Consequentialism, Social Justice

Markets and the Economic Condition of the Poor

First, let me thank Matt for inviting me to guest blog this week.  I know many of the bloggers here and am a big fan of their work.  I also love this blog – both the idea and the execution.  And it’s a special treat for me to be among the philosophers and make some use of my “other” undergraduate degree in philosophy.  The more I learn about modern philosophy, the more I realize how deeply fortunate I was to have the teachers I had at Michigan in the early 80s.  I’m not sure Peter Railton would remember me, but he was the prof for my political philosophy course.  So now that my street cred is established, on with the show…

On a plane ride the other day, I finished David Schmidtz’s Elements of Justice, which is a terrific book.  I had started it before the whole blog kerfuffle over Nozick began, and that incident prodded me to take it on the plane and finish it. It is, as I don’t have to tell this audience, terrific.  I had read Chapter 22 on “Equality and Opportunity” before (thank you Danny), but reading it in full context this time was even better.  What I’d like to do in this first guest post is to update some of David’s data and then provide some additional statistics that make his argument about what a market-driven society does for the poorest among us even stronger.

David offers some of the then-recent data on income mobility from Cox and Alm’s 1999 book Myths of Rich and Poor.  That data has come under significant methodological fire since then and there has been some additional similar research since.  For example, in a Treasury study of income mobility between 1996 and 2005, 58.6% of the lowest quintile moved up at least one quintile in that 10 year period and 29.1% moved up two or more quintiles.  A Federal Reserve Bank of Minneapolis study looked at 2001-2007 and found that 44% moved up at least one quintile, with 13% moving up two or more.  As David points out, what to conclude from this depends on where you stand.  I would say that it shows that income mobility in the US is still alive and well, with at least half of poor families moving up a quintile in around ten years or so, and decent number moving two or more over that same time span.  As David also points out, there are all kinds of cautions about these numbers, including issues of household size and “mobility compared to whom?”  Whatever one chooses to make of them, I thought I’d provide some more recent data.

At one point, David makes a quick mention of consumption but then drops it.  Well, I want to pick that up.  One way of measuring the progress of “the poor” over time is to see what the typical poor household is able to consume in different years.  We actually do have some reliable data on this.  The Census Bureau surveys US households and asks if they have certain consumer items in their homes.  I have tracked this data, both directly from the Census Bureau and from other sources.  Here’s what the latest data look like, along with some historical comparisons.  Importantly, these are households below the poverty line, not just the lowest quintile. These are the truly poor.

consumption data

Two things to notice about these data.  First, the absolute consumption possibilities of the poor have improved dramatically over time, as the first four columns show.  US households below the poverty line have more in their homes than they did in the 1980s or the 1990s, and they have some items that didn’t even exist back then!  (And to head off one objection, there is no evidence that this has all been bought on credit.)

Second, compare the poor in 2005 with the “all 1971” column.  Americans below the poverty line in 2005 were living better, at least in terms of their ability to buy what we now think of as standard consumption items, than did the average US household in 1971.  (Note too that the average household is better off today than in 1971, so much for “the Great Stagnation.”)  One might say these are trivial consumption items, but air conditioning and cell phones save lives, and refrigerators and washing machines keep people healthy.

How is this possible?  Two answers.  First, contrary to what the media say, working and middle class stagnation is a myth.  According to the Census Bureau over 30% of US households in 2006 earned above $75,000 compared to under 20% in 1980 (adjusted for inflation).  Over the same period, the percentage of US households earning under $35,000 fell from 42.8% to 36.7%.  Fewer households are poor, fewer are middle class, and a hunk more are above $75,000.  And in case you were wondering, those general trends hold for black and Hispanic households too – with the percentage of black households under $35,000 falling by 10.9 percentage points and the number above $75,000 increasing by 8.9 percentage points, for example.  If the middle class is shrinking, it’s because they’re getting richer, as are the poor.

Second, the real cost of goods is falling.  Thanks to innovation and competition, it costs far less to buy these household items than in years past, especially if we measure by the number of labor hours it takes to earn the money to buy them.  Given the increase in wages over the last few decades and the falling prices of many goods, Americans can buy much more than they could in the past for the same hours of work.

So for example take a $400 TV from 1973 which took 97.1 hours of labor at the average private sector wage of $4.12.  At the 2009 wage of $18.72, the 97.1 hours of labor it took to earn that $400 in 1973 would net you $1817.71.  So with the same work that would have purchased what, by our standards, was a pretty crappy color TV in 1973, we could today buy a darn-near top of the line very large flat-screen with 3D.  Or alternatively, we could go to Walmart and get a relatively cheap LCD TV that would still be a way better product than the 1973 TV and tack onto it a surround sound system, a blu-ray player, and then for giggles maybe a cheap laptop and a small iPod and maybe even a digital camera and still have change left for some DVDs and software.   And all of this ignores the increased variety and higher quality of the artistic creations one can enjoy on all of those toys.

So if the question is whether markets work to the benefit of the least advantaged, the answer is “it sure looks that way.”  One drive around the rural area in which I live where you can see the working poor with their cell phones, flat screen TVs, and satellite dishes is perhaps all the evidence one needs.  If not, you can just quote everything from above.

  • Anonymous

    Without the massive redistribution apparati of Fed inflation, taxation/spend welfarism (corporate and individual subsidy), regulation, outright socialism (like public schooling and national defense), affirmative action and other politically correct schemes, many of these consumer good economizations would not have taken place nor have been as accessible to the “poor”.  The market had to be curtailed, supplemented and governmentally channeled to be socially effective. E.g. Look at the absolute correlation between the increase in money supply and the price deflation in many of the goods on the chart.

    • Hardly.

      The prevalence of these goods is due to an increase in effective wealth, measured as a share of how much work one would have to put in to acquire.  IE, how long someone would have to work to cover all of these goods.  As technology improves, the cost of consumer goods and electronics comes down as a percentage of cost so the average working class individual (if free from having to purchase lodging, food, fuel etc) could take two month’s pay and walk into a big box store to purchase an iPod, cell phone, netbook and television.  All of these items would constitute a signifigant investment on their own even twenty years ago.  That’s not due to subsidies but due to improved technology, free trade and manufacturing.

      Also, I couldn’t help but notice that you included schooling and national defense in your description of outright socialism.  If we include both of those, would you please tell me what kinds of governance aren’t socialism?

  • The counterargument may be that happiness is relative, not absolute, and so that even if the poorest of the poor are still able to purchase more things today than they were yesterday, the fact that they have less stuff relative to the rest of society today still means they are disadvantaged. Keeping up with the Jones and what not.

    Do the poor today feel better off than they did decades ago? Is there a way to effectively measure this?

    Of course you’re trying to get at the economic condition, not just a quality of life. But if people have more stuff but aren’t enjoying life more it makes you wonder if economic condition, above a certain threshold, even matters for public policy discussions.

    • Aeon Skoble

      But if their problem is a perceived inability to keep-up-with-the-Joneses, then it’s a matter for intrusive government policy.  There’s no goverment program to alleviate resentment.  For that they need spritual guidance or philosophy.  The ostensible rationale for these programs is to make people better off, so if markets make then _actually_ better off, the programs have no rationale.  It’s like the economic equivalent of hypochondria. If you’re actually healthy, then you shouldn’t be getting presecription meds.

      • First, I’m going to assume that your statement is “But if their problem is a perceived inability to
        keep-up-with-the-Joneses, then it’s NOT a matter for intrusive government
        policy.” because that statement makes sense given everything else you say and that you just have a minor typo.

        I agree that alleviating resentment isn’t the right foundation for intrusive government policy. But I think that a liberal would generally agree too. I don’t think showing a liberal that the poor today are more likely to have refrigerators, cell phones, color TVs, and the like is going to change someone’s support for intrusive government policies. Outside of specific social safety net spending like welfare, food stamps, and unemployment, the liberal political agenda seems to be focused on retirement security, health care security, and educational opportunity.

         So it’s insecurity (two out of three), not resentment or economic conditions, that’s driving the liberal/progressive project. Sure the poor have color TVs and cell phones. But are they prepared for their retirement? What happens if they have a serious medical condition? What happens when they are old AND have a serious medical condition?

        I don’t think educational opportunity really addresses the issue of the economic condition of the poor, more a question of who ends up poor and who doesn’t, so I won’t try to tie that into this discussion.

        • Aeon Skoble

          D’OH!  Yes, I made just the typo you inferred, thanks for the catch!   But RE your second paragraph, I think Steve also has data showing that people are healthier too.  But point taken.

  • I’m not convinced that proof of intra-generational income mobility, which is what’s being described in the first few paragraphs of Prof. Horwtiz’s post, is a good retort to those of us concerned about inequality and economic opportunity. Of course the typical American is going to earn more in his 40s than he does in her late teens. These income mobility studies are just describing a successful career life-cycle: you work a low-paid part-time job in college, get an entry level position after graduation, move to higher income brackets as you earn promotions, and perhaps move down an income quintile in your 60s as peak income is only partly replaced by savings and Social Security. 

    That’s all well and good, and it’s a useful corrective to ‘static’ studies of income inequality that fail to account for the fact that the rich and poor are not the same people they may have been 20 years ago, but if economic opportunity is an important component of justice, shouldn’t we be looking at inter-generational mobility? How much of a child’s income is correlated with parental income? If the correlation is high – and I believe the US scores poorly on inter-generational mobility measures compared to the usual Northern European suspects – isn’t that a problem of justice?

  • I’ve heard a variant of this “let them eat iPhones” argument elsewhere, but I think it misunderstands the reasons redistributionists believe as they do, and is thus instructive.

    People don’t want to redistribute a portion of income because there is a fundamental human right to a washing machine or an XBox.  They want it because there are a whole host of other freedoms that are meaningless in practice without a degree of financial security.  

    For people without safety nets or a family to fall back on, the sort of high-risk, high-reward choices one needs to make t0 get that kind of security in the first place.  If you are at risk of moving in to your car if you make a political statement that ticks off your boss, you won’t be making political statements.  Freedom of movement means nothing if you are in a permanent state of debt peonage.

    Redistribution is not a matter of jealousy of “parasites” or noblesse oblige (as much as you’ve heard it strawmanned as such), but instead the means to an end of maximum freedom in practice.

    • Anonymous

      How do you account for opportunity costs re the seized freedoms, money, time, and materials on the ones being forcibly brought down towards equality?  Further, how do you account for the intervening party’s opportunity costs?   How do you know that the benefits to the least off outweigh the costs in the modern “liberal” welfare scheme?  Seeing is believing? 

      In other words, how much of economic reasoning do you reject in favor of high liberal moralism?

  • Kenneth Switala

    “First, contrary to what the media say, working and middle class stagnation is a myth.  ”

    For the media the actual numbers probably do not matter much, but I’ve definitely seen graphs like this one in various articles: ( http://en.wikipedia.org/wiki/File:United_States_Income_Distribution_1967-2003.svg ). There has been a special focus on the fact that there is “relative stagnation” between percentiles, not absolute stagnation. Some people dismiss this not as a myth but as stirring up class envy, but a full defense for many would be nothing less than showing the money at the top is well deserved relative to those below…

    I went to the part of the book by Schmidtz where he cites Cox and Alm, and above that there are some possible mistakes when he talks about household income. First of all I think his point about wage earners per household is actually opposite to that which has actually happened for the middle class… I have no official data handy but I scrounged up this unsourced, nearly useless graph: ( http://www.russellsage.org/research/social-inequality/chartbook/basic-trends/workers-by-quintile ). It shows workers per household rising rapidly for the middle classes and holding rather steady for the top and bottom quintiles. If personal wages were mostly stagnant but there were more workers per household then this would account for some if not most of the rise in household income.

    Next, he may have misread Table 1 in McNeil when he says individual income rose 62.2%, because the number applies to disposable income and not gross income. It is not really that clear whether or not McNeil is actually talking about discretionary income, either. What is interesting about this 62.2% number is that the correct interpretation still backs up your second point about consumption… either taxes are lower or the essentials are now much cheaper, and disposable income for things like nice TV’s has indeed risen significantly for the median consumer.

  • Anonymous

    Although the data on consumption inequality is important, I would also take a look at the arguably more important evidence that inequality in happiness has declined considerably since the 1970s.

  • Anonymous

    Liberals and libertarians needn’t disagree on whether markets benefit the poor.  Their disagreement is really about the kinds of markets we ought to have (i.e. whether they should be regulated and whether there should be redistribution) and not about whether we should have them.  If we’re going to assess economic policy from the perspective of the least advantaged, then we should ask which market-based arrangements are best for them.  Nothing in Horwitz’s data addresses that question.      

    • Anonymous

      An argument for government (like the US) regulation and/or redistribution is an argument against market.

      • Anonymous

        Fine, but in that case Horwitz’s conclusion should be that government regulation and redistribution helps the poor. 

        • Anonymous

          You could conclude either way and defend it ad infinitum. Data says nothing in itself. 

    • I wonder. I get hung up on how wealth is defined for the poor vs. the rich and how cash plays a role there.  In order to redistribute ‘wealth’ to the poor, the simple-minded approach would be to give them more money somehow, but that would likely just lead to inflation and the circumstances of the poor would remain unchanged to some degree. Perhaps just a saturation of modern conveniences that they pay their landlords to use for instance. 

      So what real appreciable asset could be created to provide wealth to the poor?

      It is interesting to me to read these arguments because you are batting around philosophies and trying to find a logical solution to a perceived problem – or to argue that the perceived problem is not really a problem. 

      It seems to me that this kind back and forth creates an ephemeral ‘bible’ that is used by politicians to set policy and results in yet another debacle. While the dialogue is important, I feel like there should be some recognition that the arguments are malleable. Without that caveat, methinks that the environment created is one of divisiveness rather than one that can bring about constructive disagreement and change when necessary. I feel like these ideas are bought and paid for by somebody rather than provided as a purely objective thought process. Maybe. 

      • Damien S.

        Printing money to give to the poor would lead to inflation, though that’s not always a bad thing, right now a bit of inflation would ease the burden of private debt that’s strangling the US economy.  But giving tax money from the rich to the poor doesn’t seem inflationary.  It can increase the cost of services relative to goods, and make bidding on scarce goods more egalitarian, but that’s different from a run-the-printing-press inflationary spiral.

        The Georgist approach would be for the state to be the landlord, at least qua land; a renter would pay a landlord for building construction and maintenance, but positional rent would accrue to the public.  This can extend to natural resources of all sorts: oil, minerals, broadcast wavelengths.  Economists generally agree that land taxes don’t distort the economy.

  • Hyena

    I’m going to side with Tyler Cowen, an actual libertarian economist who writes (and reads) good books besides, over you on the Great Stagnation. Anything else would be an epistemic fault, I think. That alone, I think, calls for devil’s advocacy in significant measure.

    So how much have markets helped the poor? 

    For most of these goods, the major change that has brought down costs has been the rise of manufacturing in China. But that’s not really market-driven: starting in the 1980s, China simply gave money to firms opening businesses and kept them afloat for years while they figured out how to do it. Even now they use regulatory and currency policy to reduce costs by curbing consumption and massively over-investing. This represents a real transfer of wealth from people in China to people in the US; in China, it’s welfare through job subsidization. For the US, it’s subsidizing consumption.

    Likewise, much of the advance since the 1970s has come from rapidly expanding credit capacity. But that expansion is in large measure a reflection of the government policies, particularly exchange rate pegs, to protect and create industries at public expense. An exchange rate peg, for example, requires you to hold securities in the target currency regardless of price in order to make the market; that means, ipso facto, a credit subsidy for traders using the target currency.

    Moreover, starting in the 1980s, the government has pursued a policy of deficit expansion. This has added enormous amounts of economic activity which would not otherwise exist because it simply redistributes the money. Insofar as this money comes from overseas, it represents a direct transfer of real wealth from foreigners to Americans in exchange for Federal guarantees. Naturally, this means a third layer of implicit subsidy, particularly for jobs in personal or food service, where the poor are concentrated.

    Lastly, an important growth industry since the 1970s has been healthcare. Currently, the industry employs over 14 million people, nearly all are paraprofessionals of some type. Given that these workers are drawn primarily from the lower segments of the economic strata, it would not be a bad bet that the growth of this industry represents a significant percentage of apparent income mobility. Direct Federal subsidies (Medicare and Medicaid) represent over $700 billion, the states kick in more money plus on top you have tax laws and regulations which encourage spending on health care. This is not “the market” at work.

    So what’s the story since 1970? 

    We’ve been the beneficiaries of a massive welfare campaign sponsored by our own and foreign governments through export-oriented development policies overseas, deficit spending at home and a health care system which is not too unfairly characterized as a jobs program. All this without mentioning means-tested education benefits or the steady rise in the value of de jure welfare programs.

    • Anonymous

      “For most of these goods, the major change that has brought down costs has been the rise of manufacturing in China. But that’s not really market-driven: starting in the 1980s, China simply gave money to firms opening businesses and kept them afloat for years while they figured out how to do it.”

      You could say– with equal non-falsifiability– that China hampered its growth by government subsidy to favored businesses.  Further, the issue in totalitarian China was not a technological issue– but an economic one. The real revolution, Deng’s reforms and onward, was what freedom in industry was allowed. To cut to the chase, I specifically mean calculation in money prices and the associated consumer feedback from Americans. These are market phenomena. Without them there would have been no historic mass move out of poverty in China.

      Since when does Tyler Cowen qualify as a libertarian? He likes the Fed Reserve and even believes that it could manage its special political privilege scientifically and altruistically by keeping to a 3% inflation rate. He also supported a temporary take-over of major portions of the financial industry during the initial collapse. Unless your definition of libertarian is tolerant of statism.

      • Hyena

        I think if you’re going to use the term “non-falsifiability”, it would behoove you to know what it means.

        • Anonymous

          Okay. I will point to your apriorism that says government subsidy = industrial revolution. It is this underlying assumption, your implied reasoning that is not open to empirical provability no matter how much data is piled on it. It is at the logical level that your government subsidy = industrial revolution fails– and must be dealt with. 

          • Hyena

            *facepalm*

          • Anonymous

            Please explain. Is that your defense?

          • Hyena

            It’s my exasperation. I suspect there is no productive discussion which can currently pass between us. I doubt our premises align in the least and so there is probably no common ground to form a working context of discussion.

          • Anonymous

            Damien said the same thing. This must be the official defense mechanism of today’s statists. What a shame. Premises matter greatly.

          • Damien S.

            Matter for what purpose?  Premises matter greatly in determining how people think, but that doesn’t mean it’s fruitful to argue about them.  What sort of argument would convince you that freedom was wrong?  And if someone believes that torture, or letting living children starve, are just wrong, arguments about how pragmatic torture or a bit of fear are won’t convince them, because it’s *just wrong*.

            In Bayesian terms, absolute priors don’t update in the face of evidence.

            And libertarian argumentation is quite often about a single explicit premise like self-ownership or non-coercion, and some related less-stated premises about property ownership, and deductive reasoning from that.  If one accepts the premises the LP platform follows; if one doesn’t it’s all beside the point.

            Might be true of dogmatic Marxists too but I have far less experience with the various varieties of Marxist and how they reason.  Liberals and social democrats, for their part, simply don’t reason the same way, especially as a group, though any individual likely has absolute points it’s not worth arguing over.  But we usually don’t state those and then deduce everything from them.

          • Anonymous

            I agree with your third paragraph, so we are really starting to get along. But I think that all coherent political views start with some value premise(s)–otherwise, how do the proponents know what a just political outcome looks like. So, explicit or concealed, I believe that most “liberals” operate from one or more egalitarian premises, i.e. all other things being equal, a more equal distribution is better than a less equal one, or something like that. Obviously, as a libertarian I find such premises to be dubious, but I think they are what motivates the leftist worldview. 

          • Damien S.

            Yes, we (liberals) have value premises, goals, or values.  But they’re usually multiple and implicit and subject to tradeoffs according to even more implicit and evidence-affected criteria.  I like freedom, I like equality, I like security, I like prosperity.  As a quasi-Hobbesian I believe we give up some of our absolute starting freedom in return for security, create property which both creates and takes away freedoms, and allow some inequality as an incentive to prosperity and consequence of freedom, while curbing inequality to protect equality, security, freedom, and prosperity.  There’s a lot of “Do X, but not X+ that’s too far, which I know because I perceive it to be so.”

            Another way of putting it is that we tend to be empiricist consequentialists.  We like various social structures because they lead to results we like directly, in the same way we like good food or friendship or sex.  Saying that I like freedom and equality as I did above isn’t so much an axiom as a model, probably simplified of whatever in my brain is producing my judgements and preferences.  I can deduce from the inferred axioms to guide me to rules that might be good, but if I don’t like the result, it’s logically valid to conclude that the reason might be that my self-model was overly simplified, rather than that feeling logically compelled to accept a repugnant outcome as good.

            By contrast, many libertarians are deontological, perhaps with a touch of virtue ethics.  Non-coercion is self-evidently right and just (I’ve been there), and any logical deductions must also be right and just, even if they lead to pragmatically absurd results like letting humanity get wiped out by an asteroid (not a straw man example: http://volokh.com/2011/02/15/asteroid-defense-and-libertarianism/ )

            Of course, many libertarians are almost-deontological, cracking when it comes to extreme consequences like lack of national defense, but trying to retain their moral purity and clarity elsewhere.  Others say once you allow taxation for anything, we’re just haggling over the price. 🙂

            Anyway, so while goals and values are ultimately all-important, having explicitly expressible premises isn’t equally important.  In computer terms, the deontologist needs open-source code, simple enough to examine and execute independently; the consequentialist is willing to be a blackbox instantiation of her own code. Why we like an outcome is interesting, even important, but it’s not as fundamental as the fact of liking or not liking an outcome; we can say “eww, let’s avoid that” without being able to justify why from some axiom.

          • Anonymous

            I generally agree with you. I think that natural rights libertarians can, consistent with our core principles, be value pluralists. So, our differences may not be as stark as you think.

          • Anonymous

            I was not making a moral point originally, but one about economics and history.  I don’t buy induction or positivism in economics, nor historicism in general.   

        • Anonymous

          It would behoove you to know what “market” means, if you are going to use the term.

      • Damien S.

        Do you have a concept of “moderate libertarian”?

        • Anonymous

          Labels can be tough to nail down, I will grant.

    • I’m going to side with Tyler Cowen, an actual libertarian economist who writes (and reads) good books besides, over you on the Great Stagnation. 

      I’m a bit confused by this, if it was directed at Steve.  Are you implying that Steve is not an actual libertarian?  Or not an actual economist?  Or that he doesn’t write or read good books?  
      I can understand the rest of your comment, but this opening threw me…

      • Hyena

        I’m a bit tired of libertarians who feel a need to bash Cowen’s thesis and dismiss it with a couple lines which Cowen himself has often addressed ad nauseum. It’s gotten a bit old and is very close to being the center square on my bingo card it’s so reliably done of late.

      • Hyena

        I am, however, surprised you read it. As things scrolled up, I lost track of how long it was and I believe the comment itself is much to tl;dr.

  • How many of these various goods that the poor own are brand new or functioning perfectly versus those that are many years old and on the verge of falling apart?  I can’t believe that the poor person who drives around in her squeaky-clean Cadillac and watches cable TV on her 60″ LCD HDTV is more the norm than the poor person who drives a twenty-year-old clunker and watches over-the-air TV on a 13″ CRT.

    • Hyena

      That wouldn’t matter to the point. In 1971, fewer people had them whether new or used.

      • I disagree.  The shape of these goods has a major effect on the point.  For example, take your car.  Many people rely on their cars as their main mode of transportation to and from work.  If you’re one of those people and all you can afford is a disaster-prone clunker, what happens when your car breaks down?  Your options are generally limited to repairing it and buying a new one.  That will cost some money, and for people who don’t know how to repair it themselves, it will likely cost them time in the form of leave (unpaid for many of the poor) to take it to a mechanic to get it repaired.  That leaves you no better off than if you didn’t have a car in the first place.  Other goods on that list aren’t quite as vital as a car, but I think my point, that a faulty good is no better than no good when it breaks down, still stands.

        • Hyena

          Then your contention is that the poor make such bad purchasing decisions that they’d be better off without the product in question? I’m just trying to get a good bead on what your objection is.

  • Damien S.

    Interesting numbers, but multiple issues, some already alluded to.

    Having fridges and A/C is great.  How much of income is spent on housing or education?  What’s the chance of medical bankruptcy? Hunger and food security? (http://www.washingtonpost.com/wp-dyn/content/article/2009/11/16/AR2009111601598.html (nearly 50 million people — including almost one child in four — struggled last year to get enough to eat.”)

    You say there’s no evidence the goods were purchased on credit.  Is there evidence they weren’t, or does your source simply not address the issue?  We know, after all, that there’s been a huge expansion of consumer credit, presumably it’s going somewhere.

    Household income has increased since 1971?  But aren’t women working a lot more than they did then?  Claims of stagnation are based more in median income per worker.

    When _The Spirit Level_ talked about social mobility, it used statistics about how many men ended up in the same quintile as their father, which showed that the bottom quintile was a lot more sticky in the US than in other countries. Not quintile mobility of individuals as they aged.  Little surprise if a 20 year old college student is in a different quintile as a 30 year old worker.

    What’s the liquid or capital wealth of the bottom quintile?

    Is a table of goods ownership telling us anything other than that technological progress and saturation of the market with used appliances makes those things cheap enough that even the poor can afford them?  It’s a good thing certainly, but as support for the poor being better off than ever before, it’s rather incomplete.

    Do people, especially poor people, feel more in control of their lives?  And more secure? Does the rise of corporate drug tests suggest that ability to resist dehumanizing labor changes is small?

    • Hyena

      The market saturation point can’t be a valid criticism. For one, it would prove his thesis because it largely is his thesis. Secondly, however, you couldn’t build a case from it, at least not directly, because it means that one of your covariables has a standard deviation of zero and so your correlation is undefined.

      • Damien S.

         There’s a difference between “the poor can afford new X” and “the poor can get used handmedown X from others”.  How much the difference matters depends on what you care about.

        Your second sentence is meaningless to me, and I know something about statistics.

  • Ivory tower guys! You gotta love ’em. An interesting correlation might have been to find out whether the truly “poor” *owned* any of the household utilities in their household and whether or not they were paying rent or owning. The likelihood is that every spare dollar that these poor had went into the pockets of their landlords.  And if you are comparing the apples to the apples of 40 years ago, let’s compare the oranges as well.  What about the measure of wealth as a percentage of GDP of the top quintile? You can’t really use refrigerators and color televisions as a measure, you have to go into net worth.  And the difference is stark. Why do these philosophers skew their perspective to favor a point of view rather than try to determine what reality looks like?

     In Alaska, the governor is defunding scientific structures that have been in place to monitor and manage natural resources in favor of allowing politicians to make political decisions about resource utilization. And it is philosophers like this hack that are providing the support for such idiocy. What a tool!

    • CC

      What would be the significance of ‘owning’ versus renting these utilities/appliances? Preferences for owning or renting can be based on things other than price. I prefer to rent, I don’t technically ‘own’ a washing machine but I do always have access to the one in the home I rent. I don’t think it would be accurate to describe me as less-well-off than someone who owns their washing machine simply because I think I may move within 5 years and don’t want to lug one around with me my whole life. If renting is more widespread today, it doesn’t necessarily mean inequality is greater or anyone in particular (or aggregate) is worse off.

      I also would like to know why net worth is a more meaningful lens than material wealth for analysis. Isn’t money only valuable insofar as you can purchase things with it?

  • Anonymous

    Is the increased consumption of the goods on your list due evidence of an increase in income, or an increase in debt? It might be interesting to view a second chart showing the amount of household debt as a percentage of houshold income (across the same time periods). My guess is that we will see that household debt increase faster than income (particularly short term credit card debt).

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