Income inequality

Apr 2013
34,873
23,582
Left coast
#1
A recent thread has been posted listing best countries in the world to live in. Of interest to me was that one of the criteria being used to judge countries was the degree of income equality.

This is something I am learning more and more about. Many if not most economists think that lowering income inequality builds a middle class. And most economists say that more progressive tax schemes are the best way of decreasing income inequality. Just the opposite to what the Republican President just did.

This is a topic the IMF has been studying for a long time.

Here is a paper put out by a group of IMF economists and published on imf.org.

https://www.imf.org/external/pubs/ft/sdn/2015/sdn1513.pdf
 
Nov 2017
1,431
793
.
#2
Why is income inequality or wealth inequality considered a problem? Why does the "middle class" need to be built up? People may have a problem with income inequality or wealth inequality, but these aren't really problems that society is faced with. Homelessness, poverty, abject hunger, crime, disease, pollution, war, etc. - these are the actual problems that society is faced with.

I'd rather be part of the "lower class" but have good access to food, shelter, transportation, healthcare, clean water, other basic needs, things & places for recreational activities, be at peace with the international community, etc. etc., than be part of the "middle class" but not have these things. I'd rather have an easier time being able to get a good paying job than have a hard time getting a job at all to be able to pay for those things & support myself.

This noise about income or wealth inequality, and desire to build a "middle class" (whatever that's supposed to be) is a red herring. "Middle class" is only something relative to something else, and it doesn't equate with or prove that people are able to put a roof over heads or food on plates for themselves & their families. Same with "lower class" the other way; it doesn't equate with or prove that people are not able to put a roof over heads or food on plates for themselves & their families.

Standard of living & quality of life are what matters, not this lies/damn lies/statistics or Orwellian 1984 "good news! Chocolate rations have been increased!" type of stuff. To me, this income/wealth inequality noise is what the "upper class" folks & politicians (the "inner party") are passing out as pacifiers to what they perceive as their proles.

It could be that having a healthy sized "middle class" normal bell shaped curve distribution tends to be an indicator of a politically & economically sound society (low unemployment, low crime rate, good quality of life or standard of living, etc.), and something with a bimodal distribution (e.g., some very rich people, many poor people, very little "middle class" people) is an indicator of something that isn't, but that doesn't mean that trying to artificially (in other words, having the state use force or threat of force in some manner) reduce income inequality and grow a "middle class" is going to translate to low unemployment, low crime rate, good quality of life, etc. That would be post hoc ergo propter hoc or causal fallacy stuff.
 
Likes: Sabcat
Apr 2013
34,873
23,582
Left coast
#4
Why is income inequality or wealth inequality considered a problem? Why does the "middle class" need to be built up? People may have a problem with income inequality or wealth inequality, but these aren't really problems that society is faced with. Homelessness, poverty, abject hunger, crime, disease, pollution, war, etc. - these are the actual problems that society is faced with.

I'd rather be part of the "lower class" but have good access to food, shelter, transportation, healthcare, clean water, other basic needs, things & places for recreational activities, be at peace with the international community, etc. etc., than be part of the "middle class" but not have these things. I'd rather have an easier time being able to get a good paying job than have a hard time getting a job at all to be able to pay for those things & support myself.

This noise about income or wealth inequality, and desire to build a "middle class" (whatever that's supposed to be) is a red herring. "Middle class" is only something relative to something else, and it doesn't equate with or prove that people are able to put a roof over heads or food on plates for themselves & their families. Same with "lower class" the other way; it doesn't equate with or prove that people are not able to put a roof over heads or food on plates for themselves & their families.

Standard of living & quality of life are what matters, not this lies/damn lies/statistics or Orwellian 1984 "good news! Chocolate rations have been increased!" type of stuff. To me, this income/wealth inequality noise is what the "upper class" folks & politicians (the "inner party") are passing out as pacifiers to what they perceive as their proles.

It could be that having a healthy sized "middle class" normal bell shaped curve distribution tends to be an indicator of a politically & economically sound society (low unemployment, low crime rate, good quality of life or standard of living, etc.), and something with a bimodal distribution (e.g., some very rich people, many poor people, very little "middle class" people) is an indicator of something that isn't, but that doesn't mean that trying to artificially (in other words, having the state use force or threat of force in some manner) reduce income inequality and grow a "middle class" is going to translate to low unemployment, low crime rate, good quality of life, etc. That would be post hoc ergo propter hoc or causal fallacy stuff.
Look at, from your post
I'd rather be part of the "lower class" but have good access to food, shelter, transportation, healthcare, clean water, other basic needs, things & places for recreational activities, be at peace with the international community, etc. etc., than be part of the "middle class" but not have these things. I'd rather have an easier time being able to get a good paying job than have a hard time getting a job at all to be able to pay for those things & support myself.
Now define middle class.

And remember, for a vibrant economy, the middle class being able to buy stuff is necessary. So using my definition of middle class, that is people with the resources to allow discretionary spending on things like recreational activities and TVs and smartphones and such are needed.
 
Nov 2017
1,431
793
.
#5
Now define middle class.
Middle - we can essentially say at the center, between one extreme and an opposite extreme: the definition of middle

Class - we can say a group of people with something in common: the definition of class

The context we have is financial - wealth/income, so the thing in common is that they're in the same range for wealth or income.

So a "middle class" would be a group of people in the middle range of wealth or income, a class between the upper class and the lower class of wealth/income. Nothing about this says anything about whether that wealth or income is good enough to make ends meet; even most in an "upper class" might not be able to easily make ends meet. There's also nothing about this that says anything about whether the wealth or income of the "lower class" is too low to make ends meet.

Things like "upper class", "middle class", or "lower class" doesn't say anything about each other, other than their relative positions to each other. We can have a scale with a mark indicating the threshold for being able to make ends meet, and we can have several arbitrary or hypothetical societies (A & B). In society A, all the classes are above the threshold mark; in society B all the classes are below the threshold mark; in society C the threshold mark cuts through part of the lower class. I'd rather be in the lower class in society A than the upper class in society B.

Not only does building a "middle class" says nothing about which version of society it is or would be, but it could even have the adverse effect of turning an A society in to a B society, where someone might have been doing ok in a lower class of a society A, but is now living in a "middle class" of a society B. That would be someone who went from being able to make ends meet to not being able to make ends meet; would you want to be that person? I certainly wouldn't.

And remember, for a vibrant economy, the middle class being able to buy stuff is necessary. So using my definition of middle class, that is people with the resources to allow discretionary spending on things like recreational activities and TVs and smartphones and such are needed.
It has nothing to do with just the middle class being able to buy stuff; it has to do with every class being able to buy stuff & it's not yours to redefine - that's not how truth works.
 
Apr 2013
34,873
23,582
Left coast
#6
Nope. Using your terms, if there were 100 families making $1,000,000 per year, 100,000 making $1,000/yr, 50,000 making $500/yr and 100,100 making less than $500/yr the ones making $500/yr would be middle class. But they wouldn't be enjoying the things you say you want.
 
Likes: Lyzza
Apr 2013
34,873
23,582
Left coast
#7
Google middle class. No one uses a mathematical definition.

"Middle class" is a tricky concept. Depending on where you live, you can feelmiddle class earning as much as $250,000 a year— about five times the US median income of $52,250 from the same time period. In this analysis, Pew defined middle class households as those earning 67%-200% of a state's median income.
How much you have to earn to be considered middle class in every US state
 
Dec 2015
13,741
12,623
Arizona
#8

So, using the chart, Neil lives in Virginia, which has a pretty high middle class compared to states like Mississippi.
A middle-class citizen in Virginia's median income would be approx between $40-60,000. Now look at the housing prices: Zillow says an average rent in Virginia is $1700/mo. Average home sales is between $250,000-300,000.
The mortgage payment on that price home @ 4.9% would be approx $1500/mo depending on your down payment.

How much expendable income would a middle class family have after a mortgage payment of $1500-1700, $800 to $1000 (family of four) for groceries/month, insurance, car payments, internet/cable, clothing, etc etc.
 
Likes: Lyzza
Dec 2015
13,741
12,623
Arizona
#9
A recent thread has been posted listing best countries in the world to live in. Of interest to me was that one of the criteria being used to judge countries was the degree of income equality.

This is something I am learning more and more about. Many if not most economists think that lowering income inequality builds a middle class. And most economists say that more progressive tax schemes are the best way of decreasing income inequality. Just the opposite to what the Republican President just did.

This is a topic the IMF has been studying for a long time.

Here is a paper put out by a group of IMF economists and published on imf.org.

https://www.imf.org/external/pubs/ft/sdn/2015/sdn1513.pdf
The RW is not concerned with income equality. Their philosophy is: If you were born with a silver spoon--GOOD FOR YOU and you deserve that silver spoon.
If you were born poor, your family is a bunch of lazy degenerates who don't deserve more money.
Income equality problem solved.
 
Likes: Lyzza
Jun 2012
41,363
14,997
Barsoom
#10
No one really cares about income inequality other than socialist and a redistributionist. It is a pretty simple concept.