Does Relative Wealth Inequality Trump Relative Wealth?
May 18 2005, 20:38 EDT [updated May 18 2005, 21:37 EDT]
Would you rather be average for a poor country or poor in a rich one? This is a question that isn't asked in a recent NYT piece. Money quote from page 1:
    A paradox lies at the heart of this new American meritocracy. Merit has replaced the old system of inherited privilege, in which parents to the manner born handed down the manor to their children. But merit, it turns out, is at least partly class-based. Parents with money, education and connections cultivate in their children the habits that the meritocracy rewards. When their children then succeed, their success is seen as earned.
So parents who found a recipe for success are more likely to impart those beneficial lessons to their kids (and having been successful have more means to do it than their own parents did) and parents who have failed are likely to impart those detrimental lessons to their kids. I am shocked, shocked!. Like the perennial headline "Why are crimes down when more people are in jail?" this is a non-paradox. The only reason it should generate a bit of outrage is that richer people have a free hand in raising their kids, but poor people have only whatever public facilities are available to them. People who made good choices, lucky choices, or inherited wealth can choose from a world of options (only the "good choices" people are likely to make a good choice again). Poor people and unlucky people are relegated to the "free" options of the system that already failed the generation before them [funding is the least of the problems at "free" institutions]. Marx may have been right about the systemic screwing of the poor - he just didn't expect it would only be the "compassionate" institutions that were available to the proles (yes, that was a knock on W. public education doesn't work any better just because it is a conservative who asks it to[1]).

The NYT article also has an interactive graph on movement between the income fifths over a decade (1988 vs 1998). Note that this is income and not wealth (wealth is much harder to track). They don't say what mobility should be, the author just implies that the current levels aren't as good as in the past. Big fuggiedey whoop, do they mention how incomes in the US compare to other western countries? How about other western countries with similar levels of immigration - legal and illegal? Higher levels tend to pull the average down - especially for illegals, which are currently 1% of the US population. Where is the interactive graph of wealth (ability to buy food, housing, and staples) over time? Or the graph of the US performance versus Britain or France? Without a baseline or a another country of similarity the graph just states one fact in a vacuum. Even in that vacuum the graph isn't compelling, move your mouse around and see how half the top fifth doesn't stay in the top fifth. And half the bottom fifth doesn't stay in the bottom fith. This is supposed to gird me for class warfare? Hardly.

The article stays mostly balanced (and bland) but throws the occasionally bomb:

    This has helped produce the extraordinary jump in income inequality. The after-tax income of the top 1 percent of American households jumped 139 percent, to more than $700,000, from 1979 to 2001, according to the Congressional Budget Office, which adjusted its numbers to account for inflation. The income of the middle fifth rose by just 17 percent, to $43,700, and the income of the poorest fifth rose only 9 percent.
OK, fine. Did they do it by taking the money from the poor? The middle income rose "just 17 percent .. adjusted for inflation." Holy shit, what a travesty that the middle class can buy a new car every fourth year now instead of every fifth when those smug rich guys drive the newest model every year. Never mind that the top 1 percept of income earners is a far more volatile space than the middle class..

The article fails at saying anything interesting. It doesn't put income in much historical or global context. It doesn't mention purchasing power (aka buying power of a dollar versus cost of food/housing). This article could only be interesting to people who wanted to be angry and to people who want a fact to back up their prejudice. They don't say the richer got richer and the poor got poorer, only that some rich people got richer faster than some poor people stayed poorer. I find that very uncompelling even as a class warfare argument. Sure, I expect that from the NYT but that doesn't mean I have to like it.

[1] I love my mother beyond words, as is proper. But she gets paid scale by the teacher's guild and what she makes is scandalous. Indeed guild meetings seem to revolve around what they get and have nothing to do with teaching. In her defense she put in a decade at a private school that paid much [much!] less money (a place where the parents paid much [much!] more). None of those years of experience count towards her current pay scale and tenure (because she wasn't in the union, natch).

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