The Top 1% of Americans Have Taken $50 Trillion From the Bottom 90%

[Loren Pechtel]

I just had a chance to read this thread and the article in the OP as well. It's pretty simple really. The point that I got from it is this. Prior to 1975, especially in the 50s and 60s, wages were rising with inflation, so that just everyone who had a job could afford to buy at least the necessities of iife, and most were able to build up enough money to improve their lifestyle and live a decent middle class life.

Wages rising with inflation is not a good thing for the economy in the long term as that stifles economic growth.

 

[lpetrich]

You just accused the rich of being evil thieves!

What do you think they are? Exploited and oppressed and deserving of reparations?

Apparently you can't help yourself. The intuition that economics is a zero-sum game is so overpowering among you guys ...

Is that what you say to victims of theft? That being stolen from is nothing to complain about if it is possible to create more wealth?

(Oh, and incidentally, you guys do not have a point that inequality is rising and that's bad for general prosperity. Inequality is falling. The 1975-2018 period the article complains about has seen historically unprecedented drops in the Gini index. People's incomes are becoming more and more equal. The reason you guys are ignoring that fact and claiming the reverse is that you are tribal thinkers. You are evidently subconsciously assuming only Americans matter.)

Pure evasion.

What's important is what happens in each society. The US's Gini Index has been going *up* over the last half-century, and that's what's important for the US's inhabitants.

Trends in U.S. income and wealth inequality | Pew Research Center
GINI Index for the United States (SIPOVGINIUSA) | FRED | St. Louis Fed

 

[laughing dog]

There is a difference between what the rich do with an increase in their incomes. The rich save a larger part of any found money than the non-rich do. Money that is saved is withdrawn from the economy. The non-rich are much more likely to spend their money than the rich. They spend the money keeping it circulating in the economy.

Standard leftist mistake.

Saved money is not withdrawn from the economy, it's moved from the consumer side to the production side.

That is the theory, and the intent, but when banks sit on excess reserves, some of those savings are not moved anywhere. Nor does the buying and selling of equity from traders necessarily end up to the "productive" side of the economy.

 

[Loren Pechtel]

There is a difference between what the rich do with an increase in their incomes. The rich save a larger part of any found money than the non-rich do. Money that is saved is withdrawn from the economy. The non-rich are much more likely to spend their money than the rich. They spend the money keeping it circulating in the economy.

Standard leftist mistake.

Saved money is not withdrawn from the economy, it's moved from the consumer side to the production side.

That is the theory, and the intent, but when banks sit on excess reserves, some of those savings are not moved anywhere. Nor does the buying and selling of equity from traders necessarily end up to the "productive" side of the economy.

Nothing is 100% efficient.

The fact remains that without money on the production side there won't be new production to meet the consumption demand.

 

[laughing dog]

That is the theory, and the intent, but when banks sit on excess reserves, some of those savings are not moved anywhere. Nor does the buying and selling of equity from traders necessarily end up to the "productive" side of the economy.

Nothing is 100% efficient.

The fact remains that without money on the production side there won't be new production to meet the consumption demand.

Thanks for admitting your economics is faulty. BTW, without money on the consumer side, there is no incentive to increase production.

 

[Metaphor]

You understand the arithmetic but you don't understand why the arithmetic demonstrates that money was taken from one group to another group? Are you being intentionally obtuse?

Are you?

I don't know how to make my point plainer. Differing distributions of income and wealth at different points in time does not mean one group took from another.

If I could be allowed to be generous and to move this along I would say that your point was that there is no evidence that the money was intentionally taken from one group to another group. That the money flowed to the already rich because of some unknown factors, not from any human actions or intent. This is a common argument from people defending the current income inequality, as you seem to be doing.

I wasn't even defending the current level of income inequality. I questioned the narrative that obviously tries to imply exactly what you say: human actions and intent. To 'take' something from someone means someone else had it and you deprived them of it.

Is that what you meant?

The answer to this argument is that things happen for a reason and when money is involved those reasons usually involve intentional human actions.

I would further ask, do you believe that the growing income inequality is desirable?

Did I say it was desirable?

Indeed, was there something about the exact level of income inequality in 1975 that was desirable? Was it the 'perfect' level?

If reducing inequality meant the top 1% got a lot less, the middle stayed the same, and the bottom 1% got more (but not as much as the top 1% lost), and an overall reduction in GDP, would that be good or bad or indifferent?

For the economy? For the 99%? For the ongoing democratic governing experiment in the US, Anglo and European democracies?

Whether 'increasing' inequality is good or bad depends, surely, on how well off everyone actually is?

If increasing inequality causes everybody's material standard of living to grow, then it ought increase. If it causes some people's standard of living to grow at the expense of other people's, but there is still more 'stuff' overall, then we might make a decision that increasing inequality is actually not that good.

But I can barely imagine the material standard of living for the worst off and the middle and the better off has not grown since the 1970s. That's impossible to believe, for the US or indeed almost in any country in the world. I'm old enough to vaguely remember my childhood in a working class family in the 1980s. Now my siblings have children and I'm a little gobsmacked, frankly, at their material standard of living. It's much better now than 40 years ago.

Answered above. Again, when things happen involving money it usually is intentional.

I'm afraid you haven't answered it at all.

Yes, the additional inequality. Capitalism requires a certain amount of income inequality. It provides the incentive to work and to innovate.

The degree of inequality that is required and tolerated is decided by whom so ever oversees the economy. In past times it was the tribal chief, the clan leaders, and the kings. Today it is decided by the democratically elected government through the economic policies that it sets, the rules and regulations that it uses to control the economy.

And yes, the government has to set the rules for the economy to operate under and the government has to enforce the rules. The government has to impose rules and taxes that increase the prices of goods and services to reflect the costs external to the direct costs of production. Things like making sure the price is burdened with the costs of pollution abatement to preserve the health of the population. To preserve competition in the market. To assure a measure of safety and efficacy of the product.

The playbook of rules and regulations that have caused the additional income inequality over the last forty+ years were written by the Republicans in the US, but have been followed in large degree since by the conservative Democratic administrations, i.e. Clinton, or were enforced by Republican control of Congress.

What were those rules? Do you think the cost of pollution abatement increases or decreases income inequality? Why or how?

As you keep saying.

I try not to debate the meaning of common words. Do you have a word that better described what went on when the income inequality increased than "take."

Yes: I can describe the actual situation. The top 1% has a larger share of income than it did in 1975.

Can you see how I didn't need the word 'take' at all?

I was not the tallest person in my grade level in year 7, but I was by the the tallest person in my grade level in year 12. The 'height inequality' got larger between year 7 and year 12, but I didn't take anybody's height.

To believe that worsting income inequality increased total economic output you would have to define another definition of economic output than GDP, which has grown about 1% less per year over the last forty years or so of rising income inequality compared to the period of lower income inequality that proceeded it.

No, you would not have to define it other than by GDP. You could recognise that correlation is not always causation.

There is a theory that America had a 'special century' of unprecedented growth between 1870-1970, fueled by 'easy gains' which are now mostly exhausted. That would certainly explain a slower economic growth from the 1970s onward.

There is a marked difference in what the rich do with any increase in their incomes and what the non-rich do with theirs. The rich by and large save any additional income that they receive, in stocks and bonds, in bank accounts, in Treasury bills, etc. Money that is saved is money that is not circulating through the economy. The non-rich are more likely to spend any additional income that they receive.

You would have believe that the economy is driven by savings not by spending, which is counterintuitive. Corporations don't invest in new products and new production facilities because more money is being saved, they do it because there is more money in the hands of consumers that will be spent on the products. And of course, it is wages that put money into people's pockets.

Or you have to believe that our current economy is being constrained by a lack of money for corporations and other businesses to invest. A certain delusion in the current economy of record profits and a fiat money system that has virtually unlimited amounts of money to lend for low risk, worthy endeavors.

I don't have to believe any of those things. All I have to believe is that different distributions in time do not mean one group has taken from another. Indeed, one might say that the lower economic groups up until 1975 were taking from the top 1%, and there has been a slow correction over time with the top 1% taking it back.

Certainly, the current income inequality is constraining growth in the economy. Just think, when was the last time that you heard that higher profits would produce run away inflation? Isn't it always been ever higher wages that have been accused of producing higher inflation? And what is inflation? It is when the demand for goods exceeds the supply of goods. It is the product of excessive growth in the economy.

High inflation in America in the 1970s was because there was too much growth in the economy?

 

[DBT]

If a firm is paying their workers $20 instead of $30 per hour because individual contracts means poor bargaining power for workers, the difference ends up as lower running cost and higher annual profit for the firm, the firm is taking the potential earnings of workers and putting it into the pockets of the CEO and board of directors, bonuses, lurks and perks for the rich while workers make do with less ....

 

[Canard DuJour]

take from
(phrasal verb of take)

detract from.
"training for the show has not taken from her efforts to campaign for the shipyard"

There we go - perfectly consistent with the upward redistribution in question. No necessary implication of criminal or property rights violation or whatever other moral outrage (and certainly nothing to do with medieval antisemitism ).

A redistribution of GDP share detracts from the losers unless the redistribution increases GDP such that the losers are no worse off. Which cannot possibly be the case where redistribution has reduced GDP growth - as appears to have been the case.

 

[Loren Pechtel]

That is the theory, and the intent, but when banks sit on excess reserves, some of those savings are not moved anywhere. Nor does the buying and selling of equity from traders necessarily end up to the "productive" side of the economy.

Nothing is 100% efficient.

The fact remains that without money on the production side there won't be new production to meet the consumption demand.

Thanks for admitting your economics is faulty. BTW, without money on the consumer side, there is no incentive to increase production.

You need both. The problem here is it's a balance between current standard of living (which benefits from more money going to the consumer side) and future standard of living (which benefits from more money going to the production side.)

 

[DBT]

One way business increases profit margins is by keeping wage cost down. By suppressing wage growth (or moving to a third world country) they are taking the possible or potential earnings of workers and using it for their own gain. It is a form of stealing.

 

[Bomb#20]

In a zero sum game, the gain from one side does not mean the gain was stolen or even viewed as stolen. Saying the gain comes at the expense of the other group is an accurate description of the outcome

It's accurate in a zero-sum game, which economies are not.

and has no necessary legal or moral implication whatseover.

Context matters. Sure, there's no necessary moral implication; but we aren't talking about a poker game where all the parties can afford to lose and all the parties volunteered to take a chance of having someone else win at their expense. In the actual context, the claim that the rich "took" $50 trillion from others was dripping with moral implication. I'm not going to pretend that wasn't there just because it isn't theoretically necessary.

Which means that is not necessarily the case that the claim that the rich gain at the expense of others is is an accusation of thievery on the part of the rich. It may be, but then again, it may not.

Moreover, a thief may or may not be viewed as evil. For example, Robin Hood is not viewed as an evil thief by many people.

Quibbler. "Evil thief" was Swammerdami's gloss on "Taken"; I just followed his lead.

All in all, you have no logical basis for insisting that the observation that the rich gain at the expense of others is an accusation that the rich are evil thieves.

But that's not an observation. "The rich gain" is an observation. "At the expense of others" is a theory-laden interpretation derived from zero-sum-game mental models.

 

[Bomb#20]

There is a difference between what the rich do with an increase in their incomes. The rich save a larger part of any found money than the non-rich do. Money that is saved is withdrawn from the economy. The non-rich are much more likely to spend their money than the rich. They spend the money keeping it circulating in the economy.

Standard leftist mistake.

Saved money is not withdrawn from the economy, it's moved from the consumer side to the production side.

That is the theory, and the intent, but when banks sit on excess reserves, some of those savings are not moved anywhere. Nor does the buying and selling of equity from traders necessarily end up to the "productive" side of the economy.

So do you agree with SimpleDon's claim, "Money that is saved is withdrawn from the economy."? You're an economics professor, right? What does your profession generally think of that claim? (People make that claim a lot so economists must be familiar with it.)

The claim on its face looks absurd. When you save money you normally invest it, which means you lend it at interest or you buy equity. Why would anyone pay you interest, or give you his property in return for your money, unless he was planning to spend or reinvest the money he's getting from you? And even in case you don't invest your saved money but just stuff it under your mattress, or you lend it to somebody who just sits on it and doesn't spend it or reinvest it in turn, then those dollars will stop contributing to the chasing of goods and services, which will make inflation go down, which will let the government get away with increasing the money supply to compensate, and then those new dollars will get spent in place of the dollars under the mattress, provided the government is staffed by good little Keynesians. So it seems on its face that that much money is going to get spent, one way or another, whether you spend it yourself or you let somebody else spend it for you.

So if you do agree with SD that "Money that is saved is withdrawn from the economy.", can you explain how that works?

 

[Bomb#20]

You just accused the rich of being evil thieves!

What do you think they are? Exploited and oppressed and deserving of reparations?

Where do you think you are, recess at elementary school?

In the first place, you're committing a false dilemma fallacy. People don't have to be either thieves or oppressed. The rich get to be just regular guys the same as you and me, trying to prosper, who happen to have gotten lucky and succeeded at it more than the rest of us.

And in the second place, you're missing the point. Your opinion that they're evil thieves is irrelevant because the previous poster stipulated that it was wrong to paint them as evil thieves. I was inviting him to practice what he preaches.

Apparently you can't help yourself. The intuition that economics is a zero-sum game is so overpowering among you guys ...

Is that what you say to victims of theft? That being stolen from is nothing to complain about if it is possible to create more wealth?

You are using your conclusion as a premise. You have provided no evidence that the people who didn't get the $50 trillion are victims of theft.

What we have observed is that customers gave that $50 trillion to your outgroup and didn't give it to your ingroup. If a new barber moved into town and subsequently your neighbors gave the guy $50,000 for haircuts and gave your friend the old barber $50,000 less than you think they otherwise would have, then you would, I take it, claim the old barber is a "victim of theft" and encourage him to complain that he is "being stolen from"?

(Oh, and incidentally, you guys do not have a point that inequality is rising and that's bad for general prosperity. Inequality is falling. The 1975-2018 period the article complains about has seen historically unprecedented drops in the Gini index. People's incomes are becoming more and more equal. The reason you guys are ignoring that fact and claiming the reverse is that you are tribal thinkers. You are evidently subconsciously assuming only Americans matter.)

Pure evasion.

No, pure reality. The world-wide Gini index is the only one that matters. Every other Gini index is a case of cherry-picking the data.

What's important is what happens in each society. The US's Gini Index has been going *up* over the last half-century, and that's what's important for the US's inhabitants.

Thank you for confirming for us that yes, you are a tribal thinker.

For a typical US inhabitant, the world-wide Gini index tells us something about how he's doing compared to other people. It is a measure of inequality. The US's Gini index adjusts that measure up or down based on whether some other person with a different income happens to reside on this side of a line on a map, or that side. It is a measure of street-address.

 

[Bomb#20]

If a firm is paying their workers $20 instead of $30 per hour because individual contracts means poor bargaining power for workers, the difference ends up as lower running cost and higher annual profit for the firm, the firm is taking the potential earnings of workers and putting it into the pockets of the CEO and board of directors, bonuses, lurks and perks for the rich while workers make do with less ....

That looks like a fun game! Can I play too?

If a firm is paying its workers $20 instead of $10 per hour because competing for workers with other firms means poor bargaining power for employers, the difference ends up as higher running cost and lower annual profit for the firm, the workers are taking the potential earnings of stockholders and managers and putting it into the pockets of the workers, bonuses, lurks and perks for the workers while stockholders make do with less ....

One way business increases profit margins is by keeping wage cost down. By suppressing wage growth (or moving to a third world country) they are taking the possible or potential earnings of workers and using it for their own gain. It is a form of stealing.

That looks like another fun game! Can I play too?

One way unions decrease profit margins is by keeping wage cost up. By promoting wage growth (or preventing the hiring of nonmembers) they are taking the possible or potential earnings of stockholders and using it for their own gain. It is a form of stealing.

So now that we have established that everybody is taking from everybody and everybody is stealing and everybody is being stolen from, let us all step back from the brink of intellectual suicide and take a moment to consider whether the word "steal" really means "trade with each other at a price point different from the price point I just pulled out of my ass."

 

[DBT]

If a firm is paying their workers $20 instead of $30 per hour because individual contracts means poor bargaining power for workers, the difference ends up as lower running cost and higher annual profit for the firm, the firm is taking the potential earnings of workers and putting it into the pockets of the CEO and board of directors, bonuses, lurks and perks for the rich while workers make do with less ....

That looks like a fun game! Can I play too?

If a firm is paying its workers $20 instead of $10 per hour because competing for workers with other firms means poor bargaining power for employers, the difference ends up as higher running cost and lower annual profit for the firm, the workers are taking the potential earnings of stockholders and managers and putting it into the pockets of the workers, bonuses, lurks and perks for the workers while stockholders make do with less ....

One way business increases profit margins is by keeping wage cost down. By suppressing wage growth (or moving to a third world country) they are taking the possible or potential earnings of workers and using it for their own gain. It is a form of stealing.

That looks like another fun game! Can I play too?

One way unions decrease profit margins is by keeping wage cost up. By promoting wage growth (or preventing the hiring of nonmembers) they are taking the possible or potential earnings of stockholders and using it for their own gain. It is a form of stealing.

So now that we have established that everybody is taking from everybody and everybody is stealing and everybody is being stolen from, let us all step back from the brink of intellectual suicide and take a moment to consider whether the word "steal" really means "trade with each other at a price point different from the price point I just pulled out of my ass."

You are free to play as much as you like. The point is that there is a significant percentage of workers who have very little in the way of bargaining power when it comes to negotiating a wage rate. Many workers have no individual bargaining power. The firm presents their contract on a take it or leave it basis.

Employer power is significant but largely constant, whereas workers’ power has been eroded by policy actions

''What this report finds: Labor markets in capitalist economies are fundamentally tilted against individual workers’ ability to bargain effectively with employers. Policy does not have to be rigged for employers to give them particular clout in labor markets; instead, the very nature of these labor markets gives them clout. In the past, when economic growth was broadly shared across the population, it was because policymakers understood this basic asymmetry and used policy levers to bolster the leverage and bargaining power of workers. Conversely, recent decades’ rise of inequality and anemic wage growth has resulted from a stripping away of these policy bulwarks to workers’ labor market power.

Why it matters: Recent research on “monopsony power”—the leverage enjoyed by employers to set their workers’ pay—is a valuable contribution to our understanding of the asymmetry inherent in labor markets. However, “monopsony power” is often a confusing term to even the most savvy economic writers and researchers, and too often it is used only to describe markets that are concentrated (i.e., where there are relatively few employers). Market concentration can indeed suppress workers’ wages, but employer power exists even in markets with lots of employers. If only the narrow conception of “monopsony power” is recognized and policymakers focus only on interventions that target the effect of market concentration (antitrust, for example), then other measures that could more effectively restore the balance of power in labor markets might not get the consideration they should.''

 

[Canard DuJour]

There is a difference between what the rich do with an increase in their incomes. The rich save a larger part of any found money than the non-rich do. Money that is saved is withdrawn from the economy. The non-rich are much more likely to spend their money than the rich. They spend the money keeping it circulating in the economy.

Standard leftist mistake.

Saved money is not withdrawn from the economy, it's moved from the consumer side to the production side.

Nah:

One common misconception is that banks act simply as intermediaries, lending out the deposits that savers place with them. In this view depositsare typically ‘created’ by the saving decisions of households, and banks then ‘lend out’ those existing deposits to borrowers, for example to companies looking to finance investment orindividuals wanting to purchase houses.

In fact, when households choose to save more money in bank accounts, those deposits come simply at the expense of deposits that would have otherwise gone to companies in payment for goods and services. Saving does not by itself increase the deposits or ‘funds available’ for banks to lend. Indeed, viewing banks simply as intermediaries ignores the fact that, in reality in the modern economy, commercial banks are the creators of deposit money.

Money Creation in the Modern Economy - Bank of England, 2014.

 

[Swammerdami]

[The article should NOT have] implied the rich are "evil thieves." But please let's not debate a sub-editor's poor word choice, if that's what Metaphor is complaining about.

... If you want to have a non-morality-play discussion of how our society can most effectively promote general prosperity, feel free to start doing that any time you like. All you need to do is start making your case without accusing the rich of being evil thieves. This is not rocket science.

There are several books by top economists discussing income and wealth inequality, though I've only read two of them -- books by Stiglitz and Piketty. Start a review of such a book and I may participate. I hope to start threads reviewing books of much more interest to me, and may not have time even for that.

What "conservatives" fail to understand is that proper human societies and their economic structures are not devices [primarily intended] to reward some people at the expense of others.

You just accused the rich of being evil thieves!

Apparently you can't help yourself....

If writing what you quoted here is an accusation that the rich are evil thieves then there is some discord between your cognition or use of language and mine. (Though I now see that my sentence was ambiguous, and have added two words to clarify.)

More generally, you seem to have an Us-vs-Them mentality. I don't agree fully with you, so I'm lumped with "you guys"?

Yes, financial rewards motivate entrepreneurship which increases production. Of course. But it's just as simplistic to think inequality is generally "good" as to think inequality is always "bad."

(Oh, and incidentally, you guys do not have a point that inequality is rising and that's bad for general prosperity. Inequality is falling. The 1975-2018 period the article complains about has seen historically unprecedented drops in the Gini index. People's incomes are becoming more and more equal. The reason you guys are ignoring that fact and claiming the reverse is that you are tribal thinkers. You are evidently subconsciously assuming only Americans matter.)

Wow! Do you want to back this up with a citation? It goes against every other source I've reviewed. Remember, we're speaking specifically of the GINI within the U.S.A. Inequality worldwide is arguably more important but is not the topic of discussion here. (And, if we assume your comment implies you think it good that American wages are moving downward toward a worldwide mean, that would make the INCREASE in billionaires' income even more perverse, no?)

 

[Bomb#20]

If you want to have a non-morality-play discussion of how our society can most effectively promote general prosperity, feel free to start doing that any time you like. All you need to do is start making your case without accusing the rich of being evil thieves. This is not rocket science.

There are several books by top economists discussing income and wealth inequality, though I've only read two of them -- books by Stiglitz and Piketty. Start a review of such a book and I may participate.

Who, me? You're the one who said income inequality is moving in the wrong direction. I don't see why inequality is an important topic. Standards of living are an important topic, and they're moving in the right direction.

(In any event, I haven't read Stiglitz and Piketty, and so far nobody's given me reason to think they're worth reading, or that they aren't just more of the same morality play.)

What "conservatives" fail to understand is that proper human societies and their economic structures are not devices [primarily intended] to reward some people at the expense of others.

... You just accused the rich of being evil thieves!

Apparently you can't help yourself....

If writing what you quoted here is an accusation that the rich are evil thieves then there is some discord between your cognition or use of language and mine.

Ah, got it: the Jews* are parasites who enrich themselves by impoverishing Christians*, but since you didn't say parasitism is a bad thing you weren't being anti-semitic* and you weren't making this a morality play. (* That's a metaphor.)

(Though I now see that my sentence was ambiguous, and have added two words to clarify.)

Yes, that does clarify it -- you're making a trumped-up accusation of immorality against "conservatives"* too. You're accusing conservatives of agreeing with you that the economic structure is a device primarily intended to reward some people at the expense of others, but thinking that that's proper for a human society. That's hate-speech against conservatives; more importantly, it's a strawman. You are misrepresenting conservatives. They don't as a rule disagree with you about whether a proper society's economic structure rewards some at the expense of others; they disagree with you about whether capitalism is primarily intended to reward some people at the expense of others.

(* Why you brought up "conservatives" is unclear. There don't appear to be any conservatives in this discussion, except possibly barbos. This is a debate between liberals and progressives.)

More generally, you seem to have an Us-vs-Them mentality.

Pot, kettle, black. What the heck do you think 'What "conservatives" fail to understand is that proper human societies and their economic structures are not devices [primarily intended] to reward some people at the expense of others.' is, if not an Us-vs-Them mentality? You are treating "conservatives" and the rich as "them" and progressives and the non-rich as "us".

I don't agree fully with you, so I'm lumped with "you guys"?

By "you guys", I mean those who think wealth is the cause of poverty -- that rich people become rich by removing wealth from others. I lumped you in that group because you appear to be in that group. If you are not in that group, then why on earth are you implying our economic system is a device to reward some people at the expense of others?

The reason a capitalist becomes rich is because customers give him their money. The reason they give him their money is because in exchange he gives them goods and services that are worth more to the customers than the money was. The customers are better off at the end of the transaction than at the beginning. Their interaction with the capitalist leaves them wealthier than they were before. The same goes for his interaction with his suppliers and employees. Everybody trading with him is trading with him voluntarily, because everybody trading with him is profiting from the trade. How, then, can his reward be at their expense?

If you understood this, then you wouldn't imply our economic system is a device to reward some people at the expense of others, and then you wouldn't be one of "you guys".

Yes, financial rewards motivate entrepreneurship which increases production. Of course. But it's just as simplistic to think inequality is generally "good" as to think inequality is always "bad."

So who the heck indicated inequality is generally good? As far as I can see, inequality* is generally morally insignificant. What matters to a poor guy is how poor he is, not how rich somebody else is.

(* I.e., monetary inequality. Of course a rule that an aristocrat's testimony counts more in court than a commoner's is always bad.)

(Oh, and incidentally, you guys do not have a point that inequality is rising and that's bad for general prosperity. Inequality is falling. The 1975-2018 period the article complains about has seen historically unprecedented drops in the Gini index. People's incomes are becoming more and more equal. The reason you guys are ignoring that fact and claiming the reverse is that you are tribal thinkers. You are evidently subconsciously assuming only Americans matter.)

Wow! Do you want to back this up with a citation? It goes against every other source I've reviewed.

Sure thing: https://www.nber.org/papers/w15433.pdf .

It goes against every other source you've reviewed because every other source you've reviewed relied on cherry-picked data. This occurs for two reasons. (1) Cherry-picked data is a lot easier to collect than unbiased samples. When people pick the low-hanging fruit, surprise!, they infer that fruit on average hangs lower than it really does. (2) Cherry-picking data is necessary if you're collecting data for the purpose of complaining about rising inequality.

Remember, we're speaking specifically of the GINI within the U.S.A.

Of course I remember that. "You guys" are being painfully obvious about that. My point is, there is no good reason to be speaking specifically of the Gini within the U.S.A.

(By the way, "Gini" isn't an acronym; it's a statistician's name.)

Inequality worldwide is arguably more important but is not the topic of discussion here.

Correction: it wasn't the topic of discussion. I'm making it the topic of discussion, because "you guys" have been invalidly using the US Gini index as propaganda for a morality play. If we're assuming inequality is a moral issue in the first place, and therefore rich Americans have a moral obligation to reduce that inequality by sacrificing some of their fortunes in order to improve the lives of poor people, why in the mother loving name of god would we imagine they have a moral duty to hand the proceeds of that sacrifice over to other Americans?!? Why wouldn't they instead be obligated to get a ton more inequality reduction out of their sacrifice by handing it over to actually poor people in Zambia?!? Poor Americans are rich people by world standards. What, is morality itself just another bloody tribalist that cares more about whether somebody is an American than about what he needs?

(And, if we assume your comment implies you think it good that American wages are moving downward toward a worldwide mean,

Why would you assume that? In the first place, I'm not the one who said inequality is a moral issue. That's all "you guys". And in the second place, American wages are not moving downward toward a worldwide mean. They are rising upward away from the worldwide mean. Economic creationists fantasize that American wages are moving downward because they stupidly judge movement direction by comparing the wages with the income of richer Americans instead of by intelligently comparing them with what American wages used to be.

What I think would be good is for American wages to go up and worldwide wages also to go up. Which goes up faster, I am not overly concerned about, since my tribe is all humankind.

that would make the INCREASE in billionaires' income even more perverse, no?)

Not at all. The increase in billionaires' income is caused by billionaires' increasing the amount of trading they do with others. That trading activity is, (see above), a net positive for the wealth of whoever they trade with. Those billionaires, more and more often, are trading with poor people in third world countries. The billionaires are the ones making the third world get richer so fast that the Gini index is going down even though billionaires' income is going up.

 

[laughing dog]

That is the theory, and the intent, but when banks sit on excess reserves, some of those savings are not moved anywhere. Nor does the buying and selling of equity from traders necessarily end up to the "productive" side of the economy.

So do you agree with SimpleDon's claim, "Money that is saved is withdrawn from the economy."? You're an economics professor, right? What does your profession generally think of that claim? (People make that claim a lot so economists must be familiar with it.)

My response is what my profession generally thinks of the claim. Savings are not necessarily entirely recycled into the economy and are not necessarily entirely withdrawn from the economy. Banks may hold excess reserves which represent resources withdrawn from the economy by definition. Savings invested in equity may simply be a transfer from one trader to another, so that the firm does not get more resources to invest. Of course, the seller of the equity may spend the entire proceeds (completely recycle the funds) or spend some and save some (which may mean completely recycle or may not).

I think it is more accurate to say that spending is more likely to be completely recycled than an equivalent amount of saving. And, I think it is very unlikely that saving would represent a complete withdrawal from the economy. But I also think is unlikely that saving is completely recycled as well.

 

[laughing dog]

It's accurate in a zero-sum game, which economies are not.

That is true in the long run, but not necessarily in the short run.

But that's not an observation. "The rich gain" is an observation. "At the expense of others" is a theory-laden interpretation derived from zero-sum-game mental models.

Not really. I have seen people argue that the ____ (you fill in the blank) at the expense of others even when the others gain. The argument is that the _____ gain disproportionately with respect to someone's view of morality or the good or something else.