DIVISION AND CONQUEST: The one percent are making up time!

MONDAY, SEPTEMBER 16, 2013

Part 1—The Wreck of the Whole 99: “The Wreck of the Old 97” is one of America’s most famous train songs.

You couldn’t make Johnny Cash stop singing it. When Vernon Dalhart recorded it in 1924, it became perhaps the first million-selling country music recording.

The song memorialized the wreck of the famous “Fast Mail” train, which had been trying to make up time heading south toward Danville. According to the famous lyrics, the engineer “was going down the grade making ninety miles an hour when his whistle broke out in a scream.”

That was The Wreck of the Old 97. In modern times, there’s the ongoing Wreck of the Whole 99, which Annie Lowrey described again in last Wednesday’s New York Times.

Saez and Piketty had released new information about the gains of the highest earners. As Lowrey began (headline included), she even referred to “a new Gilded Age:”
LOWREY (9/11/13): The Rich Get Richer Through the Recovery

The top 10 percent of earners took more than half of the country’s total income in 2012, the highest level recorded since the government began collecting the relevant data a century ago, according to an updated study by the prominent economists Emmanuel Saez and Thomas Piketty.

The top 1 percent took more than one-fifth of the income earned by Americans, one of the highest levels on record since 1913, when the government instituted an income tax.

The figures underscore that even after the recession the country remains in a new Gilded Age, with income as concentrated as it was in the years that preceded the Depression of the 1930s, if not more so.


[...]

The income share of the top 1 percent of earners in 2012 returned to the same level as before both the Great Recession and the Great Depression...jumping to about 22.5 percent in 2012 from 19.7 percent in 2011.
Is this pre-tax or post-tax income? Lowrey didn’t explicitly say, although certain parts of her report implied that she was discussing income after taxes.

Whatever! New records for income inequality are being set, Lowrey reported. You might even say that the top one percent has been making up time!

Lowrey wasn’t completely gloomy as she reviewed the new data. In this passage, she reported “a glimmer of good news for the 99 percent:”
LOWREY: There is a glimmer of good news for the 99 percent in the report, though. Mr. Piketty and Mr. Saez show that the incomes of that group stagnated between 2009 and 2011. In 2012, they started growing again—if only by about 1 percent. But the total income of the top 1 percent surged nearly 20 percent that year. The incomes of the very richest, the 0.01 percent, shot up more than 32 percent.
Incomes grew by one percent last year! As an example of “good news,” you might file that under the heading, “seeing the glass one percent full.”

Different people will have different ideas about the meaning of these data. For example, should the federal government try to address this level of inequality?

Different people will have different ideas about that. Lowrey reported something the authors have said on that score:
LOWREY: Mr. Saez and Mr. Piketty have argued that the concentration of income among top earners is unlikely to reverse without stark changes in the economy or in tax policy. Increases that Congress negotiated in January are not likely to have a major effect, Mr. Saez wrote, saying they “are not negligible, but they are modest.”

Mr. Saez and Mr. Piketty, of the Paris School of Economics, plan to update their data again in January, after more complete statistics become available.
Should Congress try to level incomes a bit? That is a matter of judgment. But in the absence of some such action, it seems the trend toward income inequality will continue.

By now, it hardly qualifies as “news” when such information appears. Indeed, Lowrey’s report appeared on page B4 of Wednesday’s New York Times. The release of these new data occasioned little reaction in the public discourse.

Nor will everyone agree about the meaning of these data. Do data like these represent a problem? Not everyone will agree, but let's make one basic observation:

In theory, progressives think that these data do represent a problem. But if they represent a problem, they represent a problem that is being felt on both sides of the tribal divide.

Within that 99 percent, the income of conservative voters is failing to rise; so is with the income of liberal voters. Then too, red and blue voters are all being looted through the massive overspending which characterizes American health care—a looting the liberal world has generally been too lazy to discuss.

At some point, you’d think the 99 percent might get mad at the one percent. You’d think the whole 99 percent might get mad about data like these:
Health care spending, per person, 2011:
United States: $8508
Finland: $3374
As compared with Finland, $5100 per person is disappearing every year in our health care spending. (For a family of four, multiply accordingly.) That’s money that isn’t going into the stagnant wages of the 99 percent.

Where is all that money going? At some point, you’d almost think the whole 99 would want to figure that out!

In our view, data like these could be part of a modern-day song, “The Wreck of the Whole 99.” Incomes are stagnant for almost the whole population. Meanwhile, ridiculous looting affects this huge group in various obvious ways.

That said, something seems to keep the 99 percent from fighting against this type of looting and income stagnation. These problems affect red and blue alike, but The Whole 99 fails to unite and put up a fight.

What keeps the 99 percent divided against itself? Some of the division comes from the so-called right. This has been true for a very long time.

But some of the division comes from the so-called left. It seems to us that instincts toward division have been growing on that side of the aisle.

Why can’t The Whole 99 fight back? We’ll examine that question all week.

Tomorrow: Ways to divide, thus to conquer!

Through the miracle of YouTube: Through the miracle of YouTube, you can hear several versions of Vernon Dalhart’s historic 1924 recording.

For one such recording, just click here. Musically, we’ve come a long way since that time, as have the top one percent!

23 comments:

  1. A point economist Thomas Sowell has often made is that people move between income brackets.

    But the very opposite conclusion [that social barriers keep people down] arises in studies that follow actual flesh-and-blood individuals over time, most of whom move up across the various income brackets with the passing years. Most working Americans who were initially in the bottom 20 percent of income-earners, rise out of that bottom 20 percent. More of them end up in the top 20 percent than remain in the bottom 20 percent.

    People who were initially in the bottom 20 percent in income have had the highest rate of increase in their incomes, while those who were initially in the top 20 percent have had the lowest. This is the direct opposite of the pattern found when following income brackets over time, rather than following individual people.

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    Replies
    1. It's tempting to dismiss another one of your right-wing nutcases out of hand. Thomas Sowell is the the guy who essentially compared Obama to Hitler in Investor Business Daily in an article in which he also flat-out lies to you about Obama and the BP Gulf spill fund.

      In his fact-free rant for which you so kindly provided a link, Sowell complains about studies that show that the US has the most rigid class-based society of any developed country. Apparently those studies are bad because they have tables of numbers and use equations. Or something.

      Most working Americans initially in the bottom 20% rise out of the bottom 20%? Really? So that leaves maybe half who don't? And what about those who are unemployed? We just won't count them.

      People in the bottom 20% have highest rate of increase? Sure. It's a lot easer to double your income when you're in the bottom 20% than when you're in the top 20%. Go back and review the arithmetic.

      The studies that Sowell dismisses out of hand mostly show that since the 1970s the rich tend to stay rich and the poor tend to stay poor. I know I should do your homework for you and cite the studies, but I'm just going to invoke Godwin's Law instead.

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    2. Thomas Sowell is a sham and simply distorts actual research to say whatever he wants to say with no regard for truth. But, you know that and are trolling as will always be the case on such a topic.

      Delete
  2. AnonymousSeptember 16, 2013 at 2:20 PM and deadrat --
    It looks like I hit your hot buttons. Anon, you've made a very serious accusation without a single example of "no regard for the truth", let alone showing that Sowell typically has no regard for the truth.

    Deadrat, at least you made a fairly specific charge. You have a good point in observing that Sowell refers only to employed people. However, you provided no link. Furthermore the weasel word "essentially" undoes your accusation.

    Neither of you pointed out anything false in the article that I linked to. It's easier to smear Sowell than to refute him.

    Sowell's point is that subtle choice of terms can lead to implicit spin. The phrase "the 1%" or "the rich" or "the poor" suggests a relatively unchanging group of people. Since membership within these groups actually changes frequently, one should more accurately talk about "the 2003 1%" or "the 1967 poor" (two groups with which I'm familiar).

    Acknowledging people's changing degree of wealth would make it harder to demagogue "the rich" or to sympathize with "the poor".

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    1. DAinCA,

      I followed your link and read Sowell's screed. Apparently you failed once again to read for comprehension.

      I also read Sowell's editorial accusing Obama and his supporters of being Nazis. something else you didn't do. I'll stand by "essentially," which doesn't undo my accusation. In any case, you have no standing to claim oitherwise until you've read Sowell for yourself.

      Maybe the following list will help you think more clearly:

      1. No one claims that the groups represented by economic quintiles have fixed populations. Studies, complete with tables of numbers and equations, show that the movement of people between quintiles does not reflect the happy-talk Republican bullshit that there are only two types of people, the rich and those who are about to be rich. Instead they show an increasingly class-bound society.

      2. No matter how often the top 1% actually changes, it may still be a bad idea for society for the top 1% to own everything.

      3. Asking the top 1%, whoever they are this year, to pay more taxes is not "to demagogue" the rich. To note that it's probably a bad idea for medical emergencies to be the leading cause of bankruptcies is independent of sympathy for the poor.

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    2. Sowell has been peddling this garbage based on a 1995 fundamentally-flawed paper by Cox and Alm for the Dallas Fed. Despite being fully refuted as far back as 2000 (www.jacksonprogressive.com/issues/econandwelfare/sowellsfallacies.html), Sowell, Like Our Own Actuary Troll, simply ignores the facts in order to demagogue the poor as a bunch of bad decision-makers and thus deserving of their lot in life.

      Delete
    3. Deadrat...I think you should have pointed out that asking the very wealthy to pay the same tax rates they paid under Clinton was exposed by the "right" to be hating the rich and class warfare.

      Delete
    4. Lacy --

      The rich are paying considerably higher taxes today than they did under Clinton even though the top rate is the same-- particularly in CA. That's because

      -- Obamacare levies an additional 0.9 percent on the wealthy.

      Obamacare also levies an additional 3.8% tax on investment income for the wealthy.

      -- California upped their state income tax rate for the wealthy.

      I'm not complaining, but just pointing out some facts.

      Delete
    5. DAinCA,

      Bullshit. For most of Clinton's terms, the qualified dividend and capital gains tax rate was 28%. It was never lower than 21%. The WPE lowered the rate to 15%.

      Delete
    6. "For most of Clinton's terms, the qualified dividend and capital gains tax rate was 28%. It was never lower than 21%. The WPE lowered the rate to 15%."

      But what rate did they actually pay?

      Delete
  3. What keeps the 99 percent divided against itself? One major part of the answer is clearly racism - the 1% uses this as tool to keep a large fraction of the 99% on their side. I'm sure that Bob will discuss this thoroughly, but I'm blaming racism on this question right now.

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  4. Say, on the day this article was published, what was TDH covering about the NYT?

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