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Thread: From Rags to Riches to Rags

  1. #1
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    From Rags to Riches to Rags

    Liberals and socialists love to point to a static or fixed picture of income inequality and demand redistribution. Reality is dynamic and fluid and this reality ought to influence policy.

    From Rags to Riches to Rags

    In order to answer such questions, Thomas A. Hirschl of Cornell and I looked at 44 years of longitudinal data regarding individuals from ages 25 to 60 to see what percentage of the American population would experience these different levels of affluence during their lives. The results were striking.

    It turns out that 12 percent of the population will find themselves in the top 1 percent of the income distribution for at least one year. What’s more, 39 percent of Americans will spend a year in the top 5 percent of the income distribution, 56 percent will find themselves in the top 10 percent, and a whopping 73 percent will spend a year in the top 20 percent of the income distribution.

    Yet while many Americans will experience some level of affluence during their lives, a much smaller percentage of them will do so for an extended period of time. Although 12 percent of the population will experience a year in which they find themselves in the top 1 percent of the income distribution, a mere 0.6 percent will do so in 10 consecutive years.

    It is clear that the image of a static 1 and 99 percent is largely incorrect. The majority of Americans will experience at least one year of affluence at some point during their working careers. (This is just as true at the bottom of the income distribution scale, where 54 percent of Americans will experience poverty or near poverty at least once between the ages of 25 and 60).

    A further example of such fluidity can be found in an analysis by the tax-policy expert Robert Carroll. Using data from the Internal Revenue Service, Mr. Carroll showed that between 1999 and 2007, half of those who earned over $1 million a year did so just once during this period, while only 6 percent reported millionaire status across all nine years.

    Likewise, data analyzed by the I.R.S. showed similar findings with respect to the top 400 taxpayers between 1992 and 2009. While 73 percent of people who made the list did so once during this period, only 2 percent of them were on the list for 10 or more years. These analyses further demonstrate the sizable amount of turnover and movement within the top levels of the income distribution....
    Tradition is not the worship of ashes, but the preservation of fire. ― Gustav Mahler

  2. #2
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    Despite the evidence above we still have liberals ignoring it to call for more redistribution.

    Post-Redistribution Liberalism

    President Obama once called inequality “the defining issue of our time.” How right he was. The question now is not whether we have a big problem; the question is what to do about it.

    Progressives naturally gravitate to the idea of redistributing income. They often take the market distribution of income as a given. Why not simply raise taxes on the wealthy and use the proceeds to beef up spending on programs that help the middle class and the poor?

    First off, let me make it very clear that I am in favor of such redistribution. But we liberals may need to start better recognizing the difficulty of achieving such redistribution in practice, and in light of those difficulties, consider other ways of reducing inequality that focus more on market incomes and less on tax and benefit programs.
    Note how he without question accepts income inequality?

    To his credit the solution he offers is interesting:

    Stakeholder capitalism is not a new concept, but it seems to have gone out of favor in recent decades. It means paying attention not just to shareholders but also to workers, customers, and the community. It has proven to be a successful strategy for many companies. They have showcased what can be accomplished when the private sector takes greater responsibility for helping workers—whether in the form of profit sharing, training, or providing benefits such as paid leave and flexible hours. The fact is that without such an approach, it will be difficult to achieve broadly based economic growth. It would simply require too much redistribution after the fact. We need instead to test the limits of equalizing the distribution of market incomes before taxes and benefits enter the picture. Let me emphasize that this is not an either-or proposition. We need to do both.

    ...Shared capitalism, especially in the form of employee ownership, has had bipartisan support in the past. Conservatives like employee ownership because it gives workers a stake in capitalism, and liberals support it because it reduces inequality. As John Case puts it in The Atlantic, “The left favors spreading the wealth. The right wants to create more capitalists. With employee ownership, they can both get their way.”
    Why the need for both. Why not the one based on facts and known to work?
    Tradition is not the worship of ashes, but the preservation of fire. ― Gustav Mahler

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    We make money over the course of our careers. Most of the money goes upward for a while from year to year until we retire or whatever. That shouldn't shock anybody. People who settle or surrender to being in the lower rung never enjoy that. That shouldn't shock anybody either.

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    Right but it's so very much a popular view:

    Tradition is not the worship of ashes, but the preservation of fire. ― Gustav Mahler

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