Is the economy already tanking?

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rodoheel said:
Lots of people have fought hard against it. But Republican tax cuts and Republican zeal for legislatively and judicially dismantling regulations that help the poor and/or restrict the rich have accelerated income inequality at a dangerous rate.
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Accelerating income inequality suggests that the extremes are moving in opposite directions, i.e., the poor are getting poorer and the rich are getting richer. In truth, it is largely just the rich getting richer.

Over time, the poor have slowly increased their wealth and the poverty rate has been on a gradually declining trend since the 1950s. The period in which income inequality is the smallest is generally in recessions -- and that is because the rich are much less rich during recessions. Unfortunately, recessions are also when the poverty rate increases.

So, although it is counter-intuitive, greater income inequality has tended to benefit the poor in America and lower income inequality has tended to hurt the poor.

I am not saying that the solution to poverty is to give money to the rich -- just that it is an important dynamic to understand when discussing income inequality.
 
Calheel said:
So, although it is counter-intuitive, greater income inequality has tended to benefit the poor in America and lower income inequality has tended to hurt the poor.
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I strongly object to the active voice here. Income inequality doesn't benefit the poor. You're talking about a coincidence: recessions hurt everyone; they temporarily hurt the rich slightly more; and so income inequality fluctuates down a bit. In no way does that help anyone. Nor does it help the poor for rich people's incomes to again skyrocket once the business cycle has turned.

Even at its recent nadir in the huge recession of 2020, the GINI coefficient for the US has, since the 80s, been considerably higher than it was even in the prosperous 1960s.

Also, metrics like the Gini coefficient generally understate the type of income inequality seen in the U.S. -- i.e. a sharp rise in the fortunes of the very very rich (top 1% or 0.1%).
 
Calheel said:
So, although it is counter-intuitive, greater income inequality has tended to benefit the poor in America and lower income inequality has tended to hurt the poor.
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I'm not sure I agree with this at all. This seems to be an attempt to conflate correlation and causation, for one thing; just because the number of people living under the poverty level has fallen (assuming that's right; I haven't checked it) while income inequality has risen doesn't mean income inequality is what caused the standard of living for the poor to rise. In fact it's far more likely that it's the social safety net programs started in the 60s that have accomplished the latter.

Also, I'm not sure it's necessarily right that "the poor have slowly increased their wealth" over time. The Pew data here (1. Trends in income and wealth inequality) show that when adjusting for inflation, the median wealth of lower-income families actually went down between 1983 and 2016 (it went up substantially 1983 through 2001, then down even more substantially from 2001 to 2016). While the wealth of upper-income families has steadily risen; in that same time period upper-income families went from holding under 60% of the nation's wealth to holding over 80%. I don't see the current data so maybe that has now recovered to the point where the median wealth of the poor today is higher, in inflation-adjusted dollars, than in 1983.
 
superrific said:
I strongly object to the active voice here. Income inequality doesn't benefit the poor. You're talking about a coincidence: recessions hurt everyone; they temporarily hurt the rich slightly more; and so income inequality fluctuates down a bit. In no way does that help anyone. Nor does it help the poor for rich people's incomes to again skyrocket once the business cycle has turned.

Even at its recent nadir in the huge recession of 2020, the GINI coefficient for the US has, since the 80s, been considerably higher than it was even in the prosperous 1960s.

Also, metrics like the Gini coefficient generally understate the type of income inequality seen in the U.S. -- i.e. a sharp rise in the fortunes of the very very rich (top 1% or 0.1%).
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But it is just as true (in fact more true) that the poor are not benefitted by rich people being less rich. The poor are benefitted by what happens to them, not other people. There is a strain of political thought, which gets amplified a lot on this board, that income inequality itself is an evil. That they would prefer everyone to have 75 cents, rather than some people have a dollar while other people have a million dollars.

The goal of any economic and political system should be to bring as many poor people out of poverty and to improve the overall living standards of the population. Some of the posts on this board seem much more focused on reducing the gap between rich and poor, rather than increasing the wealth of the poor.
 
rodoheel said:
I'm not sure I agree with this at all. This seems to be an attempt to conflate correlation and causation, for one thing; just because the number of people living under the poverty level has fallen (assuming that's right; I haven't checked it) while income inequality has risen doesn't mean income inequality is what caused the standard of living for the poor to rise. In fact it's far more likely that it's the social safety net programs started in the 60s that have accomplished the latter.

Also, I'm not sure it's necessarily right that "the poor have slowly increased their wealth" over time. The Pew data here (1. Trends in income and wealth inequality) show that when adjusting for inflation, the median wealth of lower-income families actually went down between 1983 and 2016 (it went up substantially 1983 through 2001, then down even more substantially from 2001 to 2016). While the wealth of upper-income families has steadily risen; in that same time period upper-income families went from holding under 60% of the nation's wealth to holding over 80%. I don't see the current data so maybe that has now recovered to the point where the median wealth of the poor today is higher, in inflation-adjusted dollars, than in 1983.
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Re your first paragraph, I am not really discussing causation or correlation (although it is economically verifiable that recessions reduce income disparity). You certainly could have a system with less economic strata in which the poor are better off. That said, there is a tendency to equate income inequality with causing poverty. And I don't think the economic data backs up that point at all.

Re the second paragraph, I can pull some data when I have more time. Some of it depends when you start and when you stop counting. And it is certainly true that the social welfare programs of the 1930s and 1960s are the single biggest contributor to reducing poverty in this country. It is also true that the reduction in poverty has largely abated since the 1970s, although there is still a slight downward trend in that stat.
 
Calheel said:
But it is just as true (in fact more true) that the poor are not benefitted by rich people being less rich. The poor are benefitted by what happens to them, not other people. There is a strain of political thought, which gets amplified a lot on this board, that income inequality itself is an evil. That they would prefer everyone to have 75 cents, rather than some people have a dollar while other people have a million dollars.

The goal of any economic and political system should be to bring as many poor people out of poverty and to improve the overall living standards of the population. Some of the posts on this board seem much more focused on reducing the gap between rich and poor, rather than increasing the wealth of the poor.
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1. That's a ridiculous exaggeration that nobody holds. I'm pretty sure Paine is our biggest class warrior and he wouldn't subscribe to anything of the sort.
2. Doesn't DOGE and the GOP budget resolution almost conclusively rebut your central contention?
3. I think you should read more about this issue. There's no lack of scholarship in the area. You're ignoring all sorts of follow-on effects, like environmental racism, over-incarceration, toxic gentrification, and so on. There's no lack of international and cross-country comparisons, which tend to show that increased wealth among the rich tend to be correlated with bad outcomes for the poor.
 
Calheel said:
But it is just as true (in fact more true) that the poor are not benefited by rich people being less rich. The poor are benefited by what happens to them, not other people. There is a strain of political thought, which gets amplified a lot on this board, that income inequality itself is an evil. That they would prefer everyone to have 75 cents, rather than some people have a dollar while other people have a million dollars.

The goal of any economic and political system should be to bring as many poor people out of poverty and to improve the overall living standards of the population. Some of the posts on this board seem much more focused on reducing the gap between rich and poor, rather than increasing the wealth of the poor.
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Usually precedes a revolution
 
Calheel said:
Re your first paragraph, I am not really discussing causation or correlation (although it is economically verifiable that recessions reduce income disparity). You certainly could have a system with less economic strata in which the poor are better off. That said, there is a tendency to equate income inequality with causing poverty. And I don't think the economic data backs up that point at all.
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I haven't argued that income inequality "causes" poverty. What I do think income inequality causes is economic unrest and dissatisfaction, in particular if it starts making our society less upwardly mobile. People who are stuck making $50k aren't near the poverty level but it's a real problem when real wages for the lower class are stuck in the mud while income and wealth for the upper class accelerate.
 
Calheel said:
Re the second paragraph, I can pull some data when I have more time. Some of it depends when you start and when you stop counting. And it is certainly true that the social welfare programs of the 1930s and 1960s are the single biggest contributor to reducing poverty in this country. It is also true that the reduction in poverty has largely abated since the 1970s, although there is still a slight downward trend in that stat.
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Poverty statistics in the US -- at least the official ones -- only consider food costs. They do not consider housing costs, nor the problem of people spending so much on housing that they can't afford the food diet that the poverty statistics think they can afford.
 
I'd argue that the groups most hurt by accelerating incoime inequality over the past 45 years have been the working and middle class. Their relative positoon has significantly atrophied vis a vis the wealthy. the poor sure aren't doing much better but they have not declined as much as other two given things like the earned income tax credit etc. To me and I could be wrong on this, when Republicans have jammed through their massi ve tax cuts, about the only sops they have given the Demds have been very small benefits for the poor. Neeed to quit giving tax break after tax break to rich, do not extend the tax cuts benefiting wealthy and large coprs and use those savings for programs to helo middle and working class (chile care, free vocational/technical education, child tax credits. better ACA subsidies for middle class. etc). Doing so will reduce income inequality across the board and put us on a path toward a more just, less plutocratic society.
 
superrific said:
Poverty statistics in the US -- at least the official ones -- only consider food costs. They do not consider housing costs, nor the problem of people spending so much on housing that they can't afford the food diet that the poverty statistics think they can afford.
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Still don't have the time to pull stats, but I will get around to it eventually. That said, I'm pretty sure the data will support that the relative living standards of all Americans has increased significantly since the 1950s, and while there has been stagnation in that growth since the 1970s, I think the data would support the notion that judged against all metrics (lifespan, education, health outcomes, size of living space, quality of environment, etc.) every segment of the American population has improved its economic outlook since the 1970s and that the trend is still increasing.
 
Calheel said:
Still don't have the time to pull stats, but I will get around to it eventually. That said, I'm pretty sure the data will support that the relative living standards of all Americans has increased significantly since the 1950s, and while there has been stagnation in that growth since the 1970s, I think the data would support the notion that judged against all metrics (lifespan, education, health outcomes, size of living space, quality of environment, etc.) every segment of the American population has improved its economic outlook since the 1970s and that the trend is still increasing.
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So when data is pulled from the 1950's, I suppose the fact that women and increased two earner households wouldn't have anything to do with improved metrics for Americans as a whole?
 
BlueSmoke said:
So when data is pulled from the 1950's, I suppose the fact that women and increased two earner households wouldn't have anything to do with improved metrics for Americans as a whole?
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I am sure it does. Having women enter the workforce significantly improved the prosperity of Americans, even accounting for the increased childcare costs. It also significantly increased the fairness of society, and it helped women avoid economic leverage by their husbands.

Are you suggesting we go back to the 1950s style of economics?
 
Calheel said:
Still don't have the time to pull stats, but I will get around to it eventually. That said, I'm pretty sure the data will support that the relative living standards of all Americans has increased significantly since the 1950s,
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Well, not all, but sure. That isn't the question, though. The question is whether income inequality makes that worse. I would submit that we're seeing how income (and wealth) inequality right before our very eyes makes things worse.
 
superrific said:
Well, not all, but sure. That isn't the question, though. The question is whether income inequality makes that worse. I would submit that we're seeing how income (and wealth) inequality right before our very eyes makes things worse.
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It is true there was more prosperity growth for the bottom 80% from the 1950s to 1970s -- a time when the income (and wealth) gap was narrower. That progress for the bottom 80% slowed over the last three decades while the income/wealth gap exploded. So there is certainly an argument that the increasing gap has contributed to the slowing pace of growth for the bottom 80%.
 
Calheel said:
I am sure it does. Having women enter the workforce significantly improved the prosperity of Americans, even accounting for the increased childcare costs. It also significantly increased the fairness of society, and it helped women avoid economic leverage by their husbands.

Are you suggesting we go back to the 1950s style of economics?
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No. Just wanted to make sure whatever data is pulled, that the aspect of women working was evaluated for its effect on the data. May only be able to note it, because putting a value on its affect would be tough.
 
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