Saturday, December 16, 2006

The Inequality Debate

Inequality has always been one of my big issues. Without an equality of opportunity, this country will gradually stratify even further into a banana republic. The haves and have mores have done especially great lately, with America's levels of inequality deeper than at any time since World War II.

Social mobility has always been more much rare and difficult than the perception, but it is becoming a myth in the present regime.

Anyway, there's a great link to an intellectually absorbing debate on wealth distribution and what it means between two Nobelian intellectual heavyweights, Gary Becker and Richard Posner.


Anonymous John Crowley, Ojai said...

Bret, you have written many columns that discuss 'inequality' directly, and indirectly. I am not sure that there is a debate; everybody can see things are unequal. But inequality of opportunity, and outcome, are two different things entirely.

You recently wrote about how scandalous it was that all U.S. workers did not share in the increased profits generated by increases in productivity. But you did not mention that all workers were not responsible for this increase. Teachers don't teach more student-hours, bartenders don't pour more drinks, and newspapers haven't increased circulation.

For most people, the key to positive social mobility is getting and keeping a good job. To do that, education is a must. Here is a table showing that those with a college degree are 1/3 less likely to be unemployed compared with high-school dropouts.

This subject is important, and discussion is good. I am not debating with you, just pointing out some data I think is important.

12/25/2006 9:33 AM  
Anonymous Anonymous said...

As a college graduate with a sustantial career behind me, I never thought I would find myself on the wrong side of the inequality see-saw. Now I am semi-retired, after fifty years on the work force, and find myself earning less per hour than a day laborer and struggling to make ends meet in Ojai. Bret, I would like to see you address the "age" factor when you talk about inequality. It is so prevalent in our town!

12/26/2006 8:41 PM  
Blogger Bret Bradigan said...

Both excellent posts!

As John Crowley noted, education is a must. But even the well educated are falling behind the pace. Paul Krugman wrote about this issue with characteristic insight back in Feb., when Ben Bernanke was appointed to head the Fed.

"Highly educated workers have done better than those with less education, but a college degree has hardly been a ticket to big income gains. The 2006 Economic Report of the President tells us that the real earnings of college graduates actually fell more than 5 percent between 2000 and 2004. Over the longer stretch from 1975 to 2004 the average earnings of college graduates rose, but by less than 1 percent per year.

So who are the winners from rising inequality? It's not the top 20 percent, or even the top 10 percent. The big gains have gone to a much smaller, much richer group than that.

A new research paper by Ian Dew-Becker and Robert Gordon of Northwestern University, "Where Did the Productivity Growth Go?," gives the details. Between 1972 and 2001 the wage and salary income of Americans at the 90th percentile of the income distribution rose only 34 percent, or about 1 percent per year. So being in the top 10 percent of the income distribution, like being a college graduate, wasn't a ticket to big income gains.

But income at the 99th percentile rose 87 percent; income at the 99.9th percentile rose 181 percent; and income at the 99.99th percentile rose 497 percent. No, that's not a misprint."

If you check out the data, I believe you will see that bartenders are pouring more drinks, teachers are teaching extra periods, and working summer school and summer jobs, and while most newspapers have posted circulation declines, the OVN's paid circulation has increased nearly 80 percent since 2000 (of course, we are taking about very small numbers to begin with). And that doesn't take into the account the enormous amount of web traffic generated by newspaper websites - among the most heavily trafficked sites of all.

The age issue is very important. The poorest people in America are the very old and the very young. That's not worthy of this great nation.

12/28/2006 5:55 PM  
Anonymous John Crowley said...

I have checked out the data, and am seeing that the average worker is working fewer hours compared to 10 years ago. Increased computer power, transportation improvements, electronic communication, and H-1B and offshore labor have all increased productivity by driving down per unit costs. The increase in productivity is not due to the average worker doing more, showing greater work ethic, or improving the quality of their work. If this were true, then the average worker of 10 years ago would pale compared to today’s worker. Intuitively, looking around your OVN office and dealing with your vendors and customers, would you make this case?

Being in the top 1% or top .1% will always be something that is beyond most of us. There is an implied ‘fairness’ issue in this disparite outcome, but opportunity, effort, risk, and ability are also quite disparate.

You are making my point when you say teachers are working summer school and summer jobs. The 180 day school year has not changed much since 1989; teachers working outside jobs are now compensated for what was unproductive time. And again we are in agreement when you give productivity credit for newspapers to internet-based delivery, and not worker-based performance. I am obviously interested in the subject, too, and have read Krugman’s ‘Great Unraveling’ and if you haven’t already read these you might find ‘Income and Wealth’, by Alan Reynolds and ‘Future of Success’, by Robert Reich to be of interest.

Anyway, being broke is a drag at any age, nobody broke planned on being broke, and I also would be interested if OVN covered the 'age' factor.

Congratulations on OVN’s exceptional success in a difficult business, and I hope it continues; I like your paper.

12/31/2006 4:55 PM  
Anonymous Anonymous said...

Old Age...oh yeah....bad news. Want to live in Ojai? Can't be old...unless been here for over ten years and/or you're in the money and have been for a long time. But then, it' not just Ojai, is's everywhere in California,....question is; what do we do about it? It's only a problem if you're old...or very young...old is more vulnerable, I think...less time to be in tact and having any kind of an earning potential...but at $8 dollars an hour??...Pleeeaassssee!! really, How can anyone live on that? I'm asking, what CAN we do about it...? It's serious!

Has anyone checked out the rents here now? Let's see; at $8 an hour, times 40 hours, times 4 weeks...that, what.. $1280. a month. That's about the rent of a one bedroom isn't it? Ok, let's say you find something that's $800 a month. (NOT!) we're pretending here...that gives you about $400 (I'm deducting payroll taxes here) to pay utilities, food, gas and whatever on. Does that seem workable to you?

Let's talk about the do they get to live on their own at that doesn't matter if you have a college degree anymore. I know lot's of them waiting tables and tending bar..brilliant, young, eager to work. But, hey, those great hi-tech jobs are out of the country now...just about every college educated career is being replaced by outsourcing now...isn't it?'s not enough that we all have talent in this country to compete with we have to compete with talent in other countries who only have to pay, maybe, $100 a month for rent and can work for $200 a month.

Ok, so, now what can we do about it? Democrates are useless...Republicans, the same. Government just doesn't give a damn...What's the bigger picture here....what's the answer...

12/31/2006 7:49 PM  
Anonymous John Crowley said...

Sorry to bump this so late, but just came across this quote from new bestseller Malcolm Gladwell's "Outliers" on p.260, and was reminded of this thread. With all the noise about school funding, dropout rates, etc., this information is relevant in explaining the inferior U.S. student testing results, compared to outperforming countries:

"The school year in the United States is, on average, 180 days long. The South Korean school year is 220 days long. The Japanese school year is 243 days long....You have the time to learn everything that needs to be learned - and you have less time to unlearn it."

3/16/2009 9:23 AM  

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