STLFED: WEALTH INEQUALITY MAY BE A BIGGER PROBLEM IN THE US THAN INCOME INEQUALITY

  

But, on the other hand, not all Wealth Inequality is bad. You gotta love those two-handed economists and politicians. 

During the Clinton era, the President himself defended the burgeoning wealth and income inequality that was developing during the dot.com bubble. This according to no less an authority than Allan Greenspan in his book "The Age of Turbulence". Clinton's rationale is that this is what one would expect and was a welcome development during a period of economic growth. 

Hmmm..............

I'm pretty sure that the good folks at the Federal Reserve know of Hayek, they just don't believe Hayek. And why would they? He just makes too much common sense for them.

Mandating equal outcomes leads to unfair treatment

MARCH 03, 2015 by LEVAN GVALIA

From the fact that people are very different it follows that, if we treat them equally, the result must be inequality in their actual position, and that the only way to place them in an equal position would be to treat them differently....
We do not object to equality as such.... Our objection is against all attempts to impress upon society a deliberately chosen pattern of distribution, whether it be an order of equality or of inequality.

- FA Hayek, The Constitution of Liberty

Wealth Inequality May Be a Bigger Problem in the U.S. Than Income Inequality - St. Louis Fed On the Economy

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07/29/14
Wealth Inequality May Be a Bigger Problem in the U.S. Than Income Inequality
U.S. income inequality has been a focal point of PUBLIC discussion and debate in recent years, with claims that it is severe and that the distribution is becoming increasingly unequal over time. However, wealth inequality is a much greater dilemma, according to a recent article from The Regional Economist, published by the Federal Reserve Bank of St. Louis.Income InequalityRESEARCH Director and Economist Christopher Waller and Senior Research Associate Lowell Ricketts, both with the St. Louis Fed, noted that, "Households in the top 10 percent of the income distribution have earnings so great that they raise mean income over the median for the entire population." In 2010, the median household income was about $46,000, while the mean income was close to $78,500. They also noted that some inequality in the U.S. income distribution naturally develops between age groups and that a lot of it is determined by educational attainment.Waller and Ricketts used a simple measure to see how income inequality in the U.S. compared to other countries around the world (which will be discussed on this blog Thursday) and how it compared to wealth inequality in the U.S. They used the ratio of the median income of the top 10 percent of the income distribution ($203,900) divided by the median income of the bottom 10 percent ($9,900). "The resulting ratio of 21 quantifies the substantial divide between the rich and the poor in the U.S."

Wealth InequalityWaller and Ricketts then examined U.S. wealth inequality in terms of net worth, defined as household assets less liabilities.1 In 2010, the median net worth of all households was $77,300. "Just as there was with the income statistics, there is a substantial divide between median and mean net worth. Mean net worth was $499,000, indicative of an even more top-heavy distribution than that of income."
Using income distribution, Waller and Ricketts calculated the same ratio as used above. The median net worth of the top 10 percent of the income distribution ($1.194 million) divided by the median net worth of the bottom 10 percent ($3,100) yields a wealth inequality ratio of 385, notably higher than the ratio of 21 for income inequality.
Using net worth distribution to define the population groups changes the statistics even more dramatically, as the bottom 20 percent of the distribution has a negative median net worth. The ratio of the median for the top 10 percent ($1.9 million) divided by the median for the bottom 30 percent ($700) yields a ratio of 2,714.

Not All Wealth Inequality Is BadWaller and Ricketts explained that some wealth inequality is a function of age, allowing people to maintain a stable path of consumption over their life spans. Young people have little wealth and tend to be unskilled, so they borrow money for school and their first home. In middle age, they start paying down their DEBTand accumulating wealth while entering their peak earning years. As they get older, they start spending down the wealth they accumulated. Waller and Ricketts said, "This natural life cycle of wealth accumulation hasn't changed much, and most Americans will progress along a similar path. While the process is the same for most people, at any one point in time you're going to have relative inequality: poor, middle and rich based on age alone. While this natural inequality doesn't account for the entire wealth disparity across the population, it is important to understand that some inequality isn't inherently bad." Waller and Ricketts concluded, "The labor market has changed into a system that places a greater value on EDUCATION than physical labor and rewards skilled workers with wage premiums. This system is characterized by substantial inequality, but it doesn't inherently exclude anyone from climbing the income brackets. … Wealth inequality is a much greater dilemma, but it is often unaddressed in the public debate outside of tax proposals. … Financial education initiatives could use some of the energy devoted to the fierce debate surrounding income inequality in the U.S."

Notes and References1 Household assets include both financial (such as retirement accounts, STOCKS AND BONDS) and nonfinancial (such as cars, homes and small businesses).
Additional Resources

• Regional Economist: U.S. Income Inequality May Be High, but It Is Lower Than World Income Inequality

• From the President: Income Inequality and Monetary Policy: A Framework with Answers to Three Questions

• On the Economy: Increasing House Values Playing Significant Role in Wealth Recovery - St. Louis Fed On the Economy

from fee.org

http://fee.org/blog/detail/economic-equality-and-social-injustice-video

Economic Equality and Social Injustice (Video)

Mandating equal outcomes leads to unfair treatment

MARCH 03, 2015 by LEVAN GVALIA

From the fact that people are very different it follows that, if we treat them equally, the result must be inequality in their actual position, and that the only way to place them in an equal position would be to treat them differently....
We do not object to equality as such.... Our objection is against all attempts to impress upon society a deliberately chosen pattern of distribution, whether it be an order of equality or of inequality.

- FA Hayek, The Constitution of Liberty

https://www.youtube.com/watch?v=jceN4BYsxKc

RIP: Margaret Thatcher - On socialism and the misunderstanding of "income inequality" (pay attention OWS'ers)

Margaret Thatcher on Socialism

This 2-minute exchange ( and the Acton blog entry posted below ) explains why the current administration would not send a representative to her funeral. They are deathly afraid that she would expose them for the frauds they are even from the grave. It's all for the best, they are still working feverishly here at proving that their brand of "trickle-up" economics somehow works better than "trickle-down".  

Say what you will about "Reaganomics" or "trickle-down" theory, it turned around a much worse economic condition -- the one Reagan inherited from Carter, Nixon and the Great Society spend-thrift and true racist Lyndon Johnson -- than this administration inherited and it did it much faster and more convincingly. The proof is that Reagan was re-elected by a "true landslide" proportion, winning forty-nine states to his opponents one and winning by a larger margin than 51% - 49%. It was closer to 60/40. 

It also led to the eventual demise of the Soviets, the end of the Cold War ( and "duck and cover" ), the tearing down of the Berlin Wall and the longest period of economic expansion that did not result result from fighting in and recovering from a World War. We got a heck of a lot more for our deficit spending back in the 80's, that's for sure. 

The "income inequality" picture has become worse under the Obama administration than under Bush according to most economists that I've read. I'm sure we can pass the blame off on somebody else or some circumstance or another -- the perma mind-set of the leftists entitlement culture, that of a victim. Wasn't me. He / she did it. The culture did it. The devil made me do it. Pass the blame and pass the buck.  

Thatcher and Reagan "got it". And that's why the leftists dislike both of them. Even after both are dead and buried. Because they left an example and a legacy that exposes their virulent B.S. for what it IS, WAS and ALWAYS WILL BE. And that's VIRULENT B.S. Keep trying to re-brand socialism and marxism. You can change the label or the pitch-man on a package of B.S. It's still B.S.

This current crop of pretenders to the throne ( Clinton, both Bushes and Obama)  have merely squandered it. As well as the "peace dividend" that they ( meaning Clinton and Daddy Bush, the original RINO ) inherited from Reagan. 

He could have at least sent Hillary and told her "that's how a 'real' woman" leads a country and had some fun with it. But noooooooo!!. Classless to the bitter end. 

RIP Margaret Thatcher. A giant among world leaders. She will go down in history as doing more for her country than this president can ever dream of having done for his. And that probably doesn't sit well with the President. So maybe it is best if he just stayed home.

The Incredibly Small and Ever-Shrinking President of the United States

He would no doubt look even smaller by comparison next to Maragaret Thatcher, even if she is dead.  

---

from Acton.org blog:

What Margaret Thatcher Understood About Income Inequality

by JOE CARTER on TUESDAY, APRIL 9, 2013

http://blog.acton.org/archives/53033-what-margaret-thatcher-understood-about-income-inequality.html

Margaret Thatcher once told an interviewer, “Of course, I am obstinate in defending our liberties and our law. That is why I carry a big handbag.” During her time as Prime Minister, Thatcher’s handbag became an iconic symbol of her ability to handle opponents. The term “handbagging” even entered the Oxford English Dictionary (the verb “to handbag” is defined as: (of a woman politician), treat (a person, idea etc) ruthlessly or insensitively) to describe her rhetorical style.

Thatcher’s handbagging usually occurred during Question Time, the hour every day when members of the parliament ask questions of government ministers—including the prime minister—which they are obliged to answer. A prime example is in her last appearance as Prime Minister in the House of Commons, on November 22, 1990. Liberal Democrat MP Simon Hughes taunts her on the subject of income inequality.

Mr. Hughes: There is no doubt that the Prime Minister, in many ways, has achieved substantial success. There is one statistic, however, that I understand is not challenged, and that is that, during her 11 years as Prime Minister, the gap between the richest 10 per cent. and the poorest 10 per cent. in this country has widened substantially. At the end of her chapter of British politics, how can she say that she can justify the fact that many people in a constituency such as mine are relatively much poorer, much less well housed and much less well provided for than they were in 1979? Surely she accepts that that is not a record that she or any Prime Minister can be proud of.

The Prime Minister: People on all levels of income are better off than they were in 1979. The hon. Gentleman is saying that he would rather that the poor were poorer, provided that the rich were less rich. That way one will never create the wealth for better social services, as we have. What a policy. Yes, he would rather have the poor poorer, provided that the rich were less rich. That is the Liberal policy.

Mr. Hughes: No.

The Prime Minister: Yes, it came out. The hon. Member did not intend it to, but it did.

As Thatcher might say, those concerned with income inequality many not intend for it to come out, but making the rich less rich is precisely what they want—indeed, it is the only thing that can solve the faux-problem of income inequality.

Consider the example given by Mr. Hughes that, “the gap between the richest 10 percent and the poorest 10 percent has widened substantially.” To simply the math, let’s say the bottom 10 percent in a country make between $0 and $10,000 a year while the richest 10 percent make an annual income of $100,000. That’s a minimum gap of $90,000 dollars.

Now imagine if the incomes doubled over a period of 10 years (and inflation stayed low). The poorest 10 percent would now make between $0 to $20,000 and the poorest would make $200,000. Everyone would appear to be better off yet income inequality also doubled. The gap is now $180,000—twice as much as it was a decade ago.

So is this a problem? It would only be a concern under three conditions: (a) if the income of the rich increased at the expense of the poor (through exploitation or injustice), (b) the increase was due to illegal activity, or (c) if you care about income inequality because you want to make the rich less rich, through confiscation or redistribution of income.

Preventing or correcting Condition B is a primary concern of the State while preventing or correcting Condition A is a primary economic concern of individual Christians. There are numerous Biblical injunctions and warnings against the injustice of allowing the rich to exploit the poor. But if that is not occurring, then Christians have no right to be concerned with how much income another person is generating. Jesus even told a parable about workers making different wages for the same work (Matthew 20:1-16). While the purpose of the parable was to teach us about the Kingdom of God rather than a managerial lesson on income parity, it does show that differences of income—even for the same work— is not inherently unfair.

Thatcher intuitively understood what her opponents were loathe to admit: They were less concerned about the plight of the poor than with the wealth of the rich. Even the liberal British expatriate Andrew Sullivan admits this was true of British liberals and socialists:

No culture I know of is more brutally unkind to its public figures, hateful toward anyone with a degree of success or money, or more willing to ascribe an individual’s achievements to something other than their own ability. The Britain I grew up with was, in this specific sense, profoundly leftist in the worst sense. It was cheap and greedy and yet hostile to anyone with initiative, self-esteem, and the ability to make money.

The clip below captures the left-liberal sentiment of the time perfectly. Yes: the British left would prefer to keep everyone poorer if it meant preventing a few getting richer. Envy, even when is it disguised as egalitarianism, is a deadly sin. It is corrosive to the soul to envy the wealth of one’s neighbor and destructive to society when we desire the State use it’s power to redistribute the wealth of citizens simply to achieve the goal of more equalized incomes. Ms. Thatcher understood that concerns about income inequality were really about envy. She knew envy was consuming her opponents across the aisle, even though they couldn’t see what was hiding in their own hearts. We need to follow her example and expose income inequality for what it is, before it consumes our own nation as it did Great Britain.

 Sounds like we could use a woman like Margaret Thatcher over here:
http://blog.acton.org/archives/52979-10-memorable-thatcher-quotes-on-economics-and-freedom.html

“I came to office with one deliberate intent: to change Britain from a dependent to a self-reliant society – from a give-it-to-me to a do-it-yourself nation. A get-up-and-go, instead of a sit-back-and-wait-for-it Britain.” (Speech, 1984)

 “My policies are based not on some economics theory, but on things I and millions like me were brought up with: an honest day’s work for an honest day’s pay; live within your means; put by a nest egg for a rainy day; pay your bills on time; support the police.” (The News of the World, 9/20/81)

 “I think we’ve been through a period where too many people have been given to understand that if they have a problem, it’s the government’s job to cope with it. ‘I have a problem, I’ll get a grant.’ ‘I’m homeless, the government must house me.’ They’re casting their problem on society. And, you know, there is no such thing as society. There are individual men and women, and there are families. And no government can do anything except through people, and people must look to themselves first. It’s our duty to look after ourselves and then, also to look after our neighbour. People have got the entitlements too much in mind, without the obligations. There’s no such thing as entitlement, unless someone has first met an obligation.” (Women’s Own magazine, 10/31/87)

 “Socialist governments traditionally do make a financial mess. They always run out of other people’s money.” (This Week, 2/5/76) 

 “As Prime Minister between 1979 and 1990 I had the opportunity to put these convictions into effect in economic policy. We intended policy in the 1980s to be directed towards fundamentally different goals from those of most of the post-war ear. We believed that since jobs (in a free society) did not depend on government but upon satisfying customers, there was no point in setting targets for ‘full’ employment. Instead, government should create the right framework of sound money, low taxes, light regulation and flexible markets (including labour markets) to allow prosperity and employment to grow.”  (The Path To Power)

 “Economics are the method; the object is to change the heart and soul.” (Sunday Times, 5/1/81)

The Liberal Myth of Republican Obstructionism

Gotta love 'em. Every excuse in the book for failure. Except personal responsibility. Gotta love that.

from Political Outcast:
The Liberal Myth of Republican Obstructionism:

Does Dionne forget that when Republicans gained control of both houses of Congress in January 1995, President Clinton moderated himself accordingly, bringing himself back towards the center in order get things done and be, at least compared to Obama, a successful president? Does Dionne forget that when Democrats gained control of both houses of Congress in January 2007, President Bush moderated himself accordingly, bringing himself back towards the center in order to get things done and be, at least compared to Obama, a successful president? (I note here that the Democrats’ takeover of Congress in 2007 coincides with when the economy started to tank. Make of that what you will.)

In order to believe that Republicans are preventing President Obama from being a successful president, Dionne must be writing under the pretense that Obama is already a centrist who cannot further moderate himself. (I’ll say it again: confused.) But, following the progression of logic, to say that Obama has been prevented from being successful is necessarily to say that he has been a failure. So I’ll concede this point to Dionne: Obama has failed.

But in what way were Republicans obstructing President Obama’s dreams for his “fundamental transformation” of America when, for his first two years, Democrats controlled the House, Democrats controlled the Senate, and Democrats had a fair stack-up in the Supreme Court? Obama could have lobbied for and signed virtually anything he wanted to for his entire first two years. And now that Republicans currently control one-half of one-third of the government, Democrats blame Republicans for blocking progress. While the House is busy passing bills, Senate Minority Leader Harry Reid (D) doesn’t even allow those bills to be brought up for a vote in his side of the chamber.

What do we call this if not obstruction? Methinks the Democrats give Republicans too much credit. Either that or Republicans are just that astonishingly and unprecedentedly effective.

'via Blog this'

Eric De Groot: The Trends Clearly Show The Worm Has Turned In The Labor Market

Chart 1:  Birth/Death Model (BDM) Contribution to Nonfarm Net Payrolls (NFP) Added/(Lost)

The only problem I had with former GE CEO Jack Welch's comments were "what took him so long"?

These numbers have been manipulated for political effect for the past two - three years. The most recent iteration is just the final pomp-pomp waving, get out the vote effort for Team Obama. A "he may have lost the debate but he killed Osama, saved GM and gosh darn it, saved the whole economy" type of affirmation.



If you really want to understand what the figures mean, the hyper-partisan mouth breathers are not the place to go. Bloomberg, with it's Obama-gushers or CNBC with it's "battle of the talking-heads" won't work either.

Read guys like Erik DeGroot, Doug Sort and Mish Shedlock, who are outside the mainstream, but provide solid, honest economic analysis.


Eric De Groot: The Trends Clearly Show The Worm Has Turned In The Labor Market:

For anyone not completely incapacitated by election year rhetoric and/or politics, please consider the following:

2010-2012 economic recovery has produced far fewer jobs than 2004-2006 (chart 1). 

          The 2003-2007 economic recovery was considered extremely weak.

The US driven by generations of excessive spending, ever-increasing socialism, and uncompetitive international taxation has slowly transformed its economy and labor force from the manufacturing to service hub of the world.  Service-producing jobs as a percentage of nonfarm payrolls have increased from 60% to 86% since 1953 (chart 2).  American have come to know this economy as swapping Made in the USA for Designed in the USA label and a steady decay in real hourly earnings and standard of livings for generations.

 No matter how the statiticians jigger the labor numbers to hide the trends, the worm has turned in the labor market.  The jobs creation histogram which studies both job creation/(destruction) and labor force participation peaked in early 2012 (chart 3)."

'via Blog this'

A Closer Look at the September Employment Report

By Mike "Mish" Shedlock

October 5, 2012

http://advisorperspectives.com/dshort/guest/Shedlock-121005-September-Employment-Report.php

Grossly Distorted Statistics

Given the complete distortions of reality with respect to not counting people who allegedly dropped out of the work force, it is easy to misrepresent the headline numbers.

Digging under the surface, the drop in the unemployment rate over the past two years is nothing but a statistical mirage. Things are much worse than the reported numbers indicate.

Only 114K New Jobs,
But the Unemployment Rate Drops to 7.8%

By Doug Short

October 5, 2012

http://advisorperspectives.com/dshort/updates/Unemployment-and-the-Market.php


This is a lot more folks than just Jack Welch questioning the reliability / accuracy of the numbers. The conspiracy of the numbers shell-game does not have to come from the BLS itself BTW. It's more a failure of the methodology in the context of the current environment that has made the number so politically charged. The folks on the other end of the "household survey" could be distorting the number.

from the Economic Collape blog:
http://theeconomiccollapseblog.com/archives/a-jobs-report-conspiracy

The following is a sampling of skeptical quotes about this jobs report....

Former GE chief Jack Welch

Unbelievable jobs numbers..these Chicago guys will do anything..can't debate so change numbers

Chapwood Capital Investment Management Managing Partner Ed Butowsky

I feel like I’m watching a movie. There is no way in the world these numbers are accurate.

Neil Irwin of the Washington Post

"Weird that payrolls are exactly on forecast but household survey is far better."

Conn Carroll, senior editorial writer for the Washington Examiner

While it is highly improbable that BLS conspired to cook the books, there is still a huge 756,000 job gap between the number of jobs employers told the Labor Department they created in September (114k), and the number of Americans who told the labor department that they got new jobs (873k).

U.S. Representative Allen West

I agree with former GE CEO Jack Welch, Chicago style politics is at work here. Somehow by manipulation of data we are all of a sudden below 8 percent unemployment, a month from the Presidential election. This is Orwellian to say the least and representative of Saul Alinsky tactics from the book "Rules for Radicals"- a must read for all who want to know how the left strategize . Trust the Obama administration? Sure, and the spontaneous reaction to a video caused the death of our Ambassador......and pigs fly.

Gluskin Sheff's David Rosenberg

That the 7.8 percent jobless rate takes it to the level that prevailed when the President took office in January 2009 has raised many an eyebrow. I don't believe in conspiracy theories. But I don't believe in the Household Survey either. 

This notoriously volatile indicator has become even more so in recent months. It showed a 195K slide in July and a 119K decline in August, to only then reveal a massive 873K surge in September.

Radio host Laura Ingraham

"Jobs #s from Labor Secretary Hilda Solis are total pro-Obama propaganda--labor force participation rate at 30-yr low. Abysmal!"

Americans for Limited Government

"Either the Federal Reserve, which has its fingers on the pulse of every element of the economy, and the Bureau of Labor Statistics manufacturing survey report are grievously wrong or the number used to calculate the unemployment rate are wrong, or worse manipulated. Given that these numbers conveniently meet Obama's campaign promises one month before the election, the conclusions are obvious."

Rick Santelli of CNBC

"I told you they'd get it under 8 percent — they did! You can let America decide how they got there!"

BTW, here's more fuel for the "conspiracy" fire. How can we take any of these numbers seriously? How can this thing called inflation be 2% under one methodology, 5% under another and 9% under another.



from Blacklistednews.com:
http://www.blacklistednews.com/The_Inflation_Rate_Is_A_Lie_Too/21894/0/38/38/Y/M.html

Can we believe any of the economic numbers that the government is feeding us these days?  Most of the focus recently has been on the bizarre jobs report that the government released last Friday, but the truth is that the inflation rate is a lie too.   In fact, the way that the government calculates inflation has changed more than 20 times since 1978.   The government is constantly looking for ways that it can make inflation appear to be even lower. 

According to John Williams of shadowstats.com , if inflation was measured the same way that it was back in 1990, the inflation rate would be about 5 percent right now.  If inflation was measured the same way that it was back in 1980, the inflation rate would be about 9 percent right now.  But instead, we are expected to believe that the inflation rate is hovering around 2 percent.  Well, anyone that goes to the supermarket or fills up their vehicle with gasoline knows that prices are going up a lot faster than that.  Just about everything that we buy on a regular basis is steadily becoming more expensive, and so most Americans are not buying it when government officials tell us that there is barely any inflation right now.

John Williams is not the only one doing research into these inflation numbers.  According to the American Institute for Economic Research, the real rate of inflation was about 8 percent last year.  The following is an excerpt from a story that was recently posted on the website of Pittsburgh's NPR news station....

The federal government says that consumer prices rose moderately last year, but if you think the cost of everyday purchases increased more than that, then you’re probably right according to the American Institute for Economic Research (AIER).

The Bureau of Labor Statistics’ Consumer Price Index (CPI) was up 3.1% in 2011. However, AIER’s Everyday Price Index (EPI) indicates most Americans saw their day-to-day costs increase by 8%. That’s because the EPI excludes housing, automobiles, furniture, appliances and other items purchased occasionally.

 All using methods that the government has used in the past? Because it serves THEM, not US to portray inflation as lower, therefore they FIND a method that makes it so.

 It's been going on for decades folks, by both parties.

I hate to break the news to some of you folks who still believe in Santa Clause, the Easter Bunny, the Tooth Fairy and Obama, but your government lies to you. This administration is just more brazen about it than most.

Coming from the guy who was described -- by one of his current BFF's -- as the "Biggest Fairy Tale ever", why should we really be surprised  that we feel like we are living in an Alice in Wonderland world. BTW, Clinton blisters the media and their rose-colored glasses in the same rant.

Bill Clinton on Obama: Big Fairy Tale

The (ever) growing list of Obama lies:

http://townhall.com/tipsheet/guybenson/2012/08/08/busted_team_obama_caught_lying_about_cancer_ad

http://visiontoamerica.com/12437/wh-spokesperson-okay-fine-weve-been-lying-about-romneys-tax-plan/

http://townhall.com/tipsheet/guybenson/2012/06/21/four_pinnochios_for_latest_obama_attack