Why Inequality Might Matter

Avatar

Mark of New Jersey

Mark is a Founding Editor of The League of Ordinary Gentlemen, the predecessor of Ordinary Times.

Related Post Roulette

81 Responses

  1. Avatar Trumwill Mobile
    Ignored
    says:

    Well, Mark, thanks to you I don’t think I’ll be participating in th poin Symposium. You hit on my more substantive points without the things I was going to say that people would have found irritating. I’ll see if I can think of anything to add.Report

  2. Avatar Tod Kelly
    Ignored
    says:

    Stuff like this is why you need to post more.Report

  3. Avatar M.A.
    Ignored
    says:

    the close tie between opposition to Citizens United and a focus on rising inequality seems to demonstrate that this concern about regulatory and legislative capture is very much at the heart of why rising inequality is viewed as a problem unto itself.

    The shorthand version of the CU decision was: Money=Speech, 1st Amendment = Freedom of Speech, therefore 1st Amendment = Freedom to bribe politicians with unlimited campaign donations or drown out competing voices in the national dialogue by other applications of Money.

    By now, think about how many people you know who don’t actively participate in politics because they believe their voice is drowned out. Or to put it another way, this.

    Is it an economic problem? Partially. Is it a societal problem? Definitely.

    Most important, the alleged problem is not inequality per se, but rather rapidly rising inequality. If the debate is framed as being over inequality per se, even high degrees of inequality per se, then the side arguing that inequality is a problem is going to deservedly get a lot of eye rolls.

    I’m willing to argue this point. I already said in my response to James Hanley, before he started to just troll me, that one of my criteria for determining whether inequality was a “Is the disparity temporary in nature, or is it consistently growing over time in a manner that will necessarily approach totality if unchecked?”

    His response was a flippant comment about how any system that trends towards one direction will eventually approach totality. My point here is that these things need to be examined over the long term. If inequality in wages between the middle class and the 1% shifted by one or two percentage points in the past year, but looked to be coming back down in the next 5 years or so, then it’s no big deal – “normal market fluctuations” and all that jazz.

    What we’re looking at in the USA is far more systemic. We’ve got a consistent, overall rise in inequality that started with the Reagan deregulation fever and has progressed more-or-less apace since, and we can compare it to the years 1940 through 1980 when income inequality barely moved in either direction. The last time we saw income disparities this high was the 1920s, right before the Great Depression. The 1920s are relevant in another way as well; they were a time when rampant stock speculation tied up too many people’s assets in highly risky or outright fraudulent financial vehicles, which looks almost exactly like what happened when the results of the housing and credit bubbles tanked retirement and savings accounts in 2008-2009. In the 1920s as the 2000’s, the overal unhealth of the financial system was masked by ever-expanding lines of credit and the ability to take credit out based on collateral that was itself backed only by credit lines, a gigantic ponzi-like scheme that came to fruition in 1929 with the great crash and in 2008 when the taxpayers were forced to bail out the banks, a massive transfer of wealth upwards into the hands of the already wealthy.

    The net effect of increasing inequality then may be (a) maximized GDP growth; (b) increased production of, and access to, luxury items, but little or no increase in production of goods and services of particular utility; (c) increased regulatory capture and political power for the wealthiest classes; (d) decreased free time, time with family; and (e) destruction of local culture.

    For me personally, I’m not certain whether the pie has reached the point where the additional couple of bites has ceased to be worth the diminished taste of chicken, carrots, and peas. But I can’t say that I blame someone for concluding that it has. Nor do I see anything wrong with thinking that the size of the pie can be increased, albeit perhaps at a slightly slower pace, without destroying the flavor of the chicken, carrots, and peas.

    I’m reminded both of the pizza analogy from a few posts back and the comment regarding “bread and circuses for the poor are cheaper than ever.”

    The problem with maximized GDP growth is that simply maximizing growth to maximize growth is not a valid goal. It’s what will be done with that growth that’s important. More than that, though, it’s what the 1% do with their ever-increasing share of the total pie that decreases utility for the rest of the population. It’s harder to use public parks when, in the name of giving property tax breaks to the wealthy, public parks are being shut down and we only have a few big ones remaining. It’s harder to teach your kids to swim when the local parks&rec swimming pools are shut down to save money. It’s harder to get into certain restaurants without major planning ahead when the restaurants can easily assure the 1% an “exclusive venue” that the hoi polloi can’t get into. It’s harder to find a decent venue for a wedding reception or even a wedding itself.

    The more the disparity grows, the more that the 99% are priced out of.

    I’m reminded of Jurassic Park:
    GENNARO
    And we can charge anything we want! Two thousand a day,
    ten thousand a day – – people will pay it! And then
    there’s the merchandising – –

    HAMMOND
    Donald, this park was not built to cater only to the
    super rich. Everyone in the world’s got a right to
    enjoy these animals.

    GENNARO
    Sure, they will, they will.
    (laughing)
    We’ll have a – a – coupon day or something.
    Report

    • Avatar Mark Thompson in reply to M.A.
      Ignored
      says:

      I agree that it is long-term trends in inequality that are important, not small fluctuations in inequality. But when I say that inequality per se is never going to be the problem, what I’m getting at is that an extraordinarily high degree of inequality is not a problem as long as it’s basically static; i.e., there’s no inherent problem in a country having a high Gini coefficient as long as the Gini coefficient stays more or less the same from year to year, suggesting that inequality in the given country has achieved some sort of equilibrium that everyone finds tolerable.

      The problem with maximized GDP growth is that simply maximizing growth to maximize growth is not a valid goal. It’s what will be done with that growth that’s important. More than that, though, it’s what the 1% do with their ever-increasing share of the total pie that decreases utility for the rest of the population.

      I agree with this completely, and this was very much one of the points I was trying to get across.Report

      • Avatar M.A. in reply to Mark Thompson
        Ignored
        says:

        The problem is that what the 1% does with an ever-increasing share is (dare I say it) zero-sum. It decreases the buying power of the rest of the population for any good or service that is not ubiquitous.

        Consider NBA Basketball. It’s a very odd sport. The player population is more than 90% black, while the attendees at games are 99% white. But not just 99% white, they’re usually at least in the upper 25th percentile, if not the upper 10th percentile in earnings. Not all “1%”, but strongly tending that way.

        Why is this? Simple. Seats up in the nosebleed section start at $65 and go upwards from there. NBA Basketball, despite culling players from some of the poorer sections of the population in an odd freakshow-lottery of genetics based almost solely on being tall and able to dunk, has priced itself as such a luxury good that the majority of the fan base cannot afford to attend games.

        In the 1980s, it wasn’t that way – but in the 1980s, the wealth disparity wasn’t so great.Report

        • Avatar Mark Thompson in reply to M.A.
          Ignored
          says:

          I think I get your point. You’re right, it is a little different from what I was getting at here, but is something that is an important piece of the puzzle.Report

        • Avatar Burt Likko in reply to M.A.
          Ignored
          says:

          Is attending an NBA game anything but a luxury? I don’t want to get all Heritage Foundation and say that poor people aren’t really poor because they have refrigerators, but the index of rising inequality may not best be measured by something that is unquestionably a luxury.Report

    • Avatar b-psycho in reply to M.A.
      Ignored
      says:

      For all the anger over the CU decision, it’s not like the influence of concentrated wealth was somehow dispersed until then. Certain interests have always been one with government regardless, we’re basically arguing over the window dressing.Report

      • Avatar James Hanley in reply to b-psycho
        Ignored
        says:

        Yeah, it’s an issue of how they use their wealth for influence, not whether they do.Report

      • Avatar M.A. in reply to b-psycho
        Ignored
        says:

        Not so much.

        Pre-CU, the more restrictive campaign finance got, the more you could count on the following things:

        – Politicians wouldn’t get (inordinately) large campaign cash donations as a way of currying favor. Bundlers still existed to bring together like-minded donators, but you had to actually find that many donators.
        – Politicians wouldn’t be under the gun of “do this for us, or else we swamp you with a multimillion-dollar anti-you ad campaign next election.”

        Now, you couldn’t count out all sweetheart deals or promises (Chris Dodd, obscenely corrupt politician, is now head of the MPAA) but you could have some hope they were somewhat minimized especially after all the lobbying reforms. There was still a problem with rent-seeking millionaires or billionaires who self-funded or held stock, but that could be worked on too. And there was only so far the 501(c)s could go. I actually held out hope that as the next round of loopholes was closed, we’d get to the point where real members of the community could start to run for Congress again.

        After CU, all bets are off. Campaigns are being funded to the tune of millions; SuperPAC funding, coordinated in the most blatant “wink wink, nudge nudge, not while we’re on camera” ways, is not just unlimited but is projected to make the 2008 election spending total look like chump change.

        Here’s why this falls apart: your average person now feels no point in donating a few bucks to a politician, and has no reason to feel that the politician will have any reason to work with respect to their needs. In a very real sense the constituents are no longer the voters; the only constituents the politicans are beholden to are the billionaires.Report

  4. Avatar Morat20
    Ignored
    says:

    Actually, I think you missed one. (Well, actually two — but the second is a tangent over whether everyone else is actually better off. It depends on whether you measure such things absolutely versus relatively, and exactly how you measure it — for instance, I can point out that I am NOT better off than my parents in the sense that it takes mine and my wife’s combined income (both at white collar jobs) to equal what my father managed alone for many years. Or his father for pretty much his entire life. House and two kids on just one salary? Pipe dream, at least the way my grandfather managed it — and my father, for a time. Not even getting into free time — I work considerably longer hours than he ever did. And he got overtime pay. I don’t even get comp time these days)

    Trickle down economics doesn’t work, and rapidly rising income inequality turns a solidly based (ie: across all sectors of the economy) growth in GDP into a very, very, very narrow one — those things necessary for life, and luxuries.

    I think you can make a very solid case that starving the middle class — leaving them with a smaller and smaller (relative) share of the pie will actually strangle GDP growth in the long-term. There is really a limit as to what a single person can productively spend a year. I can’t help but feel the economy would do better giving a million people a hundred more dollars a year than one person a hundred million more a year.

    Rapidly rising income inequality has the potential to basically cut the roots out from under the economy (hardly maximizing GDP!) — the wealthy will do find. Everyone else will suffer.

    Frankly, looking at the casino of the financial industry — I’m worried we are already at that point. The ultra rich are basically gambling money back and forth (not investing in companies — gambling on whether stocks rise or fall) with the financial industry taking a nice rake with each bet. And that was the “boom” of the 2000s — that and the giant middle class borrowing to desperately spend enough to keep the economy sputtering along.

    I just don’t see robust GDP growth if you don’t have the masses — that middle class — with enough money to afford more than the bare necessities of life. But hey, I have an iPod. So obviously I must be wrong.Report

    • Avatar Mark Thompson in reply to Morat20
      Ignored
      says:

      Actually, I think you missed one. (Well, actually two — but the second is a tangent over whether everyone else is actually better off. It depends on whether you measure such things absolutely versus relatively, and exactly how you measure it — for instance, I can point out that I am NOT better off than my parents in the sense that it takes mine and my wife’s combined income (both at white collar jobs) to equal what my father managed alone for many years. Or his father for pretty much his entire life. House and two kids on just one salary? Pipe dream, at least the way my grandfather managed it — and my father, for a time. Not even getting into free time — I work considerably longer hours than he ever did. And he got overtime pay. I don’t even get comp time these days)

      This is what I had in mind in my last bullet point, but the post was already longer than I had hoped.

      I just don’t see robust GDP growth if you don’t have the masses — that middle class — with enough money to afford more than the bare necessities of life.

      One thing I hoped to allude to, but perhaps did not, is that a side effect of all this is that a lot of the basics do get cheaper in conjunction with the labor getting relatively cheaper in real terms. It’s just that the surplus is never enough to create the kind of demand necessary for the types of innovations, goods, and services that would meaningfully improve the lot of most people. To take the pie analogy another step, it’s akin to the lower and middle classes looking at the newly-filled pie ordered up by the wealthiest, complaining about how they would have preferred a marginally smaller piece of the old pie, and then eating all of their new piece of pie on the grounds that it would be a pity to let it go to waste.Report

      • Avatar Morat20 in reply to Mark Thompson
        Ignored
        says:

        I see the lower and middle classes looking at their tiny sized pie, looking at the rich’s piece of pie that is hundreds or thousands or millions of times larger than theirs and thinking “I wish I had more pie”.

        Economically, I see the rich with so much surplus pie that they more than pass the limits of their ability to consume it, thus stockpiling ever growing amounts of pie.

        There’d be more demand for pie if the rich weren’t, for lack of a better word, hoarding it. It would be consumed and gone, leaving room for more pie to be eaten (and certainly the haves and have-nots have shown there is a great amount more room for pie demand to grow). Instead there’s a bunch of folks getting just enough pie to get through the day, and the rich sitting on such large stockpiles that sooner or later why would they buy new pie at all, except what else can they do with all their money but invest it in pie?

        Which is kinda where I worry we are. There is a LOT of potential consumer demand. It’s locked up, however, in people who don’t spend because they don’t have the money. There’s a LOT of money. It’s locked up, however, in people who have consumed to their physical limits and let the rest pile up.

        How do you GROW from there? The demand is there. The money is there. But they’re in the wrong hands. Long term, that’s not tenable. That’s fuedalism.Report

        • Avatar Mark Thompson in reply to Morat20
          Ignored
          says:

          I see the lower and middle classes looking at their tiny sized pie, looking at the rich’s piece of pie that is hundreds or thousands or millions of times larger than theirs and thinking “I wish I had more pie”.

          No doubt. However, this does not make inequality a problem in and of itself. I wish I could play professional golf for a living; I might even resent the hell out of those lucky enough to be able to do so. But that’s hardly a problem worth doing anything about. In other words, if everyone’s lot is improving in absolute terms, but Group A is improving thousands of times more than Group B, there is not necessarily a problem. Certainly, Group B’s jealousy is within its control and is not a terribly good basis for demanding change. But if Group B’s resentment is based on something more than just jealousy, and the growing inequality is independently causing problems, or at least has the potential to do so, then you definitely have a big problem in your hands.

          The people of Paris in 1789 did not revolt because the aristocracy had many times more wealth than them. They revolted because the aristocracy were using their status and power to send the people of Paris to the brink of starvation in order to finance their life of luxury.Report

          • Avatar Morat20 in reply to Mark Thompson
            Ignored
            says:

            Yes, but the entire second half of my comment WAS the problem. (And also, I suspect you’re not grasping how bad income inequality is getting. We are a lot closer to 1789 than I’d like to admit, and we do risk a time when bread and circuses are not going to be enough. Especially if we’re going to resort to slashing basic services to cut taxes on the rich. Because they’s REALLY gonna breed resentment and anger).

            There’s a lot of people who would like to, for lack of a better word, “buy a lot of stuff and consume a lot of services”. They can’t, because they don’t have money. They are nowhere NEAR their capacity to consume.

            There’s a very few people who have so much ridiculous amounts of wealth that they cannot consume even a fraction of it, and just pile it higher and higher.

            That isn’t, in of itself, isn’t a problem.

            The problem is that, well, you don’t really need that much economic growth to handle a tiny of handful of capacity consumers with a giant excess. Even as they consume to their physical limits, they simply can’t demand that much. And they STILL have all this excess money. Tons of it.

            But all the people who CAN increase their consumption, who can and would spend more if they had it, don’t…have it. Whatever tiny growth they get isn’t much of a spur to growth either!

            Which leads me to suspect that, long-term, income inequality is going to kick growth square in the face. That money isn’t going to rational investment (not anymore. Probably not for a decade or three. It’s just sloshing around like a casino, betting on stock prices not investing in growth).

            Long-term, the rich would be a heck of a lot better with a thriving and well-paid middle class, and a lower class that could pay their bills and afford the occasional luxury than they do strip-mining all the income growth.

            But humans aren’t long-term thinkers, by nature.Report

            • Avatar Mark Thompson in reply to Morat20
              Ignored
              says:

              I can’t quite agree with this – when the rich put their money into savings, it is not truly on the sidelines – it’s not stowed away under the mattress. It’s in various investments that earn interest. They earn interest because they’re being used for something. The issue is what is that “something,” and who does it benefit.

              My 1789 analogy was not intended to poo-poo the situation. To the contrary, my aim here is to point out that the anger and resentment of increasing inequality cannot be reduced to mere jealousy.Report

              • Avatar Michael Cain in reply to Mark Thompson
                Ignored
                says:

                “…when the rich put their money into savings, it is not truly on the sidelines – it’s not stowed away under the mattress. It’s in various investments that earn interest. They earn interest because they’re being used for something. The issue is what is that “something,” and who does it benefit.”

                There is increasing trend for the “something” to be neither real nor useful. At least in the US, businesses are sitting on an enormous pile of retained earnings — they can’t find useful places to invest their money. An enormous amount of “investment” flowed into building a million new houses for which there were no real buyers — the mortgage industry resorted to what was essentially fraud on a major scale in order to sell houses to people who could not afford them. Investment banks create synthetic derivatives into which the wealthy can pour money, but which are nothing more than bets on whether interest rates will go up or down. The finance industry has for at least the last decade expended enormous effort to create places to sop up the money, because there is a serious shortage of real places to put the money to work.Report

              • Avatar Morat20 in reply to Mark Thompson
                Ignored
                says:

                UP TO A POINT.

                However, after a certain point — there are no useful investments. There is not unlimited demand for investment money either!

                Worse yet, as I keep noting — it’s a nasty cycle. More investment money could be useful — if there was more demand. Business would want to expand to meet that demand.

                Except there is no rise in demand, because instead of fueling demand money is sitting there fueling investment. Investment that’s not gonna happen because of lack of demand.

                This isn’t a new concept. This is Henry Ford! “I pay my workers enough to buy my products!”.Report

  5. Avatar M.A.
    Ignored
    says:

    To take the pie analogy another step, it’s akin to the lower and middle classes looking at the newly-filled pie ordered up by the wealthiest, complaining about how they would have preferred a marginally smaller piece of the old pie, and then eating all of their new piece of pie on the grounds that it would be a pity to let it go to waste.

    In the 1950s the lower and middle classes lacked ipods, lacked netflix, and might not have had a TV in the house, but they had a reasonable feeling of security that they wouldn’t be forgotten about and impoverished in old age and that working hard and playing by the rules was enough to support a family.

    In the 2000’s the lower and middle classes have ipods, netflix and at least one TV in the house but they don’t have any reasonable security about any sort of pension, they don’t have the income necessary to support “investment vehicles”, even if they do they just watched their parents’ “investment vehicles” go up in smoke with the economic bubbles and the banking collapse, and supporting a family/raising kids most likely requires both parents working.

    Can we call it a net loss for the 99% yet? This simply isn’t the “win/win” variety of “positive sum interactions” that Roger kept claiming.Report

    • Avatar Mark Thompson in reply to M.A.
      Ignored
      says:

      Can we call it a net loss for the 99% yet?

      By all means we can. I’m undecided for how I am personally affected, but I can completely understand how many others have decided that it’s a net loss for them, and would not deign to suggest their conclusions are anything but correct. I suspect there are enough who can say this that we’ve crossed the threshold from net social gain to net social loss, but since I think the solution must ultimately be cultural, whether I think we’ve crossed that threshold is inconsequential.Report

      • Avatar M.A. in reply to Mark Thompson
        Ignored
        says:

        Here’s where I see the problem.

        You have a class of people who, currently, must by definition live hand-to-mouth. They cannot save; every penny goes into rent, food, clothing, gas, and other basic necessities of life, with a small smattering left over for the other necessity of enough mental stimulation and recreation to not go stark raving mad.

        Then the next class of people up are most likely to also be living hand-to-mouth, though maybe not in quite the same way. Instead of meager rent in a firetrap hovel, they’re paying a mortgage. Instead of ramen 7 days a week, they’re trying to eat somewhat healthy. They have to buy more expensive clothes to look the part to have a better job. They have student loans eating at them, they have the prospect of taking care of children and trying to send the kids to college, they maybe have a nicer car that’s not a completely rusted firetrap but they’ve still got to keep enough gas in it to get to/from work.

        Then, at some point, we hit the tipping point and some people make enough that *if* they live frugally, they can start saving, a bit.

        Across a massive chasm, there’s a group who live in obscene opulence. It’s a matter of flaunting. They have such a parachute of money hanging on their backs that they would never, presumingly they spent wisely, have to work.

        If I were to receive one-tenth of one-percent of the bonuses some of these people, I could retire at my current lifestyle and never have to work again. Meanwhile, I have to compete with these people for certain things I’d like to manage to one day in my life, and their opulence drives up the prices. The idea of getting a season ticket set for baseball is out of my reach, not because a realistic market ought to make it so (I’m not destitute and wearing sackcloth and ashes) but because the presence of income/wealth inequality so tips the scales that my carefully saved entertainment budget cannot hope to compete with their kid’s weekend pocket money.

        It used to be that the middle class generally didn’t freak out too much about “saving for retirement.” A good many had pension plans that they were well vested in, because company loyalty to workers begat worker loyalty to companies. Social Security was considered solid for those who lived that long. It’s not the case any more. In addition to wage stagnation, take-home pay has been reduced as workers were told they needed to “contribute their fair share” (why is it the 1% can use that term, but when the 99% say it it’s class warfare?) to retirement funds and health insurance.

        If there isn’t a structural solution to be found, you’re not going to like the ultimate cultural solution. It involves torches and pitchforks.Report

        • Avatar James Hanley in reply to M.A.
          Ignored
          says:

          My sister-in-law works as a booking agent for Princess Cruises. Her husband has gone through various jobs such as EMT and security guard. They’re not exactly elite. They are managing the mortgage on a modest home in L.A. County. They have season tickets to L.A. kings games. I honestly wonder how they manage it, but they do manage it.

          They are living rebuttals of your claim that only the rich can afford to attend professional sporting events.Report

          • Avatar Kazzy in reply to James Hanley
            Ignored
            says:

            Your sister-in-law is an AGENT for PRINCESSES, has her own private SECURITY GUARD at home, and regularly visits the KINGS?

            Not rich my ass.Report

          • Avatar M.A. in reply to James Hanley
            Ignored
            says:

            So they’d be a dual-income family. I know what EMT’s are paid, I wonder if he was an upscale or downscale security guard; I know some security guards who are paid quite handsomely at places where the security guards have to pass a pretty thorough background check.

            “Mortgage on a modest home in L.A. County.” Ok, so right there we know they’re at least in the upper 5%.

            Kids in the picture? You don’t mention.
            Are they saving for retirement? You don’t mention.

            When you say “booking agent” do you mean sales/marketing of cruises, or do you mean she’s the one setting up the entertainers and shows? Makes a difference for me to check the average pay in the sector.

            And there’s the fact that “season tickets” can comprise as little as a 10-game pack these days, not actually a full season.

            Need more information. Your assertion’s not flying.Report

            • Avatar M.A. in reply to M.A.
              Ignored
              says:

              Ahh, found the issue.

              She’s watching hockey. One of the “also-ran” sports. Yes, I agree, I could probably afford season tickets to hockey.

              Now did I say hockey in my initial post, or were you just deliberately comparing apples to frostbitten blueberries?Report

              • Avatar Roger in reply to M.A.
                Ignored
                says:

                All,

                Consumption quality, aka standard of living has never been better for the 99%. nor has it ever been better for the poor — worldwide or in the US

                There is a concern with stagnating wages for the less skilled. Economists are pretty much aligned on this being due to technology and globalization and the supply and demand of high vs low skilled labor.Report

              • Avatar Mr. Blue in reply to M.A.
                Ignored
                says:

                MA, how much do you think baseball season tickets cost, exactly? Here in Houston, the Astros “39 Game Full Season” start at under $500. They cap a little over $2,000. I assume it’s about twice that for a full season. I’m not saying that $1,000 is cheesecake, but it’s not hopelessly out of reach, either.

                It also seems strange that you’re acting as though a kid’s weekend money has priced you out. I’m not sure what city you’re in, but in most places baseball games don’t sell out. They’re not made to be exclusive events.Report

              • Avatar M.A. in reply to Mr. Blue
                Ignored
                says:

                Here in Houston, the Astros “39 Game Full Season” start at under $500. They cap a little over $2,000. I assume it’s about twice that for a full season.

                Now multiply that by a family.Report

              • Avatar Mr. Blue in reply to M.A.
                Ignored
                says:

                You were comparing your ability to buy tickets to some rich brat’s. Buying season tickets for your family is going to add up quickly. Not because of outrageous game prices (starting at $13 a game), but because there are 80 of them. Having kids puts a damper on doing things like going to 80 games a season.

                Anyway, you know what’s more expensive than Astros season tickets? The Los Angeles Kings season tickets you mocked as non-comparable. Dodgers tickets are also cheaper than Kings tickets, if you’re curious. I would say that you simply used baseball as a bad example, except elsewhere you are the one who made a big deal out of it being baseball and elsewhere you already said inaccurate things about basketball seat prices.Report

              • Avatar M.A. in reply to Mr. Blue
                Ignored
                says:

                and elsewhere you already said inaccurate things about basketball seat prices.

                I gave you the lowest price I could find when I tried to go to an end of season game in my city. It was accurate then, though there may be between-season or early-season discounts or other ways of getting cheaper tickets (Groupon or LivingSocial?) if you are willing to sit in the “chronically depressed” zones like the back 5 rows of the nosebleeds.

                I’d look up your city’s crappy team, but the Houston Rockets don’t have ticket pricing available right now. L.A. Clippers won’t even show you a price chart without handing over your life’s history in personal info.Report

              • Avatar Mr. Blue in reply to Mr. Blue
                Ignored
                says:

                It’s the off-season, so a lot of prices aren’t going to be listed. The Dallas Mavericks prices are. They start at $9 with other nosebleed seats at $15. The Mavericks are one of the most valuable franchises in the NBA.

                According to FindThisData, there aren’t many teams where the average ticket-price is above $65. The nosebleeds are going to be at the lower end of a spectrum.Report

              • Avatar MikeSchilling in reply to Mr. Blue
                Ignored
                says:

                the Astros “39 Game Full Season” start at under $500

                How much would you pay to see your team fail to get on base even once?

                (Sorry, still in full gloat mode. And it was on my birthday too!)Report

              • Avatar Tod Kelly in reply to MikeSchilling
                Ignored
                says:

                When even I have to loudly cheer for you guys, you know it was something special.Report

              • Avatar MikeSchilling in reply to Mr. Blue
                Ignored
                says:

                Here in Houston, the Astros “39 Game Full Season” start at under $500.

                Can you bring in your own food and drinks? If not, that raises the effective price considerably. (The bottom prices at AT&T are comparable, though the most luxurious seats go considerably higher. And you can bring in anything other than cans and bottles.)Report

              • Avatar Roger in reply to MikeSchilling
                Ignored
                says:

                The game is much better on TVReport

              • Avatar MikeSchilling in reply to Roger
                Ignored
                says:

                Communist.

                Seriously, I would pay $500 to have been there last night.Report

            • Avatar James Hanley in reply to M.A.
              Ignored
              says:

              M.A.,
              So they’d be a dual-income family.

              Uh, yeah. Lots of folks are. That’s hardly relevant.

              I know what EMT’s are paid,
              An intro-level EMT? Not that great.

              I wonder if he was an upscale or downscale security guard;
              Midscale; gated community–he sat in the gatehouse trying to stay awake.

              “Mortgage on a modest home in L.A. County.” Ok, so right there we know they’re at least in the upper 5%.

              You seem to think pulling shit out of your ass constitutes a substantive rebuttal. According to top 5% is about $160k per year. I don’t know just how much they make, but I know beyond a shadow of a doubt they’re nowhere near that.

              Kids in the picture? You don’t mention.

              Two. Recently adopted. Yep, it’s making things tighter for them, as kids will. So?

              Are they saving for retirement? You don’t mention.

              I’ve never asked them, but now you’re just adding more stuff, looking for any type of thing you can hang your hat on after your initial claim has been blown out of the water. I would guess they are, but if they aren’t, that’s their choice.

              When you say “booking agent” do you mean sales/marketing of cruises, or do you mean she’s the one setting up the entertainers and shows? Makes a difference for me to check the average pay

              Folks call Princess Cruises to book a trip, some of them get her on the phone. No, she’s not doing the really high-paying jobs. Sorry; it’s clear that you’re getting desperate here, but the facts just don’t fit the story you want to tell; they fit the real story of their lives. They’re not rich, not elite. They’re middle class. No matter how much you want to find a way to pretend that they must be elite,

              Oh, it is worth noting that one of their former employers (I don’t remember which one) gave them a good chunk of money toward a downpayment on their house. It was a company program they qualified for. There you go, that’s the key that allows them to do better than you think the middle class is able to. Of course it means that the employing company actually did something decent and helpful for its employees, rather than telling them to live in a dumpster, so it still doesn’t fit your preferred storyline.Report

  6. Avatar MaxL
    Ignored
    says:

    This post (along with Morato20’s reply) is as good a definition of the problem of rising inequality as I have ever seen. Of course, that said, it is hard to be anything but disheartened. I don’t see how this pendulum swings back. Rather, the concentration of wealth along with the elimination of barriers to making that wealth permanent and the lunge back to a luxuries/bare necessities economy feels more like a reversion to the historical norm.

    Just like a pro-military party always seems to find (instigate?) conflict that demands more pro – military party power, rising wealth concentration appears to lead to a self reinforcing feedback loop. Rent seeking by the 1% went from treating different income streams unequally (capital gains vs. labor) and lowering the top marginal tax rates a generation ago to eliminating estate taxes and carving into stone the notion that money = speech today. In just 2 or 3 generations we find ourselves moving back towards the market instability and stratification in which the oligarchs have always thrived. If I recall my Roman history correctly, this is the environment for which they will claim to be the only remedy.

    In any case, thank you for posting this.Report

    • Avatar Morat20 in reply to MaxL
      Ignored
      says:

      Well unions would work. Except unions are a dirty word, and kind of a non-starter. They do in the real world something vaguely akin to what information parity and frictionless movement would do — somewhat turn the employee/employer “how much am I worth” discussion into one of vaguely sorta in the same room equals from one of king dictating to serf.

      But they’re a dirty word. Minimum wages laws only get you so far. You can tackle the symptoms — high inheritance taxes on the affluent (to prevent concentration), high marginal brackets — but taxes are a dirty word. As is “progressive taxation system”.

      You can have a robust enough safety net for the serfs, but that’s a dirty word.

      Frankly I don’t think you can do anything about it under the current US political landscape, not until the masses revolt. And then we’re talking Marx, and that is a very dirty word. (Or as a particularly violent little british associate of mine calls it “The Day of the Rope”. It’s a bit French, except without the guillotines, but I can see his point.)

      Amusingly, I was a conservative and Republican when young. And now? Now I’m starting to see Marx had some really good points that a modern capitalist society should keep in mind, but ours doesn’t.

      Basically, the US had a nice little bit of class warfare and the rich won. About all you’ve got left is hoping somewhere, somehow, the fact that being rich still just leaves you one vote will someday fix it.Report

      • Avatar James Hanley in reply to Morat20
        Ignored
        says:

        Now I’m starting to see Marx had some really good points that a modern capitalist society should keep in mind, but ours doesn’t.

        You mean about how gov’t will always be a tool of the elite, so ultimately we want to do away with the state? I can get on board with that!Report

        • Avatar Morat20 in reply to James Hanley
          Ignored
          says:

          Nope. You really, really should read more Marx if that’s where you went.Report

          • Avatar Morat20 in reply to Morat20
            Ignored
            says:

            Figured I’d give this a bit more of an airing. Marx was actually in awe of capitalism, in a way. He had a number of things to say about it (some that worked their way straight into classical economics) and some predictions and some suggested policy or idelogical responses to those predictions.

            In fact, some of his predictions were so spot on that the modern welfare state (European and American) has much to do with the flaws in capitalism Marx noted. (I find communism and even socialism to be as fundamentally flawed as a purely free market society — economics is economics, not a method of arranging human society).

            He certainly threw in a lot of philosophy I don’t have any truck with, but he’s suprisingly relevent when he noted that capital, in reality, would pay labor only the bare minimum it could get away with.

            Such abuses used to be quite common, even here in the US. Especially at times here in the US, by first world standards. The safety net — frayed thing that it is now — was one response. As was intensive regulation. For a few decades, things were quite different.

            And yet not exactly a Soviet hell-hole, hmm?Report

            • Avatar James Hanley in reply to Morat20
              Ignored
              says:

              It was a joke, Mr. M. Perhaps the problem was in the delivery.

              Absolutely Marx had great respect for capitalism. He correctly saw it as a gret improvement over feudalism, and understood (perhaps over understood) it’s productive efficiency.

              But he had very little to say that worked its way into classical economics. Rather, he worked–consciously and purposefully, so as to develop an internal, rather than external crtique–in the classical tradition. But mainstream economists paid little attention to him, and Marxist inspired economics has always been a bit of a sideshow, not at all center-ring, where the neoclassical economists were mostly content to point out his errors, such as his labor theory of value and his misunderstanding of Say’s law.Report

      • Avatar MaxL in reply to Morat20
        Ignored
        says:

        “Under the current US political landscape” is exactly the problem. I don’t know that unions would ever find their way back in a global market (do we have to wait until the Chinese unionize first?), but without the unions the middle class loses it’s advocate in Washington. Who speaks for the middle class now?

        I’d would have thought that there would be a consensus market solution between liberals and libertarians: tax things we don’t want and lift taxes on things we do. For, example, Australia just passed a carbon tax that applies all of the revenue to raising the tax threshold to $40 (?) k. I would use it to, say, eliminate payroll taxes. The policies are out there, but there is clearly no consensus here in the US that rising inequality is corrosive to a democracy and a free, open market. Clearly, what we will get instead is a robust response to dissent and power securely resting in the steady hands of the job creators. Joy.

        I think the swing back to the real status quo is inevitable, and you are right: Our little experiment in broad based, middle class growth is over. Maybe it was only possible in a world where our competitors were clearing out the rubble of World War 2, because now it’s back to business as usual.Report

        • Avatar Mark Thompson in reply to MaxL
          Ignored
          says:

          The return of unions is probably an essential part of any solution to all of this. However, the last thing they are needed for is to act as an advocate for the middle class in Washington. This is an issue for another post, but I’d argue that them taking that role upon themselves is a substantial reason they’ve been so easy to kill off these last 40 years.Report

          • Avatar MaxL in reply to Mark Thompson
            Ignored
            says:

            I’ll look out for that post. A return of unions outside the public sector would be welcome.

            But if not unions, then the middle class will still need some sort of advocate in Washington. I honestly have no idea what organization or issue could manage that heavy a lift.Report

            • Avatar Morat20 in reply to MaxL
              Ignored
              says:

              Because public sector workers should bend over and take it for the good of the Republic?

              I don’t get the public sector union hate — other than raw envy that they’ve kept their unions while the private sectors saw theirs smashed.

              I’ve worked with public sector unions. You know what? IT’S A JOB. They don’t game the system, they don’t vote themselves raises.

              In real life? They get raises when politicians — politicians whom they only get one vote for, I might add — want to give it to them. They’re frequently the first targets of cutbacks or spending freezes. And guess what? When taxes go up? THEY PAY THEM TOO.

              I’d love to join the sort of public sector union the haters seem to think exists! Sadly, the “free money and wenches for life” club ain’t real.Report

              • Avatar M.A. in reply to Morat20
                Ignored
                says:

                I’d love to join the sort of public sector union the haters seem to think exists! Sadly, the “free money and wenches for life” club ain’t real.

                You’ll never convince people like Roger or Rush Limbaugh otherwise.Report

              • Avatar Mark Thompson in reply to Morat20
                Ignored
                says:

                I think you misconstrued what Max was getting at there. I think he was just referring to the fact that by and large public sector unions are still quite strong, at least in terms of the size of their membership, but private sector unions are on the verge of extinction.Report

              • Avatar Morat20 in reply to Mark Thompson
                Ignored
                says:

                Pity about the private sector then. Still, if public sector unions were so strong my wife the teacher — with two Master’s Degrees and an excellent record (her principle is horrified at the thought of losing her) — would make more than, you know, half my salary.

                Educating the young is important! Enough so that we can label the entire public school system as failing because it can’t educate the crime ridden and backbreakingly poor segments of society — but does just fine everywhere else.

                But not important enough to pay teachers anything vaguely like what other white collars with their education demand.

                But important enough to scream because somewhere, some teacher made 100,000 dollars last year! (Never mind the media wage there is far more and the cost of living is insanely high).

                I looked at Silicon Valley once — the teachers there make seriously good money, by Texas standards. But by Silicon Valley standards they’re so poor the district had to subsidize housing so they could afford to live even vaguely nearby.Report

              • Avatar Mark Thompson in reply to Morat20
                Ignored
                says:

                When I say “strong,” I mean only that they have fairly large and stable membership bases and are reasonably well organized. How well they serve those memberships is another question entirely, the answer to which will surely vary from locale (or even Local) to locale (or even Local).

                The other thing is that private sector unions matter in a way that public sector unions by their nature cannot, insofar as healthy private sector unions participate in the market and thus create upward pressure on market labor rates across the board.Report

              • Avatar MaxL in reply to Morat20
                Ignored
                says:

                What I meant to say, without steering the comment thread into a discussion of unions, was that it would be far better to have unions strong everywhere, not just the public sector. Having only public sector unions is a sort of death spiral.

                That’s because there is naturally going to be some conflict between taxpayers and public sector unions, and if that is the only kind of union around and virtually the only frame the debate is ever placed in, then that gives a leg up to those building an ANTI-union platform. When the only interaction with unions we know is one where technically we the taxpayer literally represent the the employer, so much for solidarity. This is absolutely not the fault of public sector workers, but it is the case.Report

      • Avatar M.A. in reply to Morat20
        Ignored
        says:

        “Class Warfare” is what the 1% call it when the 99% starts fighting back.Report

  7. Avatar Brandon Berg
    Ignored
    says:

    What does personal wealth inequality have to do with regulatory capture? Granted, if a market is dominated by a few large firms, it’s likely that there will be greater wealth inequality than if it were dominated by many small firms, assuming that the founders of these firms retain enough stock to receive a significant portion of their firms’ profits. But the usual method of reducing inequality, progressive taxation, does nothing to reduce the market share of those firms.

    Rather, concerns about regulatory capture might better be addressed by more vigorous antitrust enforcement, with the caveat that antitrust enforcement itself is subject to regulatory capture.

    If you’re concerned with the market catering more to the tastes of the wealthy, it’s important to look at consumption inequality rather than wealth inequality. The wealthy are wealthy in part because they don’t consume every penny they have as soon as they get it, so consumption inequality will naturally be lower than wealth or income inequality, and also tend to grow more slowly. And it’s also worth remembering that a lot of mass-market consumer items got their start as luxuries for the rich, who subsidized the development of more economical production techniques.

    Finally, income inequality isn’t increasing. It only appears to be increasing if you arbitrarily limit your data to a single country. Global inequality—and more importantly, poverty—is decreasing.Report

    • Avatar Mark Thompson in reply to Brandon Berg
      Ignored
      says:

      Finally, income inequality isn’t increasing. It only appears to be increasing if you arbitrarily limit your data to a single country. Global inequality—and more importantly, poverty—is decreasing.

      Last things first – while this is generally true, it is irrelevant to the question of whether rising inequality within the US is a problem or may be a problem.

      What does personal wealth inequality have to do with regulatory capture?

      Quite a bit, since the persons with power to control the regulatory and legislative actions of a given business are: (a) wealthy, and (b) increasingly subject to the cultural isolation I reference. This is also true of the persons who control the mutual funds in which the average person is invested. A closely-held business whose ownership is invested in the community will have vastly different scruples when it comes to regulatory capture questions than the CEO of a multinational corporation who is increasingly lacking ties to the relevant community.Report

      • Avatar Roger in reply to Mark Thompson
        Ignored
        says:

        Mark,

        Great post, and I agree with a lot of it.

        Playing off BB, my concern is that the very process which is contributing to the solution of billions of people arising out of true poverty is a major part of the problem that is limiting gains in wages for the less skilled in America. I keep harping on positive vs zero sum environments, but short term, the impacts of technology and globalization are that the supply of competitors has vastly increased for the lower skilled. As the market plays out this will increase prosperity, but not necessarily in the short term.

        The other thoughts that keep going through my head is that the enforcement mechanism for enduring more equality is itself the ultimate weapon of regulatory capture. Let’s say it is a problem. Are you sure the tool you build to solve it isn’t actually a bigger potential problem. I guess I think that is the point JH made in his post.Report

      • Avatar Brandon Berg in reply to Mark Thompson
        Ignored
        says:

        Again, I think you’re conflating large personal fortunes and large corporations. The two are somewhat independent, since a large corporation may be owned jointly by many people, and a very wealthy person may have his wealth spread out among many different investments.

        And the problem you’re describing is most associated with large corporations, not with large personal fortunes. Furthermore, large corporations need not be controlled by a handful of extremely wealthy individuals to have a corrupting influence, the obvious counterexample being labor unions.Report

        • Avatar Mark Thompson in reply to Brandon Berg
          Ignored
          says:

          Let me give you three scenarios to illustrate my point here:

          Scenario A: Corporation A is owned in equal shares by 100,000,000 investors, representing a broad cross-section of the population as a whole. None of them vote by proxy.* The CEO comes from a middle-class background and is widely popular with the shareholders.

          Scenario B: Corporation B is closely held by a family with deep ties to their community. The family is wealthy, perhaps extraordinarily so, but they live in the community where their main factory is located.

          Scenario C: Corporation C is owned by 1,000,000 investors from a cross-section of the community. However, 1000 of those investors control the overwhelming majority of the corporation’s stock. The remaining 999,000 shares are primarily held through mutual funds, which vote by proxy. The 1000 largest investors are all (a) very wealthy; (b) from various countries around the world; and (c) largely isolated from the communities in which they reside. The proxies for the mutual funds are also wealthy and travel in the same social circles as the largest investors. They have never spoken with one of the shareholders on whose behalf they vote. Not surprisingly, the corporation’s CEO is also wealthy and travels exclusively in the same social circles as the proxies and 1000 largest shareholders.

          I submit that the business and government relations tactics, strategies, scruples, and indeed goals in Scenarios A and B will be reasonably similar. Most importantly for our purposes, though, they’re each going to be reasonably respectful of community norms and aren’t going to try very hard to change the rules of the game. I submit that Corporation C, however, will use all of its might to use government as a weapon in its arsenal. I submit further that the main reason for this is that Corporation C’s decisionmakers live in a cultural bubble that is a symptom of rising inequality.

          *Yes, this scenario is intentionally unrealistic.Report

  8. Avatar M.A.
    Ignored
    says:

    The wealthy are wealthy in part because they don’t consume every penny they have as soon as they get it,

    In other words: the wealthy are not living paycheck-to-paycheck to cover having a roof over their heads, food on the table, and enough gas in the car to get to and from work in order to do it all again the next day.

    They can AFFORD to not consume every penny they have as soon as they get it. The 99% can’t.Report

    • Avatar Brandon Berg in reply to M.A.
      Ignored
      says:

      They can AFFORD to not consume every penny they have as soon as they get it. The 99% can’t.

      You said you weren’t going to respond to me anymore, you big tease.

      In any case, it simply isn’t true that 99% of the population can’t save. I know that for a fact, because my income is less than half what it would take to get me into the top percentile, and I save about a third of it. But don’t take my word for it—your claim can be proven false through simple introspection: If a person with a $40,000/year income can’t afford to save anything, then a person with a $30,000/year income can’t afford to live. Given that many people do in fact live on $30,000/year and less, then clearly a person making $40,000/year can afford to save.Report

  9. Avatar Stillwater
    Ignored
    says:

    Mark, I haven’t read all the comments so I hope this hasn’t been covered, but it seems to me your argument here is that since ultra-wealth leads to regulatory capture (which leads to increased inequality), the best remedy is to dismantle regulatory regimes (to some extent). But why not the alternative? Why not dismantle the structures which permit centralized wealth, or limit the influence of private power on policy formation? I mean, I’m sure it’s been mentioned somewhere on this thread that even the minimal state still holds a monopoly on the use of legal coercive force. So it seems to me eliminating private power from influencing politics even then is also a fools errand, no?Report

    • Avatar Mark Thompson in reply to Stillwater
      Ignored
      says:

      I more or less purposely avoided the issue of remedies in this post, though I touch on it in my comments to Jason’s post. But I don’t think I would go so far as to say that deregulation is the solution or even part of the solution. In theory, some types of deregulation could help, but I highly doubt you’d succeed in getting those through in the necessary way until we basically got back to an equilibrium of some sort in the first place. More likely, the deregulation would just wind up being captured itself. Even if you did succeed in getting some things through, they’d be too minimal to make a difference.

      Attempts to limit the influence of private power on policy formation are destined to only make the problem worse, at least to the extent those attempts take the form of attempts at legal restrictions. They may restrict the influence of the few wealthy interests with an investment in local cultural norms, but that mostly just means those who do not will have even more influence.

      The solution has to be cultural.Report

  10. Avatar Michael Drew
    Ignored
    says:

    I’m not entirely sure I see from the post why we should think that the rate of change is all-important, and why we should be so sure that there isn’t potentially also a critical level of inequality in a given society where the interest-agglomeration problems with respect to governance that you describe will arise? Why do we know we should be only concerned about quickly-rising inequality in a society that remains quite equal because it is quickly rising, and certainly not because if it keeps going like that (or even if it slows down somewhat), it might hit a level (unique to the political and broader culture of that society) at which those problems become critical?

    Also, do we know that, depending again on the political and general culture of the society in question, that there aren’t levels, or, to drill down further, specific qual-quant arrangements (who has how much of what) of resource distribution in a society that don’t lead to, or at least affect, the rates of change of those distributions?Report

    • Avatar Michael Drew in reply to Michael Drew
      Ignored
      says:

      (And, to the last, obviously, if that is the case, would that perhaps be reason to worry about degrees of inequality, as I mentioned in the other thread, as a causal factor relating to secondary effects we do have reason to care about, even while not worrying about them as a primary matter?)Report

    • Avatar Mark Thompson in reply to Michael Drew
      Ignored
      says:

      Good questions, as always, Michael. My quick response (I don’t have much time today) would be that where inequality is either decreasing or is relatively stable, then the cycle I attempt to describe is not in play.

      Regarding your second paragraph, I must confess to lacking the knowledge to even attempt an answer, though it’s surely a valuable question.Report

    • Avatar M.A. in reply to Michael Drew
      Ignored
      says:

      I’m not entirely sure I see from the post why we should think that the rate of change is all-important, and why we should be so sure that there isn’t potentially also a critical level of inequality in a given society where the interest-agglomeration problems with respect to governance that you describe will arise?

      The rate is problematic for two reasons:

      #1 – there is definitely a critical level of inequality where interest-agglomeration problems begin to cause harm in a cascade effect.
      #2 – the rate of change gives us much more of an indication whether we are seeing already-existing agglomeration problems and self-reinforcing, dangerous cycles or seeing what would be “normal fluctuations” that will correct over time around a sustainable equilibrium point.

      An equilibrium system functions in one of two ways. Stable systems oscillate around a normal point, a sustainable equilibrium. Think of a meatball on a dinner plate. It’ll roll around, but the edges are upturned a little to keep it inside.

      Push the system too far, and it breaks. Meatball over the edge of the plate, out the door, into the garden, under a bush.

      Which part of that system do we seem to be in? Measuring the growth rate of inequality, tracking whether it recedes again in normal timing or just keeps going, gives us a hint.Report

  11. Avatar M.A.
    Ignored
    says:

    I submitted a reply post to E.D. Kain via email, but your and Tod’s email addresses were not listed in your invitations to send to you as well in earlier posts. Hopefully it gets seen eventually.Report

  12. Avatar Christopher Carr
    Ignored
    says:

    Mark, I just want to say really nice post, but I don’t really share your concern. Rather than coming to dominate current markets in monopsony-like fashion, wouldn’t the super rich just forge new markets? At least until someone figures out how to make private jets and caviar for the middle class?Report

Leave a Reply

Your email address will not be published. Required fields are marked *