ALL BLOG POSTS AND COMMENTS COPYRIGHT (C) 2003-2018 VOX DAY. ALL RIGHTS RESERVED. REPRODUCTION WITHOUT WRITTEN PERMISSION IS EXPRESSLY PROHIBITED.

Wednesday, March 28, 2018

The mystery of US inequality

Ugo Bardi finds it difficult to explain the post-1960 rise in US income inequality in his very interesting book The Seneca Effect, which seeks to apply some of the concepts that NN Taleb has developed while investigating the science of collapse.
Obviously, the larger the Gini coefficient, the larger the income inequality. The case of perfect equality has Gini = 0 since the area of A is equal to zero. The opposite case would be when only one person owns all the wealth while all the others own nothing. This condition would generate a Gini coefficient equal to 1. Both conditions are obviously improbable and coefficients measured for different countries range, typically, from 0.2 to 0.7 (sometimes given in percentiles, that is from 20 to 70). Some countries are less egalitarian than others: for instance, South-American countries have normally high Gini coefficients, with Brazil perhaps at the top with around 0.6. On the opposite side, European countries are rather egalitarian, with income coefficients in the range from 0.2 to 0.4, especially low in Scandinavian countries. About the United States, it had seen a trend toward lower inequality that started in the ninetieth century and that accelerated after the end of the second world war, thus making the US trend similar to that of most European countries. But the trend changed direction in the 1960s-1970s, to arrive today at values of the Gini coefficient between 0.4 and 0.5, typical of South American countries. This phenomenon is part of the series of economic changes in the US economy that was termed “The Great U-Turn” when it was noted for the first time by Bluestone and Harrison.

There is no general agreement on what happened to the US society that caused such a change in the trend of the income distribution. What we know is that a lot of money flew away from the pockets of middle-class people to end up it in the pockets of the wealthy. As you may imagine, we have here another one of those problems where the large number of explanations provided is an indication that nobody really knows how to answer the question. For instance, there is no lack of conspiracy theories that propose that the rich formed a secret cabal where their leaders collected in a smoke-filled room to devise a plan to steal from the poor and give to the rich. Recently, I proposed that the “U-Turn” may be related to the peak in oil production that took place in the US in 1970. At that moment, the US started a rapid increase in the imports of crude oil from overseas. The result was that the money that the Americans spent on foreign oil returned as investments in the US financial system, but from there it never found its way to the pockets of middle-class people. But I am the first to say that it is just a hypothesis.
Actually, something else happened right between the 1960s and 1970s, in 1965, as a matter of fact, that just might have had a little something to do with the lower-income classes suddenly facing more competition and more pressure on their wages, and the higher-income classes benefiting from larger corporate profits.

I refer, of course, to the 1965 Immigration Act that has resulted in 130 million new !Americans! as well as 45 straight years of lower average wages since 1973.

And there is one other obvious hypothesis that Bardi fails to note, which is a little ironic in light of what he writes about the specific way in which the very rich are different than you and me, which is how that they go about making money and building wealth in a more holistic and heavily networked manner.
The rich, apparently, can even defy entropy by following a wealth distribution that ignores its effects. But what exactly makes a person rich or poor? An interesting feature of the thermodynamic distribution model of incomes is that being rich or poor is purely casual; the rock-paper-scissors is not a game of skill (nor is the second principle of thermodynamics!). Certainly, in real life, skill and grit count in one's career, but it is also true that most rich people are the offspring or rich families. As you may imagine, the idea that wealth is inherited rather than earned is not popular with the rich but, for some reason, they seem to be the ones who are most active in dodging and opposing inheritance laws.

Still, that doesn't explain why the rich seem to live in a world of their own in which thermodynamics laws don't seem to apply. Perhaps we can find an answer noting that power-laws tend to appear when we look at the evolution of highly networked systems, that is, where each node is connected to several other nodes. The Boltzmann-Gibbs statistics may be seen to apply to a “fully connected” network in the sense that each molecule can interact with any other molecule. But it is also true that, at any given moment, a molecule interacts with no other molecule or, at best, with just one in the kind of interaction that, in physics, is called “pairwise.” In a gas, molecules bump into each other and then they leave after having exchanged some kinetic energy; these pairwise interactions don't affect other molecules and so don't generate feedback effects. And, as it is well-known, there do not exist phase transitions in the gas phase; only solids (and, rarely, liquids) show phase transitions as the result of feedback effects Something similar holds for the kind of economic interactions that most of us are involved with: we get our salary or our income from an employer and we spend it buying things in stores, and we pay our taxes to the government, too. These are, mostly, pairwise interactions, just like molecules in a gas and it is not surprising that the resulting distribution is the same. The rich, apparently, are much more networked than the poor and their many connections make them able to find and exploit many more opportunities for making money than us, mere middle-class people. So, they don't really play the Boltzmann game, but something totally different....

Today, salaried people engaged mostly in pairwise economic transactions may have become much more common. So, it may be that over time there has been a sort of financial phase transition where some money “sublimated” from the rich to move to the poor, an interpretation that is consistent with the trend for lower inequality that has been the rule during the past century or so. As times change and the trend is reversed, the rich may regain their former 100% of the distribution, leaving the poor totally moneyless; maybe as a result of the “negative interest rates” that seem to be fashionable today. But that, for the time being, is destined to remain pure speculation.

It is said that Scott Fitzgerald said, once, “The rich are different from you and me” or “The rich are different from us.” To which Ernest Hemingway replied: “Yes, they have more money." But, maybe, Fitzgerald had hit on something that only much later the physicist Yakovenko would prove: the difference between the rich and the poor is not just the amount of money they have. It is in how they are networked.
If only we could identify a highly networked group of people, concentrated primarily on the financial sector, who were not particularly influential in the United States before the 1960s, we might be able to understand who were the primary benefits of this massive shift in income inequality as well as how they took advantage of it. But since it is clear that no such group of people exists, this leads me to conclude that Signor Bardi is most likely correct with regards to his hypothesis about the socio-economic effects of the rapid increase in the imports of crude oil from overseas.

Fortunately, since the problem of excess oil imports has already been successfully addressed by increased domestic oil production and a concomitant reduction in US reliance on foreign oil, we can be confident that this post-1960s shift in the Gini coefficient will be corrected any day now and US income inequality will shift back to traditional European standards rather than the third world standard it has more recently come to resemble.

Labels: ,

74 Comments:

Blogger exfarmkid March 28, 2018 5:49 AM  

Good morning from Somalia on the Mississippi.

Blogger Looking Glass March 28, 2018 5:55 AM  

Prof. Bardi puts on a great display of "Use my tools on everything!", something intelligent hard sciences folks are prone to do. Because has he seriously never heard them term "financialization"? Before missing most of the rest of the inputs, he does realize what a vast expansion of Credit within an economy does, correct? We haven't even gotten to the discussion about the things that would get him fired before we have issues.

Also, did an Italian seriously write:

Obviously, the larger the Gini coefficient, the larger the income inequality. The case of perfect equality has Gini = 0 since the area of A is equal to zero. The opposite case would be when only one person owns all the wealth while all the others own nothing. This condition would generate a Gini coefficient equal to 1. Both conditions are obviously improbable and coefficients measured for different countries range, typically, from 0.2 to 0.7 (sometimes given in percentiles, that is from 20 to 70).

Really? Did he miss the Cold War and the Iron Curtain? The place were the State owned everything? Or plenty of island Nations around the world where everyone effectively has, historically, had nothing? How about the European Feudal era when just a few people owned all of the land?

He seems to have completely missed that the natural course of human existence is either right near 0 or right near 1. Anything in the middle is what we call "modern economies".

As to the Rich and how they are different. They know how to keep their money & find ROI (in both Monetary & Utility senses). Their children's biggest advantage is they don't make disastrous errors with their finances. That's what the Networking advantage allows for, especially when you know things are coming down the pipe and can get out of Dodge before it gets bad. A lot of that, frankly, would be covered in "Rich Dad, Poor Dad". The recent issues are, as mentioned by Vox, Immigration (foreign poor is leagues poorer than Western poor) and the use of Financial means to drive so much wealth into the Banking Centers.

Blogger Michael Maier March 28, 2018 5:56 AM  

F'in' Eskimos.

I wonder if real money will ever come back? Anywhere?

Blogger Moritz Krämer March 28, 2018 5:57 AM  

Where's that "really makes you think" emoji when you need it?

Blogger Rocklea Marina March 28, 2018 6:12 AM  

"South-American countries have normally high Gini coefficients, with Brazil perhaps at the top with around 0.6......
.....But the trend changed direction in the 1960s-1970s, to arrive today at values of the Gini coefficient between 0.4 and 0.5, typical of South American countries."

Maybe he's trying to say it without being yelled at?

Plus the oil shock theory has some merit and more immediate impact than the immigration act, which would take time to have an effect. Although of course the IA preceded the oil shock.

"If only we could identify a highly networked group of people, concentrated primarily on the financial sector, who were not particularly influential in the United States before the 1960s, we might be able to understand who were the primary benefits of this massive shift in income inequality as well as how they took advantage of it."

I can't think of anything.... Sounds like crazy talk, one of those wacky conspiracy theories.

Blogger Looking Glass March 28, 2018 6:13 AM  

I should expand on the "Use my tools on everything!" issue. While everyone has the ability to make that mistake, it's normally something you only notice with academics. They're really smart and they have a specific, highly advanced analytical skill set. (If they're in the hard sciences.)

The problem a lot of the run into is that taking that skill set, especially if they have extremely valuable insights into the application, then applying it practically everywhere. Inside Academics itself, this is normally what you see with someone that's done good work in multiple disciplines. They have a fundamental insight into something, which they can apply all over the place.

That can work great in the Sciences, but in areas where inputs & outputs cannot be easily cataloged, it tends to result in amazingly short-sighted analysis. They have to assume too much to start applying their skilled, analytical frame work, so they end up looking pretty bone-headed when subjected to study. You'll see that with specialized Doctors. Every problem is with the heart to a Cardiologist.

Without reading the book, I can't comment on his take on the discussion from the sub-head of the book, "Why Growth is Slow but Collapse is Rapid", but it doesn't strike me as that complex for "Why". The Process for "How" is far more valuable to explore, though, especially with regard to societies.

Blogger wreckage March 28, 2018 6:27 AM  

So, he's failed to note that nations with strong "ethno nationalism" are much, much more equal than nations with a blender mix of African, South American, and European descent; and that the more mixing, the greater the inequality?

Blogger VD March 28, 2018 6:30 AM  

So, he's failed to note that nations with strong "ethno nationalism" are much, much more equal than nations with a blender mix of African, South American, and European descent; and that the more mixing, the greater the inequality?

No, quite the opposite, in fact. There is an interesting and informative comparison of Japan with Ireland that I will post later in this regard.

Blogger Uncle John's Band March 28, 2018 6:37 AM  

There is a common academic tendency to take models abstracted from limited observations of reality for heuristic purposes and then treat them as if they were the reality that they imperfectly describe. It's dishonest as hell, but many aren't even aware that they are doing it. It's also the epistemological foundation for Postmodern "scholarship" in general.

You can see it in Bardi's mystification; his tools, whether Gini coefficients or therodynamic laws, are limited approximations of reality. Things were left out in their inception. By raising actual events (by nature things excluded from the theoretical abstraction), Vox lays bare the intellectual bankruptcy of this approach in a couple of paragraphs.

Blogger Jack Amok March 28, 2018 6:40 AM  

I think the fall of the Roman Republic was set in motion by Hannibal. He rampaged through the countryside, destroying the wealth of the middle class (who were defending the walls of Rome itself). The Patricians - instead of making the yeoman who had defended the Patrician's wealth whole - bought up farmland for silqua on the solidus. Thus was born the Roman Mob.

A similar destruction of the middle class has hamstrung the American Republic.

Blogger Looking Glass March 28, 2018 6:45 AM  

@10 Jack Amok

Pretty much, though it's been done through Usury. Apply that, as well, to Student Loans.

Blogger Uncle John's Band March 28, 2018 6:50 AM  

@ 10 Jack Amok

This is a good point. If you add the entirety of people living off some sort of government parasitism (from the current welfare system to the top of the swamp) you don't just have a mob, you have one that is well compensated enough to dominate and/or produce institutions. The Roman mob got bread and circus on the state dime, but at least they weren't pulling six figures in universities and think thanks to spew cultural poison.

Blogger Duke Norfolk March 28, 2018 6:58 AM  

"But it can't be THAT! Good God, that would be unthinkable!"

Anonymous Anonymous March 28, 2018 7:00 AM  

If your household requires two incomes to maintain a 'middle class' lifestyle, you are no longer middle class.

Part of the 'Great Swindle' of the middle class has involved 'defining down' what middle class is.

--ZhukovG

Blogger Uncle John's Band March 28, 2018 7:14 AM  

@ 14 zhukovg

It's the economic magic of pushing women into the workplace. We can double our labor force with the same number of jobs and all get twice as rich! Or something.

Blogger MendoScot March 28, 2018 7:15 AM  

Stop trying to blame the Scots for everything.

Blogger Stilicho March 28, 2018 7:18 AM  

@Zhukov: the US coefficient would be much higher if the move to two income families had not occurred alongside dirt world immigration and the financial sector shift Vox notes. It wasn't nearly enough to offset the deleterious effects of those two and it has had other, negative, cultural effects.

@Vox, the rise in inequality also coincides with the final abandonment of a link to hard money which also served to shift wealth to the financial sector.

Blogger MendoScot March 28, 2018 7:18 AM  

Well said, Zhukov.
People forget that large families used to be a middle class phenomenon, as the woman no longer had to work but could dedicate herself to childbearing and rearing.
The modern definition of middle class is almost an inversion of the historical reality.

Blogger wreckage March 28, 2018 7:32 AM  

@8 I'd love to see some comparisons along those lines. I'm working at getting my head around what uneven distributions (of demographics, capital, you name it) look like and imply in the real world, and whether I can pull any useful heuristics from that.

Of government and financial sector, consider: income taxes mean the government has a vested interest in creating and maintaining a super-rich minority (pick your flavour). The financial sector is ideal because nobody sympathizes with them when they get taxed, and nobody blames the government when their incomes and capital are increasingly pervasively leveraged.

BY moving society to a loans basis rather than a savings basis, the government essentially gets to launder responsibility for its spending and its revenue raising... another point, possibly, in favour of tariffs as a means of funding government.

Blogger Aeoli March 28, 2018 7:38 AM  

The farther we get from slavery in theory, the more we practice it in reality.

I don't have an answer for this one. There seems to be no sale more difficult than convincing humans to cut their own damn grass.

Blogger Peter Gent March 28, 2018 7:38 AM  

There are so many factors coming together in succession that contributed to the shift of wealth out of the middle class, first hitting the lower middle class through the erosion of unions, manufacturing jobs, and the failing of pension programs and later the upper middle class as the stock market eroded and their children's education costs ate much of their income. Two children going through college at an acceptable university would take anywhere from $200-400,000 dollars out of the family holdings.

Blogger duane oldsen March 28, 2018 7:43 AM  

On the demographics front its more than just the immigration act of 1965. Three years later (1968) is the symbolic coming of age for the Boomer generation - a huge youth cohort entering the workforce. And with the Boomers, women entered the salaried workforce at a rate 3x higher than previous generations. Women were not unemployed in previous generations, but they tended to be in family businesses that officially saw them drop out of the salaried workforce and the statistics that track it. Add all of those forces together in a short time frame and the size of the workforce explodes. At that point its simple Malthusian economics; supply and demand. More workers, lower wages.

As wages fall there is more surplus to support the elite, and more elite can be supported. Which is what the Higher Education Bubble has been about - producing more elite aspirants.

The "problem" is that eventually the dynamic reverses. The workers are run down to subsistence and no longer produce a surplus to harvest, greater population density leads to conflict, disease and famine. Worker population falls and wages must rise, even though the elites have not seen this for decades and resist it. There is no longer a surplus for the elite to feed off of, but too many aspirants for elite status have been produced and the system churning them out cannot be shut down on the flip of a switch. The elite turn on each other because there are not enough resources and too many candidates vying for power. Which is about where we are now.

Blogger Ron Winkleheimer March 28, 2018 7:44 AM  

https://www.youtube.com/watch?v=UCftJ8Hf0kI

Blogger Looking Glass March 28, 2018 7:51 AM  

@21 Peter Gent

The structure of those Pension programs actually did much of the damage. "Financial Wizardry" is a deeply evil field, at least in the modern context of it.

Blogger Peaceful Poster March 28, 2018 7:51 AM  

BREAKING NEWS: Jordon Peterson has solved the JQ. The great man has concluded that it's all about their higher IQ.

Nothing to see here.

Thanks JP.

Blogger Peter Gent March 28, 2018 7:52 AM  

Ron Winkleheimer wrote:https://www.youtube.com/watch?v=UCftJ8Hf0kI
That gave me a quite a laugh. Modern women learning the working is hard and pining for the "good old days..." even though their understanding of them is a bit off. Looks like we are about to come full circle, but where will they find the real men to marry who can do the hard work to support them at home? They've successfully neutered a large portion of the pool and there just isn't enough left to go around. So sad, too bad.

Blogger Rick March 28, 2018 7:53 AM  

“Part of the 'Great Swindle' of the middle class has involved 'defining down' what middle class is.”

And the simultaneous devaluing of motherhood (the invaluable role of raising the children in the home by their mother). Actually, I think that was step one of the bait and switch: you can have it all!
It stands to reason that you can be good at one thing or not good at many things given the same resources. Two masters, and so forth.

Re the article, the elite is to the restivus, as order is to chaos. There is an analog to capitalism vs socialism too, here. As capitalism ensure the benefits of expertise are encouraged and grown, while socialism ensures no one is really good at anything because each person has to do everything. Eg. in capitalism, I trade the product of my expert pie making skills for the product of your basket making skills. In the utopian socialistic middle class, the mother and father have to have duplicate skill sets. But neither are as good as if they focused on their strengths. Duplication of effort we much!

Blogger Daniel Paul Grech Pereira March 28, 2018 7:53 AM  

(((Who))) are you talking about?

Blogger VD March 28, 2018 7:56 AM  

BREAKING NEWS: Jordon Peterson has solved the JQ. The great man has concluded that it's all about their higher IQ.

It's hardly a surprise. He is Canadian, after all.

Blogger Daniel Paul Grech Pereira March 28, 2018 7:57 AM  

@26

It's not even that they are castrati. Many men who are wealthy and have stable lives, are simply too disgusted and put off by women to even consider raising a family.

The incapable + the capable but unwilling = a massive portion of the male population

Blogger Daniel Paul Grech Pereira March 28, 2018 7:58 AM  

@29

Worse, he has been marinating in Toronto for years.

Blogger Rocklea Marina March 28, 2018 8:07 AM  

"BREAKING NEWS: Jordon Peterson has solved the JQ. The great man has concluded that it's all about their higher IQ."

Phew! That is good news. Now all we have to do is just clone an army of Jordan Petersons' and send them forth to messy bedrooms all over the world, and preach the gospel of individualism.

Blogger Peaceful Poster March 28, 2018 8:09 AM  

The Indians (dot not feather) are also major networkers.

The number of scams I have personally seen them pull is quite impressive, from cable stealing, to abusing friends&family corporate discounts, to tax evasion.

Blogger Peter Gent March 28, 2018 8:10 AM  

@26
I have two friend, both Christian, both very successful, whose wives stayed home and had large families (one nine children, one seven). Those types of men are rare these days.

Blogger Johnny March 28, 2018 8:20 AM  

"Why Growth is Slow but Collapse is Rapid"

It takes a lot of money and a long time to build a house, but a day and a match are enough to destroy it.

Blogger Rick March 28, 2018 8:25 AM  

"Why Growth is Slow but Collapse is Rapid"

There is a Hemingway gag about how one goes bankrupt: “slowly, then all of a sudden.”

Blogger dienw March 28, 2018 8:27 AM  

Bardi is deliberately obfuscating the issue; first he deliberately dismisses so-called conspiracy theories because, well, no one forms a club, committee, or dinner party to discuss their peers interests and how to further them; no, no one does that; second, Bardi uses metaphors, concepts, and cool equations from "science" in order to separate the laity from the priests when plain language would have fully explained the inequality: "the wealthy, using their commerce, have set their boot upon the poor and middle class devising methods to plundering them and depriving them of their property and their livelihoods."

Or do I have to use an equation for Bardi?: (((W)))=(P & MC)- (i & p); wherein, ((())) = a given alien tribe, W = Wealthy, P = Poor, MC = Middle Class, i = income, and p = property; see I is economist.

Blogger Cecil Henry March 28, 2018 8:30 AM  

Sublimated is such a duplicitous term. More lying.

It wasn't 'sublimated', it was stolen in endless taxation and theft and state bureaucracy overtaking every aspect of economic life and freedom.

Blogger Avalanche March 28, 2018 8:35 AM  

@22 "The elite turn on each other because there are not enough resources and too many candidates vying for power. Which is about where we are now."

Which explains those National Merit scholars serving your eggs-and-ham at Denny's?

Blogger Avalanche March 28, 2018 8:42 AM  

@23 That's AMAZING! DO they really think most women WON'T recognize themselves there? Is that a hidden "pill" to get women to THINK about going home to their kitchens?!

The libs are so mired in their (broken) world-view, they may actually THINK that is "pejorative" towards the "patriachy" -- instead many MANY women are going to go: "Yes! That's it! THERE I AM!" It's The Feminine Mystique for the modern age!

That "commercial" is not reverse psychology -- it's biological reality! Brought to you by: "TWATS: the Women Against Tiredness Society"! BRILLIANT!

Blogger Looking Glass March 28, 2018 8:44 AM  

@37 dienw

Bardi wants to keep his job. That's part of the problem with any socio-economic analysis approach & the PC culture. Most of this stuff isn't that hard, but you can't "notice" certain aspects.

Doesn't mean Bardi won't have any interesting insights of specific effects, but he'll miss totality because he wants to keep putting food on his table.

Blogger Avalanche March 28, 2018 8:47 AM  

@31 "Worse, he has been marinating in Toronto for years."

And before that, he was at Harvard! He's been double-dipped... (In the sheep-pesticide sense, not the pension sense...)

Blogger Shitavious Lordecai March 28, 2018 8:51 AM  

Not sure how people here feel about Anglin, but I think this article https://dailystormer.name/we-all-know-exactly-where-this-story-ends/ dovetails nicely with this post.

Blogger Rick March 28, 2018 8:58 AM  

LG, if you’re right, his writing must remain esoteric (in the more ancient sense).
Sorta like Q.

Blogger Looking Glass March 28, 2018 9:07 AM  

@44 Rick

I think he's going to be a modern, Italian Professor of Chemistry. He might have some interesting insights, but his perspective is automatically warped by his position & relations. Though he can avoid a lot of "issues" by talking about history more than current day issues.

Thus, you can't be sure if he's avoiding things because he doesn't see them, since he's trying to shoehorn parts of Chemistry Logic into his analysis, or because "seeing" them & printing them will mean he needs to find a different career. *Insert quote here about Food and Noticing.*

Blogger Uncle John's Band March 28, 2018 9:13 AM  

The representation replaces the reality, the "discourse" becomes the "discipline" and career advancement, prestige, and cool medals with iconography like torches of "knowledge" depend on endlessly masticating the cant. If you can't speak the discourse, you aren't in the discipline and therefore are a philistine, and perhaps a racist. The real world need not apply.

It's why any effective "reform" of higher education is essentially a complete rebuild from the ground up.

Blogger Duke Norfolk March 28, 2018 9:21 AM  

Avalanche wrote:That's AMAZING! DO they really think most women WON'T recognize themselves there?

Yeah, that video is just jaw dropping. They've so lost touch with reality, it's just stunning.

They'll lose. It just can't be any other way.

Then, of course, the cycle will continue.

Blogger Rick March 28, 2018 9:33 AM  

LG said “Thus, you can't be sure if he's avoiding things because he doesn't see them, since he's trying to shoehorn parts of Chemistry Logic into his analysis, or because "seeing" them & printing them will mean he needs to find a different career.“

If he intended to ensure the latter, he better look like the former.

Blogger peppermint88 March 28, 2018 9:37 AM  

Academia has abjectly failed, not because of "use my tools", but because of chronic namefagging, "I knew that"ism, and general dishonesty. The actual tools are obvious and easy. School is much more difficult than it would be if it was about learning tools.

Blogger ReluctantMessiah March 28, 2018 9:42 AM  

Vox: If only we could identify a highly networked group of people...

Yup, it's a complete mystery. Motives unclear. Perfect amount of sarcasm in the last 2 paragraphs Vox

Blogger Unknown March 28, 2018 9:43 AM  

The destruction of the GOLD STANDARD the turning on the money presses of unlimited free money is what has stolen the wealth of Americans.

Every time they print money, they are robbing wealth from the people. That is how it was done.

Blogger Dave March 28, 2018 9:48 AM  

See this just published tale of another highly networked group of people where the rich get richer:

Secret Empires: How the American Political Class Hides Corruption and Enriches Family and Friends
by Peter Schweizer

https://www.amazon.com/Secret-Empires-American-Political-Corruption/dp/0062569368

Blogger pyrrhus March 28, 2018 9:49 AM  

Fortunately, since the problem of excess oil imports has already been successfully addressed by increased domestic oil production and a concomitant reduction in US reliance on foreign oil,

Heh...The US continues to import nearly 10 million bpd of oil, despite the shale "revolution"....

Blogger Hammerli280 March 28, 2018 10:00 AM  

I think the networking issue makes sense. Let's face it, someone who went to the right new England prep school and then an Ivy League college will have doors open to them that don't even exist for the common man. You don't send your kid to Harvard for an education, you send him there for the alumni list.

The situation is aggravated by the prohibition on businesses using IQ tests to screen job applicants. This was a way for businesses to spot potential high-grade workers who could be hired relatively cheap...and for ill-educated but smart lower-middle-class workers to move up. A win-win situation.

Blogger pyrrhus March 28, 2018 10:00 AM  

Engineers and scientists love to expound scientific sounding theories about societal trends..The Kondratiev Wave is one major example.But they have been very well trained as to what they are not allowed to notice, of which government corruption and the ethnicity of their rulers are primary no-no's.

Blogger Hammerli280 March 28, 2018 10:08 AM  

I'll also observe that the IRS used to publish an extensive analysis of tax revenues. At the very end, there was a simple table of the rate of increase of income, after inflation, for various income levels. IIRC, annual rate of increase looked like this:

50th percentile was 0.5%.
75th percentile was 1%.
90th percentile was 1.5%.
95th percentile was 2%.
99th percentile was 4%.

And that 1.04 to the 20th or 30th power means the rich got a whole lot richer than everybody else.

Blogger Ominous Cowherd March 28, 2018 10:10 AM  

pyrrhus wrote:Heh...The US continues to import nearly 10 million bpd of oil, despite the shale "revolution"....

How much do we export?

Blogger L' Aristokrato March 28, 2018 10:52 AM  

Jodeo-Christ works in confounding ways.

Blogger rumpole5 March 28, 2018 10:57 AM  

We need to use this oil shale independence opportunity to get off as much oil as possible. We should be generating all of our electricity with coal and molten salt nuclear reactors. We sholuld also electrify the short and long range truck fleets ad train systems. We should never again have to depend on foreign sources for our energy. Use the oil we pump to sell to other countries to make them dependant on us.

Blogger peppermint88 March 28, 2018 11:26 AM  

Why does Justice Stevens think RKBA is 18c American? Schooling has nothing to do with education except in name. It's not that academics are trained to ignore government corruption - they are the government corruption, since before they called their school of historical philosophy "political science", before they took historical idealism and made Marxism, before they took Aquinas' model of the mind and creepified it into Freudianism, they were a rabble of high iq gammas seeking to destroy everything, and may yet succeed.

Blogger MadMax 1861 March 28, 2018 11:32 AM  

@53 and @57
In 2017 the U.S. has averaged more than 900,000 barrels per day (BPD) of crude oil exports while continuing to import an average of 8.1 million BPD. The US exports more than 1,000,000 BPD of both gasoline and distillates. The US is also a major natural gas and coal exporter.

Blogger JaimeInTexas March 28, 2018 12:01 PM  

The rich are friends with other rich. Their children go to schools with other rich children and marry other rich.

Blogger Aeoli Pera March 28, 2018 12:39 PM  

Peaceful Poster wrote:BREAKING NEWS: Jordon Peterson has solved the JQ. The great man has concluded that it's all about their higher IQ.

Nothing to see here.

Thanks JP.



In his defense, I hear he's on SSRIs.

Blogger Marcus Marcellus March 28, 2018 1:28 PM  

That has to be the most convoluted, unnecessary, pretentious, and unhelpful way of saying something I have ever read (and I have a BS is physics!). That must have been good pot to come up with money being "sublimated" to the poor. Thanks for posting, I laughed all the way through.

Blogger DonReynolds March 28, 2018 2:00 PM  

I am always skeptical about the modern tendency to borrow relationships and equations from the hard sciences and scotch-taping them into economics. There may be some useful analogies for teaching purposes but they are limited and presuppose a better understanding of science than of economics. (Paul Samuelson had an annoying habit of doing this in his textbooks, with his Retail Gravitation Model and wait...there is Hook's Law!)

I really do not know where this modern mania over inequality comes from. I suspect it is purely democrat politics, since they keep beating that drum.

Inequality is actually important in a country, because capital formation is necessary for industrialization, which is nearly impossible when everyone is equal. No, they are not going to all be equally wealthy.

To make paper from wood pulp, they use a machine that costs $100 million each, and a ordinary paper plant could have four or more of these machines. Unless you want to go full Soviet or Maoist communist and confiscate all wealth for the state...or the "greater good", as they would say, you must have a certain amount of inequality in order to have the capital formation necessary for large industrial plants. The same is also true for corporate agriculture, the miracle of the modern age. One John Deere tractor can easily cost over a quarter million and this is simply impractical to work a 40 acre postage stamp. A single chicken growing house can have 60,000 to 90,000 birds and the same farm may have 4 to 8 growing houses. Yes, this is inequality.

Blogger Allen L. March 28, 2018 2:32 PM  

It could just be that equilibrium is not the required end state when it comes to wealth. I'm not sure why you would assume that.

Anonymous Anonymous March 28, 2018 2:32 PM  

I think the networking issue makes sense. Let's face it, someone who went to the right new England prep school and then an Ivy League college will have doors open to them that don't even exist for the common man

Jews first attack was taking over hiring at the top 5 law schools, giving them the ability to jew people in court. Probably 150 law professors (those at the best 5 or so) educate the majority of law professors and federal judges throughout the country. Control those 5 schools, and you control the judiciary for everyone in the United States (this is how academia was remade as well). 25 mentors from a Harvard professor/law professor go on to teach at 25 schools. 25 mentors from Iowa State go on to be marginally- or un-employed.

That must have been good pot to come up with money being "sublimated" to the poor.

The people with the $8000 a month drug habit are using AIDS drugs paid for mostly by taxpayers, that 60 IQ HIV+ Somali refugee has a drug habit that costs more than the average family practice DR's take home pay. Of course You Know Who is profiting from the overpriced drugs.

The Truvada Prep $1,500 monthly drug habit is also mostly picked up by taxpayers. That's the AIDS prevention drug for people that don't use condoms. It could theoretically be prescribed to everyone HIV- who gets health care from the taxpayers.

They don't just overprice AIDS drugs doxycycline went from $20 a bottle to $1800 a bottle in months, and bee sting kits from $12 in the 90s to $700 today.
https://vineyardgazette.com/news/2015/09/24/cost-doxycycline-skyrockets

Blogger Unknown March 28, 2018 2:38 PM  

From the top:

[because oil] we can be confident that this post-1960s shift in the Gini coefficient will be corrected any day now and US income inequality will shift back to traditional European standards rather than the third world standard it has more recently come to resemble.
----- end quote ------

A low Gini coefficient is the goal? Not sure about that.

However, because of the Pareto principle, the productive are forced to pay off the unproductive or face revolt. The unproductive must not leech off too much from the productive or there will be a revolt. The boundaries here are not simple.

That is why the gini is important - the productive in the US will not put up with too much bleeding, and we are armed. The US will maintain a MUCH higher gini coefficient than Europe until/unless the EU collapses, when they will eventually return to a productivity based model.

Not sure how to avoid anonymous, since I don't have a profile in any of the listed places, but I am Travis Knoll, and I am not afraid to own my comments.

Blogger Snidely Whiplash March 28, 2018 3:00 PM  

DonReynolds wrote:I really do not know where this modern mania over inequality comes from. I suspect it is purely democrat politics, since they keep beating that drum.
Inequality is an important aspect of social stability, which in turn is an important aspect of creating the legal and political environment in which you can continue to rip off the middle and working classes.
The rich have to track income inequality if they don't want to end up on the wrong end of a lamppost.

Blogger The Kurgan March 28, 2018 6:28 PM  

(((Brilliant)))

Blogger icyhotspartin March 28, 2018 6:30 PM  

🤔->🤕

Blogger David Herr March 28, 2018 9:59 PM  

#51 has it -- only person to even mention gold standard and its destruction. Specifically, the interaction of fiat money and fractional reserve banking, brought to us by the Federal Reserve and the entire edifice of the banking "regulatory" and bailout regime. People speculating with printed money and conjured credit keep their profits, while losses get pawned off on the taxpayer. Rinse and repeat a few times, and you are left with rising inequality of wealth, based on not on market innovation but on political connections -- in other words, wealth is determined by who gets first crack at churning fraudulently created money and credit. Solution is easy. Raise short term interest rates to 5%, and watch SF/Silicon Valley, LA/Hollywood, Chicago, Seattle, NYC and of course Washington DC collapse overnight.

Blogger PapayaSF March 29, 2018 2:24 PM  

"What we know is that a lot of money flew away from the pockets of middle-class people to end up it in the pockets of the wealthy."

Nope. A lot of money flew away from the middle class to pay for Great Society social programs. I don't think the 1965 immigration act had economic effects until much later. Those Great Society programs also trapped many in poverty and then bred more poor people in a positive feedback loop.

Other effects: union excesses crippled many industries that previously supported much of the middle class (e.g. automakers, steel).

Blogger VD March 29, 2018 7:30 PM  

Nope. A lot of money flew away from the middle class to pay for Great Society social programs.

As a general rule, if you begin a comment with "Nope", you are almost always opining in ignorance.

The statistics are clear. Nor is what you said necessarily even in contradiction to what the previous commenter correctly stated. The fact that the government took money from the middle class to pay for the Great Society does not preclude that money from ending up with the upper class.

Which, you will note, is exactly what Bardi observes began happening at that time.

Post a Comment

Rules of the blog
Please do not comment as "Anonymous". Comments by "Anonymous" will be spammed.

<< Home

Newer Posts Older Posts