Wealth disparity in America: an inch of bar-graph for the 90%, 4.9 miles' worth for the top 0.01%

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84 Responses to “Wealth disparity in America: an inch of bar-graph for the 90%, 4.9 miles' worth for the top 0.01%”

  1. Ian Brewer says:

    Makes me feel like an ant.

  2. fuzzyfuzzyfungus says:

    It doesn’t count as ‘class warfare’ now that it’s reached the ‘let the pathetic remnants fight like dogs for the right to mop themselves up’ stage, does it?

    • jimh says:

      It only counts as class warfare when someone tries to wage it from the bottom up. Otherwise it’s called “get back to work.”

  3. Brainspore says:

    The most offensive part is how many people will see nothing wrong with this graph.

  4. Mitchell Glaser says:

    I really hate it when the situation is made this clear.

    • Daneel says:

      I’d expect that the only people that hate the situation being made this clear are the ones profiting by it.

      • howaboutthisdangit says:

        I doubt if they care.  There are too many people on the low end of the scale who actually support the status quo and think the system is working on their behalf.  The situation is unlikely to change any time soon.

        Those who live in the stratosphere really do not care about the rest of the world or what it thinks.

        • Navin_Johnson says:

           I’m surprised to see that none of them have commented yet. These kinds of articles usually attract them, as well as shady astroturf types.

  5. Daneel says:

    Here’s a good companion video.

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

    • Warren Grant says:

      That is an amazing illustration of just how skewed, perhaps I should say screwed, the situation is. If that 1% guy paid even 20% of his income as taxes (instead of keeping it all and paying no taxes) he could pay for the rest of the country combined it looks like :P
      I saw someone using a clever line as their signature on another forum that seems appropriate “Capitalism is just Feudalism with a better PR department”.

    • LinkMan says:

      That video frustrates the hell out of me.  The graphic design work is truly outstanding and I mostly agree with the overall concept (that inequality is out of hand), but the creators don’t appear to have a very good understanding of the information they’re presenting. 

      First, wealth and income are two different things.  While there is some correlation between them, and inequality exists in both, the video muddles the two and switches back and forth randomly between using wealth and income statistics in a way that’s confusing and makes their argument less convincing.

      Second, in part due to the wealth vs. income confusion, the video presents as horrifying some things that shouldn’t be horrifying at all.  Wealth, for example, is usually measured as net worth (i.e., the value of what you own minus the debt you owe others), and in a world where debt exists, there are always going to be people with little or no (or negative) net worth–even some people with very high incomes.  So the idea that the top 1% has almost infinitely more wealth than the bottom 20% shouldn’t be surprising, since the bottom 20% probably has a net worth of zero.

      Third, the Dan Ariely survey that the video starts out presenting is well worth discussing, but the way the video presents it skews its conclusions by misrepresenting the questions that were asked.

      Now if only somebody could get the most excellent graphic designers who created this video to re-do it with input from someone like Dan Ariely who actually understands this stuff (a lot better than me)…

      • wysinwyg says:

        The problem with trying to separate wealth from income is that the wealthiest people in the world profit from their wealth (“capital gains”), not income derived from their labor.  You say “there is some correlation between them” but that is absurdly oversimplified.  It is not merely “correlation”.  It’s a complicated relationship that is completely elided by the idea that wealth and income are totally distinct concepts when they’re quite obviously not.

        Not only that, people with high income have greater freedom to borrow because they can demonstrate the ability to pay back loans.  As a result a high income can provide all the benefits of wealth even for someone who has a very low net worth. Someone making $500,000 a year with a zero net worth is by any reasonable measure wealthier than someone making $25,000 a year with a zero net worth.

        Not that the video isn’t propagandizing, but we really have to stop with this “wealth is totally different from income” nonsense.

        • LinkMan says:

          Both wealth and income are completely relevant to discussions of inequality and of course they’re related.  The video doesn’t fail because it invokes both. 

          It fails because the way it presents its information demonstrates that the authors of the video don’t understand what they’re talking about.

          It’s like somebody making a video about computer performance where they repeatedly switch back and forth between references to RAM and hard drive space as if they were the same thing.  Or a video about heart health where they failed to distinguish between pulse and blood pressure.  A video can be visually gorgeous and have a good message and still completely fail at delivering its argument.

          • wysinwyg says:

            Yeah, again, I’m not disputing the fact that the video is propaganda.  But it seems to me that this point is usually made as a distraction from the issue rather than as a legitimate critique. In particular, I was objecting to the phrase “there is some correlation between them” which seemed to be to downplay the more than merely correlative connection between wealth and income.

            Again, the fact that the wealthiest people make their money from their wealth and not their income means that the comparison between RAM and hard drive space is not particularly apt. RAM and hard drive space are completely distinct whereas wealth and income are not.

          • LinkMan says:

            Sounds like we’re on the same page.

            I’m still struggling to come up with a better analogy for why the distinction between wealth and income matters.  Another analogy might be speed vs. acceleration, but it’s still not quite right…

          • wysinwyg says:

            Yes, that’s a toughy.  The problem with “speed vs. acceleration” would seem to me that it’s more difficult to accelerate faster-moving bodies in most cases which is the opposite of the relationship between wealth and income which are mutually reinforcing. 

            Maybe physical health and exercise?  It’s easier and more fun to exercise if you’re already healthy.  Still has problems but maybe getting closer. 

            Actually, on reflection RAM vs. hard drive space isn’t so bad given that you can substitute swap space for RAM in many cases similar to how one might borrow against a high income to live a wealthy lifestyle despite a relatively low net worth. Analogies are never perfect so the real measure is utility and now I’m thinking there may be a lot more utility to this comparison than I initially gave credit for.

  6. voiceinthedistance says:

    Perhaps we should repurpose the “How Far is Mars” website in the post above to aid in visualizing the off the chart portion of this graph for income growth.  That way we might stand a chance of at least glimpsing the top of the highest plot point.

  7. anon0mouse says:

    It is obscene. What would be worse is to put that in global terms.

  8. Rusty says:

    The critical line for this story is actually about 2/3rds of the way in.

    “Those at the top are pulling away from everyone else not because of hard work, but the shift of income from labor to capital and changes in federal income, gift, and estate tax rules.”

    In other words, “No they didn’t earn this income as the product of their labor, they earned it by manipulating their money.”

    • bcsizemo says:

      Of course they actually earn it by hard work.  The wealth gap has only been accelerated by things like the stock market and other financial vehicles.  If the super rich actually had to “work” to earn their money there would be a lot less of them.

  9. anansi133 says:

     the ones who need 5 miles of paper, are free to use as much of that wealth as they want to keep from having to look at the bottom 10%. Unless that were true, there’d be some social feedback loops involved, don’t call it peer pressure, maybe subordinate pressure.

  10. HarveyBoing says:

    Great pointer. Classic example of “money is power, and the powerful write the rules to increase their own power”.

    But…

    where the income growth of the bottom 10 percent is represented by an inch-high bar

    It’s worse than that. I think you mean “…the bottom 90 percent…”. Which is, of course, even more obscene.

    • Marc45 says:

      “Classic example of “money is power, and the powerful write the rules to increase their own power”.”

      That’s called the golden rule (He who has the gold makes the rules)!

  11. JonS says:

    Well, you know what they say: give ‘em an inch, and we’ll take five miles.

    • Antinous / Moderator says:

      Give them an inch and they’ll copyright it, license it back to you and drag you to court if they suspect that you’ve been using bootleg units of measure.

      • Jason Wood says:

        Or worse, you could measure several feet at once, when you’re only expected to measure an inch at a time. Prosecuting that would be something to build a career as a U.S. Prosecutor out of!

  12. Cowicide says:

    Hmmm… what could POSSIBLY go wrong?

    • millie fink says:

      Gulp. I hope that’s not the only form of correction out there.

      • IronEdithKidd says:

        For other forms of correction, see:  France c. 1789; Russia c. 1917; China c. 1949

        • millie fink says:

          Yes. So, USA c. 2015? 2020? . . . 

          • wysinwyg says:

             Never.  People were hungry in France, Russia, and China at those times.  Since Nixon, US agricultural policy has ensured that there will always be a large enough supply of low-quality feed corn to prevent the kind of widespread hunger that leads to popular revolutions.  (Though it won’t be a particularly tasty or healthy diet.)

            The US has learned from the Roman empire that the poor can always be mollified with bread and circus.

  13. chgoliz says:

    This was on TYWKIWDBI and a commenter named Wales Larrison posted a response that I think needs to be repeated here, just because getting the details right is important so the opposition can’t use small errors to claim the entire argument is invalid:

    What’s interesting about this, is that there is quite a bit of difference between using IRS AGI data and from the Census data.

    If
    you use tax units (as was done by Piketty and Saez), you see that the
    median income (as expressed on their tax returns as AGI) has only
    increased by 3.2% over the last 30 years.

    But if you use
    household income, as compiled by the IRS you see that during the same
    time it has increase by 15.2% That’s a factor of 5 difference!!

    Part
    of this is that the number of Tax Units (tax filers) have increased
    substantially over the last 30 years — lots of people living together,
    but filing separately. That tends to skew the statistics, making the
    outlier values much more dramatic. AGI also doesn’t include government
    transfer payments, such as Social Security, which have become a larger
    part of of people’s expected income used for households.

    A
    recent article that discusses this is at
    http://www.aei-ideas.org/2012/04/piketty-and-saez-vs-burkhauser-and-cornell-whos-right-on-income-inequality-and-stagnation/

    The
    discussion by Burkhauser indicates that when you start looking at this
    at a household level, you see that the increase over the last 30 years
    is 23.6% (not 3.2%) for median income for the household sharing unit —
    adjusted by the number of people in the household, and including
    government transfer payments (which are not in the AGI as reported to
    the IRS) THey also further indicate that if you include “benefits in
    kind” that aren’t taxable (such as employer paid health insurance) the
    increase in median household income rises by 36.7% over the past 30
    years. That’s an order of magnitude larger increase than the Piketty
    and Saez assessment — a huge difference.

    This is not to say
    that incone inequality is not rising, but that the statistics here are
    quite challengable, so that we need to think about where the statistics
    are coming from and what is or isn’t included in them.

    I also
    suspect anything that tries to compare something with very different
    magnitudes on an absolute scale (in units of $59, say) and not by
    comparing on percentage basis.

    • Navin_Johnson says:

       

      I also suspect anything that tries

      I’m not a numbers cruncher, but I also suspect anyone that gets their info from extremely far right wing think tank. These are the same dirtbags who spread lies about Iraq, global warming and just about any other political issue under then sun..

      • chgoliz says:

         I agree with you there.  But as I said, I think we need to be aware of the arguments they’re making about the small details so they don’t derail the whole story.

    • Pag says:

       

      if you include “benefits in kind” that aren’t taxable (such as employer
      paid health insurance) the increase in median household income rises by
      36.7% over the past 30 years.

      All this indicates is that American health insurance cost has increased ridiculously . Saying that the middle class earns more now, but that they spend all of that money to pay for essential insurance is fairly irrelevant since it means their actual quality of life hasn’t increased. The money just vanishes into an expense that’s not taken into account for calculating inflation.

      • chgoliz says:

         Right….so a good counter-argument might be to show how much higher a percentage of middle class income goes for health costs these days.

  14. HubrisSonic says:

    I am abhorred at the disparity of wealth in the United States, but I am slightly less recoiled at how bad this graphic is. Continues off the page? If you dont understand how to visualize data, dont do it. Ask a buddy! 

  15. Wealth and income are not the same. Wealth is a measure of property owned; income is a measure of money gained yearly.

    Also,
    if you look at the bottom 90%, you notice the absolute number is only
    $59. I highly doubt most people own only $59 worth of wealth, rather it
    is  problem of debt (negative wealth) cancelling out positive wealth. It
    seems the bottom 90% (or at least a number of outliers strong enough
    to  destroy the curve) simply financing the majority of their wealth or
    lifestyles with debt.

    • Antinous / Moderator says:

      …financing the majority of their wealth or lifestyles with debt.

      Like housing and health care? Those kind of “lifestyles”?

      • Housing would be a big one. A new mortgage with a new house would result in $0 positive net worth until some of the house was paid off.

        I would suspect student loans would be the main reason for much of the negative wealth. Coming out of college with student loans would put a young person at a significant negative wealth, and a young person would generally have little to no positive wealth. IIRC,  there’s $1-trillion or so in student loan debt outstanding right now, so that would be a major drag

        Consumer spending (credit cards) would probably be another big one.

        I highly doubt medical debt is anywhere near as large as those ones, as it is not as common to take, is expendable in bankruptcy if is becomes ruinous (unlike student loans), and is paid for by medicare/medicaid for the poor.

        Student loans would be my guess as the main culprit.

        • chgoliz says:

          Prior to the current housing fiasco, medical debt was the number one cause of personal bankruptcy filing.

      • awjt says:

        It’s true.  The way they’ve constructed our society, we are made to be indebted to ourselves to provide ourselves the basic services, so that the rich can earn the interest on all those massive debts.  It’s brilliant, really.  Evil, but brilliant.  Like flying fully loaded airplanes into packed buildings.  Who would have thunk it? 

        • LinkMan says:

          What is your proposed alternative? 

          I’m generally left-of-center on most issues.  I think we should have a base level of universal health care, much stronger support for public education, and higher and more progressively scaled taxes to pay for it.  I also think the financial industry needs a regulatory overhaul to break up too-big-to-fail institutions and temper abusive lending practices.

          But you have it backwards when it comes to debt.  Debt enables the vast majority of Americans to own homes, cars, refrigerators and (yes) big television sets. It also enables average joes to start a new business so they can try to create real wealth for themselves.  All of this is not without risk, but that’s why we have regulations (to keep the risks reasonable) and a bankruptcy code (so that when borrowers screw up, they get to start over).  Take debt away, and you might starve a few abusive lender vampires, but you’ll also make upward class mobility even more difficult than it already is.

          • Jonathan Roberts says:

            I am not an economist, so maybe someone more knowledgeable can comment on this. The way I see it, one of the main reasons that housing prices are so high is that there is a correlation with how much people can afford. Once people can ‘afford’ a house with a 90%+ mortgage, prices will rise accordingly to the point where the price of a normal family home bears no relation to what the vast majority of people could actually afford. You still need a house, so you buy one and end up with a lifetime in debt. In the end, most of the money you paid over the years for the house goes to the bank rather than improving the property or community, and any appreciation in the value of the house is essentially meaningless compared to the amount you paid for the loan, especially when you consider that you have to buy another house with that money – the bank is the main winner where it comes to increases in housing prices. What’s more, if you default half way through you might not actually be paying off any of the value of the house itself (as my parents in law found after 15 years paying their mortgage). Other areas of debt might have different arrangements, but essentially it’s only benefiting you in the very short term, while driving up prices and exaggerating inequality by funneling money to those who already have it and punishing those who don’t.

            But the good news is, you can have that car, house, computer, degree and whatever else you want.

          • Brainspore says:

            The way I see it, one of the main reasons that housing prices are so high is that there is a correlation with how much people can afford.

            Or what they were convinced they could afford.

          • LinkMan says:

            Housing is indeed somewhat unique and the availability of mortgages definitely inflates home prices a bit.  I’m not an economist either, but I’m quite sure that taking away mortgages for the average joe wouldn’t bring gross purchase prices down to where average joes could afford them.  Before prices dropped to that level, those who already have lots of money would (instead of loaning it to average joes to buy homes) directly buy the now-cheaper houses and rent them to the average joes for slightly less than the average joes otherwise would have spent on a monthly mortgage payment (since the average joes are no longer building equity with their monthly payment).

          • awjt says:

            If I’m decrying anything, it’s PUBLIC debt.  Although Jonathan Roberts makes a strong argument about the evil nature of ALL debt public and private.  However, back to the point, we could insist on paying for everything we as a society use by only doing it with available general funds.  Local governments tend to do this.  It is the state and federal governments that think massive debt is fine.  These debts were set up by the influence of the rich, and they are at such a massively disproportionate scale that it is inconceivable/intractable how we could imagine a different society.  But what about if we only ever bought those stealth bombers/supercarriers/ashtrays with cash on hand, or realizable within a reasonable time frame?  What if we budgeted only within our means, as a nation?  What then?  That’s the alternative I would sanely suggest.  But we are not sane.  We are INSANE, and to prove it, we have INSANE amounts of debt… to our political enemies, even.  How irrational is that?

          • awjt says:

            But then again, defaulting a huge debt to an enemy… ALSO EVILLY BRILLIANT!!!  The enemy was stupid enough to give us the money!

      • chgoliz says:

         Credit cards.  That’s how most people in the US are able to buy groceries, utilities, and health care.

    • LinkMan says:

      Thank you.  Inequality is a very important topic, but it drives me nuts how often people confuse income and wealth in these conversations.

      • wysinwyg says:

         They are confused because they confound each other.  They should not be treated as distinct because in reality they are not distinct.

        • LinkMan says:

          That’s silly.  They are very much related (and both entirely relevant to the discussion of inequality), but two distinct concepts.

          My point is that when presenting data, the data should be labeled correctly.  And both Free Northerner and I were initially mistaken in our comments, because this chart actually doesn’t show wealth or income.  It shows the change in the average income of each group over a 45 year period.

          • wysinwyg says:

            I’ve already argued to you that they are not distinct because the “income” earned by the wealthiest people is almost entirely capital gains accrued because they are wealthy.  You have not even addressed this argument.

            They are only “distinct concepts” under models that oversimplify the relationship between the two.  Any model that does any justice to the real-world situation has to acknowledge that wealth and income confound and mutually reinforce each other.

            In other words, the contention that wealth and income are “distinct concepts” is what is silly.

    • LinkMan says:

      Crap.  I just clicked through to read the actual article and it has NOTHING to do with wealth or debt.  It’s all about income.

      That $59 isn’t the average net worth of the 90%.  It’s the amount by which the average AGI (adjusted gross income) of the 90% increased from 1966 to 2011 (adjusted for inflation in 2011 dollars).

      This chart isn’t showing income disparity or wealth disparity (directly).  It’s showing how 90% of the population effectively hasn’t participated in any of the income increases of the last 45 years.

    • wysinwyg says:

       

      Wealth and income are not the same. Wealth is a measure of property owned; income is a measure of money gained yearly.

      Property already owned can be used to guarantee a high income and a high income can be borrowed against to create wealth in everything but name (if you’re living at the Waldorf and eating lobster three days a week you’re wealthy even if your net worth is close to zero).  “They are not the same thing” is strictly true but misleading because they do have the same effects and tend to be mutually reinforcing (those with high income tend to be wealthy and those who are wealthy tend to have high income for the reasons just mentioned).

  16. abstracht says:

    $59 is to $18,362,740 as 1 inch is to 4.9 miles

    if the growth of the bottom 90% was a mere $58 dollars less, the ratio would be 1 inch to 290 miles.

    if it was a tiny $0.99 less than that, the ratio would be 1 inch to 29,000 miles.

    if it was a piddling $0.01 less than that, the ratio would be 1 inch to infinity miles.

    if it was yet $0.01 less, the ratio would be 1 inch to (negative) -29,000 miles.

    etc

  17. Wreckrob8 says:

    They were talking about the increasing disparity in incomes in the States since the seventies and how Britain is now headed in the same direction on Radio 4 last night. I swear I heard someone say it doesn’t matter ‘cos now you (and us lucky Brits soon) get lots of free stuff which you never got before. He didn’t elucidate further. I can hardly wait. I want my free stuff, too.

    • peregrinus says:

      There is an argument supporting your second para.  If things become so cheap to manufacture that there’s little point in spending more than you have to locally, the economy shifts shape.  But then a key driver for super-wealthy people is egotism and the control they have over others – a dictator would rather lord it over a crushed country than a wealthy country teaming with potential rivals.

      As we move towards cheaper manufacturing, you betcha that the big money is going to buy up the vitals – water, agriculture, land.  Stuff you can’t just make.

      Then of course we’ll have a revolution.

  18. TheMudshark says:

    It´s a little scary to me how much I would enjoy seeing some bloody retribution coming to the 1%, and I´m not even that badly off compared to most people.

    • Leah Raeder says:

      A key difference between present-day US and Revolutionary France, IMO, is that we’ve convinced the Have-Nots that they, too, can become Haves…so they willingly enlist to support the status quo of the Haves, believing that hard work = success.

      That is the true evil genius of the American Dream. Convince everyone that hard work translates directly into success (without taking factors like privilege, inheritance, etc. into account), and they will work themselves to death for you. The Haves grow richer while the Have-Nots go around and around the hamster ball.

      • millie fink says:

        Well said.

      • Christopher says:

        Frighteningly enough there is also the fact that many poor people work against their own interests and the interests of their community. They have to keep others down, because they  feel that, no matter how bad off they are, they can get some satisfaction that they’re still better than someone else.

        Actually it’s an attitude that explains more than just wealth disparity.

        http://www.youtube.com/watch?v=UlzaBi_QxPw

      • mccrum says:

        “Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.” John Steinbeck

  19. Jeffrey Fisher says:

    Another good one on the increase in disparity in the us I found in some article:

    Median us family income is around 50,000 dollars.

    If the income distribution today was the same as in 1970 the median family income would be 91,000.

    Of course there are good reasons to think growth would have been faster if it were more equal as well, so maybe even higher.

    • LinkMan says:

      That’s almost exactly what this chart is showing.  The chart just isn’t labeled correctly.  This chart shows that from 1966 to 2011, the bottom 90%’s average income has only increased $59, while the top 10%, top 1% and top .01% have seen their incomes skyrocket.

  20. chgoliz says:

    My favorite Economist cover (from 2006):

    Inequality and the American Dream

  21. Lemoutan says:

    So do it again. Mars, anyone?

  22. MrScience says:

    I tried to create a bar graph that would show this, with the bottom 10% as a pixel. Unfortunately, most editors (and GDI+) didn’t like the resulting images. I did create a 120MB BMP image (JPG/GIF/PNG all failed), but imgur and flickr won’t host it.

  23. redesigned says:

    let them eat cake!

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