Ascription is an Anathema to any Enthusiasm

Another good posting on inequality.

Interesting chart (By way of some nice ranting by Dr. Traven.):

I didn’t click around enough to see the data sources.  I presume that’s Japan up there on the left.  I’d not seen this before, so I’m suspicious.  Also, given how hard it is to pull a meaningful average out of a highly skewed distribution, like the wealth distribution, I’m always a bit uncertain what to make of a concept like GDP per capita.  For example, there are huge number of people in the US who make less than 10K/year.

If this was all you knew, and you want’d to raise GDP you’d start by addressing inequality.

This is an interesting post on income inequality across the nation’s states. What it adds to his prior posting is a brief synopsis of Jamie Galbraith’s model of what’s going on for the folks at both ends of the spectrum. I find it notable that both groups live on a raft.

The rich raft is the stock market - as the market rises and falls so do they. This says two things to me. One is that the rich are not easily distinguishable from firms for the purpose of modeling, i.e. that distribution of firm size and the distribution of individual wealth are probably the same. But more importantly, as a group, the rich have common cause in creating economic conditions that are, in short form, whatever is good for the stock market.

The poor live on a raft of social programs: the social security, food stamps, the earned income credit, and in the poor states the federal minimum wage. That should create common cause across that vast group to support state policies to improve and maintain those programs.

What I find notable is that in both cases the common cause of the two groups is about the nature of how the state engages with the market as a complementary actor. That again is the model exposed by the voteview work on legislative voting patterns. E.g. that the economic left/right axis practically one to one with the small/large economic actors.  Those on the left looking to provide complements for the small actors and those on the right striving to aid the large ones.

This chart is so cool, that I can’t resist in-lining it directly; I hope it’s creator doesn’t mine. The states are sorted poor to wealthy, vertical scale is log of constant dollars. The upper lines are the median income of the top 10% while the lower lines are the bottom 10%. Horizontally shows 40 years. If the lines grow closer together, as they do in some of the poor states, income inequality is declining. Contrast that to some of the wealthier states. Note that there are a number of reasons arising from the highly skew’d distributions involved that make this chart a poor lens for viewing the data. For example, most of the population lives in just the few largest states (51% in the top 9) and most of the income is actually captured the top 1%.

Click thru to the original posting for some additional charts that play with this data set.

From a press release

For example, low-income households, or those at the 10th percentile of the income distribution, spend approximately $8,900 per year per child, while high-income families, or those at the 90th percentile, spend $50,000 per child.

I find that hard to believe.  Where do people in the bottom 10% find $9K/child/year?  According to this report from the BLS the top of the bottom 10% make $163/week (”Usual weekly earnings of wage and salary workers, by upper limits of … deciles …”); though I have my doubts about the correctness of just multiplying that by 52 that’s $8,476 per year.  Maybe that number includes the transfer payments for what ever actually reaches the child via food stamps and public education. For comparison that BLS report leads one to conclude that $59,228 is the 90% annual income.  These are 1999 dollars, and salaried workers.  Of course the real explosive growth in the income distribution happens after the 90% level.