollars are going to get cheaper tomorrow. And that I am better off buying something real with them today, because after inflation those dollars are going to be worth less even with the interest added.
    The Fed told you no such thing. It sounds more like something an idiot goldbug would promote.

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    Loony Running The Asylum ZiprHead's Avatar
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    NYT-The Rich Really Do Pay Lower Taxes Than You

    For the first time on record, the 400 wealthiest Americans last year paid a lower total tax rate — spanning federal, state and local taxes — than any other income group, according to newly released data.
    The overall tax rate on the richest 400 households last year was only 23 percent, meaning that their combined tax payments equaled less than one quarter of their total income. This overall rate was 70 percent in 1950 and 47 percent in 1980.

    For middle-class and poor families, the picture is different. Federal income taxes have also declined modestly for these families, but they haven’t benefited much if at all from the decline in the corporate tax or estate tax. And they now pay more in payroll taxes (which finance Medicare and Social Security) than in the past. Over all, their taxes have remained fairly flat.

    The combined result is that over the last 75 years the United States tax system has become radically less progressive.
    ITMFA

    When conservatives realize they cannot win democratically, they will not abandon conservatism. They will abandon democracy.

    You submit to tyranny when you renounce truth. - Timothy Snyder

  9. Top | #19
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    Quote Originally Posted by laughing dog View Post
    Quote Originally Posted by RVonse View Post
    The fed basically has told me my whole working life that my dollars are going to get cheaper tomorrow. And that I am better off buying something real with them today, because after inflation those dollars are going to be worth less even with the interest added.
    The Fed told you no such thing. It sounds more like something an idiot goldbug would promote.
    No, the fed told it to me. $100 in 1976 at the start of my working career is now equivalent to $461.44 according to the CPI calculator here:

    https://data.bls.gov/cgi-bin/cpicalc...1&year2=201908

    Put in other terms, it now takes one dollar to buy what it took 20 cents. And with that kind of inflation that has always existed in my lifetime, Bank of America is paying a whopping interest rate of less than 1% now. There has never been an incentive to save in my lifetime living in the US. And certainly no incentive to save since leaving the gold standard in 1971. Which is why no one in the US saves.

    Koy is wrong anyway. Because if he was right about lack of savings causing wealth disparity in the US, you would see no wealth disparity in China. Because China has more personal savings than any other place and yet that country experiences the same disparity issues we have in the US.

    I'm not buying into Koy's saving theory.

  10. Top | #20
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    Quote Originally Posted by ZiprHead View Post
    Quote Originally Posted by Koyaanisqatsi View Post
    Quote Originally Posted by ZiprHead View Post
    Koy, your links seems to be at odds with your post that I replied to.
    How so?
    You ranted about the big problem is people don't save money.
    Actually, I said:

    Yes, I know, that's oversimplification and avoiding the serious issue of being poor in a rich country, but it's also the majority condition. You aren't as rich as your neighbor for one primary reason: you didn't save or invest when you had the ability to save or invest. For like 80% of us.
    Then you post a link and quote a source that says many, many people simply don't make enough money to acquire savings, living from paycheck to paycheck.
    That's not what the source said. They said:

    For the bottom 90%, average wealth is $84,000...The key driver of the declining bottom 90% share is the fall of middle-class saving, a fall which itself may partly owe to the low growth of middle-class income, to financial deregulation leading to some forms of predatory lending, or to growing behavioral biases in the saving decisions of middle-class households.
    They then conclude their report with (emphasis mine):

    Encouraging saving for the bottom 90% could also boost middle-class wealth by reducing the growing inequality in saving rates. The best policy to encourage middle-class saving depends on the reasons for the observed drop in the saving rate of bottom 90% families. Middle-class saving might have plummeted because of the lackluster growth in middle class incomes relative to top incomes, fueling demand for credit to maintain relative consumption (see e.g., Bertrand and Morse (2013)). In that case, policies to boost middle-class incomes would probably boost saving as well and powerfully affect the bottom 90% wealth share. Financial deregulation may have expanded borrowing opportunities (through consumer credit, home equity loans, subprime mortgages) and in some cases might have left consumers insufficiently protected against some forms of predatory lending. In that case, greater consumer protection and financial regulation could help increasing middle-class saving. Tuition increases may have increased student loans, in which case limits to university tuition fees may have a role to play.

    Yet the fall in the bottom 90% saving rate might also owe to growing behavioral biases in the saving decisions of middle-class households; many individuals, for instance, do not know how to invest optimally and end up spending too much on servicing short-run debt at high interest rates.
    This is alluded to several times throughout the paper, not just in their conclusion. They noted this earlier in their analysis (emphasis mine):

    The share of wealth owned by the middle class has followed an inverted-U shape evolution: it first increased from the early 1930s to the 1980s, peaked in the mid-1980s, and has continuously declined since then (Figure 8, bottom panel). The large rise in the bottom 90% share from 16% in the early 1930s to 35% in the mid-1980s was driven by the accumulation of housing wealth, and more importantly pension wealth. Pension wealth was almost non-existent at the beginning of the twentieth century. It first developed in the form of defined benefits plans, then from the 1980s in the form of defined contribution plans such as IRAs and 401(k)s. The decline in the bottom 90% wealth share since the mid-1980s owes to a fall in the net housing and fixed income (net of non-mortgage debt) components. The net housing wealth of the bottom 90% accounted for about 15% of total household wealth from the 1950s to the 1980s, while it now accounts for about 5–6% only. In turn, the decline in the net housing and net fixed income wealth of bottom 90% families is due to a rise in debts—mortgages, student loans, credit card and other debts.
    ...
    The share of income earned by the bottom 90% fell from 70% in the early 1980s to 60% in 2012. While this fall is significant, it is smaller than the decline in the bottom 90% wealth share (from 36% to 23%). The dynamics of the bottom 90% wealth share is thus primarily explained by the sharp fall in its relative saving rate.
    So, yes, their conclusion is that for the majority of Americans--with an average wealth of $84,000 so we're talking about people who have the means to save and/or invest, but for primarily behavioral reasons did not do either--the main reason their "share of wealth" (which does not exist but for the conceit of the report) is lower due to not saving/investing and to behavioral debt issues (i.e., living beyond one's means), but not necessarily exclusively due to living from paycheck to paycheck, which I would consider necessary debt.

    As I "ranted" there are, obviously, those who do live paycheck to paycheck, but they are clearly not the ones Zucman and Saez are referring to as they make specific note of:

    The second key result of our analysis involves the dynamics of the bottom 90% wealth share. The bottom half of the distribution always owns close to zero wealth on net. Hence, the bottom 90% wealth share is the same as the share of wealth owned by top 50-90% families — what can be described as the middle class.
    Iow, they acknowledge that the poor simply have no wealth, but they are measuring wealth, so the poor are just bundled into the 90% figure. What they are really comparing, however, is the middle-class to the upper classes.

    Note, too, their definition of "wealth":

    Let us first define the concept of wealth that we consider in this paper. Wealth is the current market value of all the assets owned by households net of all their debts.
    So you could be making $250,000 a year and have $500,000 in your 401K and the like, but if you have a mortgage on your house of say $1,000,000, for the purposes of their analysis you would be considered to have a net negative wealth ranking of -$250,000. Iow, according to the methodology of their analysis, you--who makes a quarter of million/year, has half a million invested and lives in a million dollar home--because it's mortgaged (in spite of your more than capable means of paying the monthly premiums), you would be considered poor and placed in the bottom 50%.

    That's why all of this kind of nonsense is so misleading. There is no finite wealth pie. People don't "own" more "wealth" than you do in the sense of keeping something from you that is otherwise rightfully yours. Aggregating total amounts is highly misleading and serves no purpose other than to incite emotional responses, but that's just as bad as the right inciting nazi hatred and violence.

    Bill Gates did not take anything from anyone and the fact that he has billions and you don't is utterly meaningless, other than it sucks to not have as much money as he does. But it's got zero to do with you and zero to do with him and absolutely zero to do with government unless it's about a proper tax structure and making sure loopholes are closed and the rest of the normal political flow.

    Again, if the idea is to force companies to pay higher wages, what's the justification for that argument? It can't be, "they got more than we do and that sucks and we want more too!" It must instead be value for value. Does a secretary deserve a million dollar raise for his secretarial skills? Do we somehow force companies to cap their salaries? How? Under what pretext? "Fairness"? That's not a legitimate argument as it stands, so what's your better argument?

    I'm all for someone actually coming up with an argument, but trotting out this misleading bumper sticker nonsense ain't it.
    Last edited by Koyaanisqatsi; 10-07-2019 at 07:31 PM.

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