This seems like an obvious consequence of globalism and the nature of the labor market. Also seems consistent with Picketty’s thesis about capital growth. The days when being a US citizen gauranteed affluence are coming to a close. To see the future look at California; refugees from Guatemala living amongst young millionaires, mostly immigrants also. A global community, sliced into ever narrower tranches by the invisible hand. It’s the future we choose.
Much of Piketty's work has been widely debunked, especially r > g, so I'm not sure why one would start with his thesis. Top 1% income earners are typically business founder-owners, and reams of evidence from the Forbes 400 to tax data show that the wealthiest in US society are entrepreneurs who again created their own business- not rentiers living off of inherited wealth. (Anecdotally, children of inherited wealth they didn't earn burn through cash so fast that r < g, not the other way around).
I have no idea what 'globalism' means in this context, or what type of alternate reality could exist where foreigners would be polite enough to not, like, turn a wrench or run an assembly line for cheaper than Americans did in the 50s. We as a country don't have the option of 'choosing' an alternate economic reality where developing country wages aren't cheaper than ours
> Top 1% income earners are typically business founder-owners
No, they're not. The top 1% are people who work "normal" high-paying jobs [1]. You're probably thinking a smaller slice like 0.1%. Also if you're going to claim that someone's work is debunked, at least point to some references to back that up.
'Have the idle rich replaced the working rich at the top of the U.S. income distribution? Using tax data linking 11 million firms to their owners, this paper finds that entrepreneurs who actively manage their firms are key for top income inequality. Most top income is non-wage income, a primary source of which is private business profit. These profits accrue to working-age owners of closely-held, mid-market firms in skill-intensive industries.'
Without going into the extensive exaggerations, lies and data-fudging of Piketty- do you look at the Forbes 400 list of wealthiest Americans and see a lot of inherited wealth there? A lot of Rockefellers, Morgans, and Vanderbilts? It's a bit surprising, right, because if we accept r > g then Rockefellers/Morgans/Vanderbilts should own most of the US by compounding wealth starting over 100 years ago at this point....
And in fact we find the Forbes 400 is virtually all- self-made entrepreneurs who created their own wealth. If you find a Rockefeller there who's never worked a day in his life but is simply living on rentier income, please let me know. (As I mentioned in the original comment, one of the reasons Piketty's rentier fantasies don't work is that he doesn't gauge consumption- and I suspect idle wealthy inheritant-types who don't work burn cash at a greater rate than r)
I went to the trouble of actually buying the paper you cited and, surprise, it doesn't say what you seem to think (did you only read the abstract?). Here are the key findings:
- Among the top 1%, 69% earn pass-through business income in some form
- At the 99th percentile, business income only accounts for about 40% of total income
The majority of what is described in the abstract (and a lot of the focus in the paper) is on the 0.1%, not the 1%. If you dig through their data and filter out the clear focus on $1M+ earners, the picture is pretty clear: the 1% are mostly working people who supplement wage income with some kind of side business income. This is exactly what you would expect if you think about lawyers, doctors, software developers, consultants, etc. When you get near the 0.1% level the picture changes significantly and business income takes over along with number of employees at owned businesses.
While I did not purchase the document, I did rely on famous economist Tyler Cowen to summarize it. I feel pretty comfortable with that decision as he's an SME.
> the 1% are mostly working people who supplement wage income with some kind of side business income. This is exactly what you would expect if you think about lawyers, doctors, software developers, consultants
This is.... not what I would expect, at all. If you told me my thesis was just wrong and that the 1% (not .1%) just made wage income, I could accept that. But- you think it's normal for highly paid professionals to work a self-employed side gig, and that's what tips them into that top percentile? Like, a Bain consultant is going out and doing some extra side consulting in her copious spare time outside of her 80 hour a week job? This seems bizarre & unlikely (I am just relying now on your interpretation of the paper).
Worth noting that high-earning doctors, lawyers, some developers can be self-employed, and so neither an employee or employer (especially for doctors I think that's the path to the highest income). Not sure how that factors in to the paper
Yes I think that's extremely normal. And that's exactly what the paper talks about - self-employed = pass-through income. If you're a lawyer or consultant and you bill your clients through your 1-person LLC (extremely common), your income is pass-through income and the paper would conclude that you are a "top earner" whose income comes from owning a business. On the doctor side, it's quite common for specialists to be technically self-employed and bill hospitals for their time rather than being a true FTE. See the issue with using the abstract comments here? Also important to note is that the paper isn't looking at individual earners, it's looking at households (it bases its information on tax filings, most of which for 1%+ people would be joint filings). If you and your wife each make $220k in total compensation (relatively easy in the Bay Area or NYC for example), congratulations, the paper says you're a 1% earner.
Back to my main point - if you want to talk about business owners in the job-creating sense vs. income, it's important to distinguish between 1% and 0.1%. The latter is composed mostly of medium-size business owners (a good thing!), but the former is not.
Looking at top 40 (because it gets boring to look up bios after a while), I see the following folks who inherited companies founded by their family members:
Charles Koch, David Koch, Jim Walton, Alice Walton, Robson Walton, Jacqueline Mars, John Mars, Abigail Johnson, Donald Bren, Lukas Walton, Leonard Lauder.
That is 11 out of top 40 (or 27.5%) have inherited their wealth. That is certainly a big fraction of billionaires who did nothing but win the birth lottery.
I don't know exactly what Mr. Piketty actually claimed, but that statistic pretty good evidence that return on capital vs the growth of income is not the major cause of wealth inequality. The major cause would be inheritance law and birth rates in wealthy families.
Economic divides are a strange concern anyway; I don't see how I am unfairly disadvantaged by someone else's obscene wealth through winning the birth lottery. The issues as I see them are (1) high inequality is often an indicator of corruption and (2) many cities won't build sufficient high-density housing for political reasons.
What exactly is Jim Walton consuming that should be given to the poor? He probably doesn't eat that much food, and I doubt he is competing for housing stock with people who are struggling to make rent.
> but that statistic pretty good evidence that return on capital vs the growth of income is not the major cause of wealth inequality
I see 27.5% as too damn high to be among the richest in the world just based on birth lottery.
> I don't see how I am unfairly disadvantaged by someone else's obscene wealth through winning the birth lottery.
Wealthy people get disproportionate benefits in: legal system [1], healthcare [2], political influence [3]. I can go on, but there few examples are sufficient to see why someone should get these privileges just because of birth.
> What exactly is Jim Walton consuming that should be given to the poor?
Don't know about Waltons, but Koch brother are consuming their wealth to purchase political influence [4]. I would rather have it spent on poor.
The Kochs are active executives within their companies, which is a huge % of net worth. Wikipedia states that their stakes were worth $1.1 billion in 1983 when the brothers took them over, obviously they are worth vastly more now. It's not like they're rentiers who never worked- they still created most of their current wealth. This seems to be true for a number of 2nd generation wealthy.
If r > g is true- why are the large majority self-made entrepreneurs? Wouldn't the compounding effect of inherited wealth make say the Rockefellers top the list by 2019? I couldn't find them in the top 100.
The broader point is to use actual data versus empty theorizing from first principles. While I don't personally agree with what you stated above, you're already miles ahead of Piketty by using real-world data that we have on wealthy families vs. extremely broad theorizing on stuff like 'r always exceeds g'
You seem to be assuming that the ultra rich keep their wealth as personal wealth. This is pretty far from what actually happens. In most cases they setup foundations with large endowments instead of directly passing it to heirs (though the heirs are often board members and never have to work a day in their life). You mention the Rockefellers as an example. Guess what foundation has a $4.1 billion endowment, 105 years after its founding? Where is Bill Gates putting all his money? A foundation.
See where I'm going with this? I'll take arguments against r > g seriously when they account for institutional wealth instead of just personal wealth.
Two of the directors of the Hearst Foundation are Hearsts, of thirteen.
If these foundations are attempts to keep wealth in the family they’re utter failures. At the peak of his personal wealth Rockefeller was worth over 1% of US GDP. $4 billion is nothing compared to that.
He has.... pledged to give 99% away to charity by the end of his & Melinda's life? I don't think 'foundation' in this case means what you think it means. It's not a secret tax dodge to pass it on to their children indirectly, their heirs will get very little
The Koch brothers would be nowhere near the top 40 based on the wealth they inherited. They may have inherited the companies but their wealth is not mostly inherited. I’m not saying they could have done it from a standing start but the Koch brothers are closer to Bezos or Gates than the Walton heirs.
One reason the Forbes list is so dominated by self-made entrepreneurs is that it's relatively easy to verify their wealth based on public records. Jeff Bezos' net worth is, to a first approximation, the same as his stake in Amazon, which is regularly reported in SEC filings. The wealth of the Rockefellers/Morgans/Vanderbilts is less concentrated in any single company, so if they don't voluntarily disclose their finances to Forbes, they stay off the list, regardless of what their net worth is.
Thankfully they get divorced occasionally so we can be reasonably sure that no matter how discreet they are they are not the shadowy powers that actually control the US. Divorce lawyers want as much money as possible for themselves and for their clients and they don’t care if you hold your wealth in a well balanced diversified portfolio or if it’s all in one company.
It doesn't look like it refute's the OP's point that the top 1% of people sorted by income are wage earners.
The abstract seems to be talking about "top income' (i.e. sort people by income and fetch from highest to lowest until you have 1% of all income in the US), which is a different measure.
A simple way to put this is that today's 1% isn't yesterday's 1%. Static inequality is oppressive. Dynamic inequality is entrepreneurship. PG explains this well in his inequality essay.
Actually, no, that's just an article diving into the contents of the book. I figured might be helpful in case people didn't want to read the full book.
Challenging the Empirical Contribution of Thomas Piketty's Capital in the 21st Century
Thomas Piketty's Capital in the 21st Century has been widely debated on theoretical grounds, yet continues to attract acclaim for its historically-infused data analysis. In this study we conduct a closer scrutiny of Piketty's empirics than has appeared thus far, focusing upon his treatment of the United States. We find evidence of pervasive errors of historical fact, opaque methodological choices, and the cherry-picking of sources to construct favorable patterns from ambiguous data. Additional evidence suggests that Piketty used a highly distortive data assumption from the Soviet Union to accentuate one of his main historical claims about global “capitalism” in the 20th century. Taken together, these problems suggest that Piketty’s highly praised and historically-driven empirical work may actually be one of the book’s greatest weaknesses.
How Different Studies Measure Income Inequality in the US
Piketty and Company Are Not the Only Game in Town
...
The results from at least four studies were compared for three measures of income change: change in median incomes, share of growth captured by the top 10 percent, and the changing income share of the top 1 percent. In all cases, Piketty and Saez (2003) were the outlier, showing the most increased inequality. And in all three measures of income change, Piketty, Saez, and Zucman (2018) found much less growth in income inequality than Piketty and Saez (2003).
This brief does a meta-analysis of different findings to estimate a “consensus” level of change. Applying Canberra Group (2001, 2011) recommendations, I find that
instead of stagnating, real median incomes grew by just over 40 percent (1 percent a year) from 1979 to 2014;
the top 10 percent of the income ladder captured 45 percent of income growth from 1979 to 2014; and
the share of the top 1 percent grew 3.5 percentage points.
All studies find that income inequality rose after 1979, but common perceptions that all income gain went to the top 10 percent and middle class incomes stagnated (or even declined) are wrong.
i think by globalism he means that free trade brings with it the free movement of labor across countries
>what type of alternate reality could exist where foreigners would be polite enough to not, like, turn a wrench or run an assembly line for cheaper than Americans did in the 50s. We as a country don't have the option of 'choosing' an alternate economic reality where developing country wages aren't cheaper than ours
the illusion of non-choice on this issue began when bill buckley reformed the right wing into free-traders. we could vote to not let foreigners in to our country and to establish high tariffs on foreign goods. we choose not to. not saying whether that's right or wrong. just saying it is a choice.
Manufacturing jobs were leaving the US in the millions pre-NAFTA and China joining the WTO. Even with high tariffs & restrictionist immigration policies, it can't change the fact that someone in a 3rd world country can do x semi-skilled labor for $2 an hour whereas a unionized American does it for $30+. You can't pass a law against cheaper.
Even with the highest tariffs in the world, manufacturers would still have left for cheaper labor elsewhere in a globalized world. Economic reality is not a choice
The cheap labor is part of the equation. Less environmental restrictions also contributed significantly to cheap goods. But the final blow is the low cost of shipping / transportation.
There has always been differences in markets. It's the low cost (and ease) of shipping / transportation that changed everything.
Tariffs, especially combined with the usually underestimated coordination expense of managing supply chains across continents, can make cheaper not cheaper.
>Economic reality is not a choice
It is completely a choice. Unfettered trade, globalism and the Washington Consensus were all choices.
>Top 1% income earners are typically business founder-owners,
First, 1% in income puts you around $450K/yr... and that's usually household, so if two software engineers get married and move to the bay area, they have a reasonable shot of making that cut mid to late career. (from what I've seen, if they get a job at a big company and then talk that company into transferring them, they have a good shot at keeping that ridiculous income and living somewhere where it means something. They have less of a shot at getting the really sweet raises and bonuses at those other places, though.)
I know a bunch of people in that box. For that matter, most of them would argue they aren't rich at all. I remember the other day, one of my co-workers, who I am fairly certain meets the above standard, was claiming that in the bay area, this salary is not rich, "just normal" - I explained to him that the median household income in santa clara county was like $70K/yr, and he was aghast. "How would you even live on that?" and he has a point... I mean, I lived on less than that when I was running a company and living here, but yeah, rent is nuts to the point where I know several people who would be 1%ers if they married someone of their own income who live with roommates.
(I still have to laugh at people who are literal millionaires who claim they are "just normal." - but I kind of see their point; I don't make quite that much, but it's really pretty reasonable to think that if I worked a little harder that I could.)
>wealthiest in US society are entrepreneurs who again created their own business- not rentiers living off of inherited wealth.
See... it's very often not entirely one or the other. Would Bill Gates be super rich if his mom wasn't on the United Way board with the chairman of IBM? I mean, I'm not saying that Bill didn't do any of the work or that it was all inherited... I'm just saying that his parents handed him... certain advantages, and while I'm sure his intelligence and hard work would take him far no matter how poor he was born, if he started where most people start? while I'm sure he wouldn't stay poor, it's pretty unlikely that he would have gotten so rich that you or I would know his name today.
Nearly all those 1%ers I work with? they came from families that were at least dentist rich, and were sent to really good schools. Nearly all the folks on H1B visas I know are really sharp, very educated and have parents who are very politically connected, and rich for their country of origin (even if not always rich by US standards)
Hell, compared to most of my co-workers, I grew up poor, but even I had parents who worked in the computer industry. I got several jobs at critical points in my career through neighborhood and family connections. I know people who are just as good as me who didn't have those family connections early in their career, and several of them fell out of the industry entirely in 2001; me? I got a job a company started by someone who had interned for my father, many years ago, and I worked through the dot-com crash. I mean, clearly my connections were not good enough to get me a job I couldn't reasonably do, but it certainly got me the interview, at a time when such things were hard to come by, and probably gave me a leg up over the other applicants who could hurdle the minimum bar. (Incidentally, a few years later, I started my own company, and hired a few of those less connected but just as good as I am people... It didn't work out; Business is a lot harder than it looks, and I don't have those sorts of connections, but it was really interesting how I became technically bourgeois (and not in the poor taste in lawn furniture sense... I mean that I owned means of production and employed other people, combining my labor and capital to produce a product) but at the same time, my income dropped precipitously. Like i made rent, sure, but the total revenue was about a L6 bay area SWE total comp number, there were were other employees to pay, datacenter bills, and servers to buy. So when I sold out and got a regular job, it was like a 4x raise for me.)
"Within the same state or metropolitan area, inequality today is large and extreme, in part because of the continuing effects of racial discrimination"
What is the ratio of discrimination to starting from a historically disadvantaged (i.e. non-recompensed) position?
This article reads like a narrated census rather than a true insight into the problem.
I’m amazed the article didn’t mention the political correlation between the “big metros” and everywhere else. We know that increasingly “Blue America” is exclusively these major metros and “Red America” is everywhere else. But all these better outcomes are correlated to living in Red America, which they say is mostly due to affordable housing.
I don’t really know what to make of that, but it’s interesting to me.
The current city = Blue and rural = Red division is a relatively recent one; so across the timescale of people born in the 80s to now you'd have a lot of political shifts that would be hard to account for. Just look at the 1996 election results by county seems unimaginable now, but it wasn't that long ago. https://en.wikipedia.org/wiki/1996_United_States_presidentia...
That’s a good point I hadn’t really considered. You can still see the beginning of the trend toward today’s polarized map, but you’re right, over the span of time the article is covering that dichotomy is more recent.
If you are going to use the 1996 county map you need to factor out Perot. Louisiana for example is much bluer Parish by Parish in 1996 than any of the elections going back to 1980.
He was actually both (he ran again in '96). The second time around he still managed to get over 8% of the popular vote, which is pretty impressive [1].
This all speaks to a calcification of opportunity in the USA where coming from a good family background (with strong educational opportunities) means opportunities abound. If you come from a disadvantaged background, you are likely to stay there.
> They then pass those advantages onto their children, with parents placing a “glass floor” under their kids. They ensure they grow up in nice zip codes, provide social connections that make a difference when entering the labor force, help with internships, aid with tuition and home-buying, and schmooze with college admissions officers. All the while, they support policies and practices that protect their economic position and prevent poorer kids from climbing the income ladder: legacy admissions, the preferential tax treatment of investment income, 529 college savings plans, exclusionary zoning, occupational licensing, and restrictions on the immigration of white-collar professionals.
The belief system here makes me incredulous. How exactly does the average upper middle class worker support 'occupational licensing' and 'restrictions on the immigration of white-collar professionals'? Can you outline the exact steps that they've taken to, say, support occupational licensing? When did a pro-occupational licensing candidate run for office? The latter is especially ironic because so many people believe the opposite, that the US has supported the H1B and other visa programs to drive down programmer wages.
While I agree that superior education etc. absolutely helps the children of the upper middle class, the 'social connections' part is pure fantasy. The vast majority of regular people secure employment based on actual credentials and not 'connections', especially in tech
> The vast majority of regular people secure employment based on actual credentials and not 'connections', especially in tech
Is that really true? Anecdotally, I have been far, far more likely (perhaps 95% of the time vs <25% of the time) to secure an interview at a company when I get a referral from a current employee who I know socially than when I apply blind through some web application form.
I'd be very surprised to hear if you've had a different experience.
All of this is covered in Dream Horders (the linked book).
Occupational licensing is a weaker argument (it's not covered in Reeve's original nytimes article: https://www.nytimes.com/2017/06/10/opinion/sunday/stop-prete...), but there's something to be said for how expensive it is to get through medical or law school (in part due to licensing requirements).
I haven't read the book, but I imagine immigration and licensing connect. It's known to be difficult for foreign-trained doctors to ramp up in the US (https://www.pri.org/stories/2018-03-26/highly-trained-and-ed...) and lawyers have difficulties just changing states due to state-level bar exams.
I have no idea what 'globalism' means in this context, or what type of alternate reality could exist where foreigners would be polite enough to not, like, turn a wrench or run an assembly line for cheaper than Americans did in the 50s. We as a country don't have the option of 'choosing' an alternate economic reality where developing country wages aren't cheaper than ours
No, they're not. The top 1% are people who work "normal" high-paying jobs [1]. You're probably thinking a smaller slice like 0.1%. Also if you're going to claim that someone's work is debunked, at least point to some references to back that up.
[1] https://archive.nytimes.com/www.nytimes.com/packages/html/ne...
'Have the idle rich replaced the working rich at the top of the U.S. income distribution? Using tax data linking 11 million firms to their owners, this paper finds that entrepreneurs who actively manage their firms are key for top income inequality. Most top income is non-wage income, a primary source of which is private business profit. These profits accrue to working-age owners of closely-held, mid-market firms in skill-intensive industries.'
Without going into the extensive exaggerations, lies and data-fudging of Piketty- do you look at the Forbes 400 list of wealthiest Americans and see a lot of inherited wealth there? A lot of Rockefellers, Morgans, and Vanderbilts? It's a bit surprising, right, because if we accept r > g then Rockefellers/Morgans/Vanderbilts should own most of the US by compounding wealth starting over 100 years ago at this point....
And in fact we find the Forbes 400 is virtually all- self-made entrepreneurs who created their own wealth. If you find a Rockefeller there who's never worked a day in his life but is simply living on rentier income, please let me know. (As I mentioned in the original comment, one of the reasons Piketty's rentier fantasies don't work is that he doesn't gauge consumption- and I suspect idle wealthy inheritant-types who don't work burn cash at a greater rate than r)
- Among the top 1%, 69% earn pass-through business income in some form
- At the 99th percentile, business income only accounts for about 40% of total income
The majority of what is described in the abstract (and a lot of the focus in the paper) is on the 0.1%, not the 1%. If you dig through their data and filter out the clear focus on $1M+ earners, the picture is pretty clear: the 1% are mostly working people who supplement wage income with some kind of side business income. This is exactly what you would expect if you think about lawyers, doctors, software developers, consultants, etc. When you get near the 0.1% level the picture changes significantly and business income takes over along with number of employees at owned businesses.
> the 1% are mostly working people who supplement wage income with some kind of side business income. This is exactly what you would expect if you think about lawyers, doctors, software developers, consultants
This is.... not what I would expect, at all. If you told me my thesis was just wrong and that the 1% (not .1%) just made wage income, I could accept that. But- you think it's normal for highly paid professionals to work a self-employed side gig, and that's what tips them into that top percentile? Like, a Bain consultant is going out and doing some extra side consulting in her copious spare time outside of her 80 hour a week job? This seems bizarre & unlikely (I am just relying now on your interpretation of the paper).
Worth noting that high-earning doctors, lawyers, some developers can be self-employed, and so neither an employee or employer (especially for doctors I think that's the path to the highest income). Not sure how that factors in to the paper
Back to my main point - if you want to talk about business owners in the job-creating sense vs. income, it's important to distinguish between 1% and 0.1%. The latter is composed mostly of medium-size business owners (a good thing!), but the former is not.
Looking at top 40 (because it gets boring to look up bios after a while), I see the following folks who inherited companies founded by their family members: Charles Koch, David Koch, Jim Walton, Alice Walton, Robson Walton, Jacqueline Mars, John Mars, Abigail Johnson, Donald Bren, Lukas Walton, Leonard Lauder.
That is 11 out of top 40 (or 27.5%) have inherited their wealth. That is certainly a big fraction of billionaires who did nothing but win the birth lottery.
Economic divides are a strange concern anyway; I don't see how I am unfairly disadvantaged by someone else's obscene wealth through winning the birth lottery. The issues as I see them are (1) high inequality is often an indicator of corruption and (2) many cities won't build sufficient high-density housing for political reasons.
What exactly is Jim Walton consuming that should be given to the poor? He probably doesn't eat that much food, and I doubt he is competing for housing stock with people who are struggling to make rent.
I see 27.5% as too damn high to be among the richest in the world just based on birth lottery.
> I don't see how I am unfairly disadvantaged by someone else's obscene wealth through winning the birth lottery.
Wealthy people get disproportionate benefits in: legal system [1], healthcare [2], political influence [3]. I can go on, but there few examples are sufficient to see why someone should get these privileges just because of birth.
> What exactly is Jim Walton consuming that should be given to the poor?
Don't know about Waltons, but Koch brother are consuming their wealth to purchase political influence [4]. I would rather have it spent on poor.
[1] https://en.wikipedia.org/wiki/Peter_Thiel#Gawker_lawsuit
[2] https://www.nytimes.com/2017/06/03/business/economy/high-end...
[3] https://en.wikipedia.org/wiki/Dark_money
[4] https://en.wikipedia.org/wiki/Political_activities_of_the_Ko...
If r > g is true- why are the large majority self-made entrepreneurs? Wouldn't the compounding effect of inherited wealth make say the Rockefellers top the list by 2019? I couldn't find them in the top 100.
The broader point is to use actual data versus empty theorizing from first principles. While I don't personally agree with what you stated above, you're already miles ahead of Piketty by using real-world data that we have on wealthy families vs. extremely broad theorizing on stuff like 'r always exceeds g'
See where I'm going with this? I'll take arguments against r > g seriously when they account for institutional wealth instead of just personal wealth.
There are no Rockefellers on the board of the Rockefeller Foundation.
https://www.bloomberg.com/research/stocks/private/board.asp?...
One of the directors of the Ford Foundation is a Ford.
https://www.tfff.org/who-we-are/board-directors
None of the directors of the Carnegie Corporation are Carnegies.
https://www.carnegie.org/about/trustees-and-staff/
Two of the directors of the Hearst Foundation are Hearsts, of thirteen.
If these foundations are attempts to keep wealth in the family they’re utter failures. At the peak of his personal wealth Rockefeller was worth over 1% of US GDP. $4 billion is nothing compared to that.
He has.... pledged to give 99% away to charity by the end of his & Melinda's life? I don't think 'foundation' in this case means what you think it means. It's not a secret tax dodge to pass it on to their children indirectly, their heirs will get very little
It doesn't look like it refute's the OP's point that the top 1% of people sorted by income are wage earners.
The abstract seems to be talking about "top income' (i.e. sort people by income and fetch from highest to lowest until you have 1% of all income in the US), which is a different measure.
But hard to tell without the paper.
Big claim.
Actually, no, that's just an article diving into the contents of the book. I figured might be helpful in case people didn't want to read the full book.
Thomas Piketty's Capital in the 21st Century has been widely debated on theoretical grounds, yet continues to attract acclaim for its historically-infused data analysis. In this study we conduct a closer scrutiny of Piketty's empirics than has appeared thus far, focusing upon his treatment of the United States. We find evidence of pervasive errors of historical fact, opaque methodological choices, and the cherry-picking of sources to construct favorable patterns from ambiguous data. Additional evidence suggests that Piketty used a highly distortive data assumption from the Soviet Union to accentuate one of his main historical claims about global “capitalism” in the 20th century. Taken together, these problems suggest that Piketty’s highly praised and historically-driven empirical work may actually be one of the book’s greatest weaknesses.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2543012
How Different Studies Measure Income Inequality in the US Piketty and Company Are Not the Only Game in Town
...
The results from at least four studies were compared for three measures of income change: change in median incomes, share of growth captured by the top 10 percent, and the changing income share of the top 1 percent. In all cases, Piketty and Saez (2003) were the outlier, showing the most increased inequality. And in all three measures of income change, Piketty, Saez, and Zucman (2018) found much less growth in income inequality than Piketty and Saez (2003). This brief does a meta-analysis of different findings to estimate a “consensus” level of change. Applying Canberra Group (2001, 2011) recommendations, I find that instead of stagnating, real median incomes grew by just over 40 percent (1 percent a year) from 1979 to 2014; the top 10 percent of the income ladder captured 45 percent of income growth from 1979 to 2014; and the share of the top 1 percent grew 3.5 percentage points. All studies find that income inequality rose after 1979, but common perceptions that all income gain went to the top 10 percent and middle class incomes stagnated (or even declined) are wrong.
https://www.urban.org/sites/default/files/publication/99455/...
I sense you're implying a meaningful comparison there. Why is being an entrepreneur better (or indeed, distinct at all) from being a landlord?
>what type of alternate reality could exist where foreigners would be polite enough to not, like, turn a wrench or run an assembly line for cheaper than Americans did in the 50s. We as a country don't have the option of 'choosing' an alternate economic reality where developing country wages aren't cheaper than ours
the illusion of non-choice on this issue began when bill buckley reformed the right wing into free-traders. we could vote to not let foreigners in to our country and to establish high tariffs on foreign goods. we choose not to. not saying whether that's right or wrong. just saying it is a choice.
Even with the highest tariffs in the world, manufacturers would still have left for cheaper labor elsewhere in a globalized world. Economic reality is not a choice
There has always been differences in markets. It's the low cost (and ease) of shipping / transportation that changed everything.
Tariffs, especially combined with the usually underestimated coordination expense of managing supply chains across continents, can make cheaper not cheaper.
>Economic reality is not a choice
It is completely a choice. Unfettered trade, globalism and the Washington Consensus were all choices.
First, 1% in income puts you around $450K/yr... and that's usually household, so if two software engineers get married and move to the bay area, they have a reasonable shot of making that cut mid to late career. (from what I've seen, if they get a job at a big company and then talk that company into transferring them, they have a good shot at keeping that ridiculous income and living somewhere where it means something. They have less of a shot at getting the really sweet raises and bonuses at those other places, though.)
I know a bunch of people in that box. For that matter, most of them would argue they aren't rich at all. I remember the other day, one of my co-workers, who I am fairly certain meets the above standard, was claiming that in the bay area, this salary is not rich, "just normal" - I explained to him that the median household income in santa clara county was like $70K/yr, and he was aghast. "How would you even live on that?" and he has a point... I mean, I lived on less than that when I was running a company and living here, but yeah, rent is nuts to the point where I know several people who would be 1%ers if they married someone of their own income who live with roommates.
(I still have to laugh at people who are literal millionaires who claim they are "just normal." - but I kind of see their point; I don't make quite that much, but it's really pretty reasonable to think that if I worked a little harder that I could.)
>wealthiest in US society are entrepreneurs who again created their own business- not rentiers living off of inherited wealth.
See... it's very often not entirely one or the other. Would Bill Gates be super rich if his mom wasn't on the United Way board with the chairman of IBM? I mean, I'm not saying that Bill didn't do any of the work or that it was all inherited... I'm just saying that his parents handed him... certain advantages, and while I'm sure his intelligence and hard work would take him far no matter how poor he was born, if he started where most people start? while I'm sure he wouldn't stay poor, it's pretty unlikely that he would have gotten so rich that you or I would know his name today.
Nearly all those 1%ers I work with? they came from families that were at least dentist rich, and were sent to really good schools. Nearly all the folks on H1B visas I know are really sharp, very educated and have parents who are very politically connected, and rich for their country of origin (even if not always rich by US standards)
Hell, compared to most of my co-workers, I grew up poor, but even I had parents who worked in the computer industry. I got several jobs at critical points in my career through neighborhood and family connections. I know people who are just as good as me who didn't have those family connections early in their career, and several of them fell out of the industry entirely in 2001; me? I got a job a company started by someone who had interned for my father, many years ago, and I worked through the dot-com crash. I mean, clearly my connections were not good enough to get me a job I couldn't reasonably do, but it certainly got me the interview, at a time when such things were hard to come by, and probably gave me a leg up over the other applicants who could hurdle the minimum bar. (Incidentally, a few years later, I started my own company, and hired a few of those less connected but just as good as I am people... It didn't work out; Business is a lot harder than it looks, and I don't have those sorts of connections, but it was really interesting how I became technically bourgeois (and not in the poor taste in lawn furniture sense... I mean that I owned means of production and employed other people, combining my labor and capital to produce a product) but at the same time, my income dropped precipitously. Like i made rent, sure, but the total revenue was about a L6 bay area SWE total comp number, there were were other employees to pay, datacenter bills, and servers to buy. So when I sold out and got a regular job, it was like a 4x raise for me.)
Those days never existed. The US offered opportunities, not guarantees.
What is the ratio of discrimination to starting from a historically disadvantaged (i.e. non-recompensed) position?
This article reads like a narrated census rather than a true insight into the problem.
I don’t really know what to make of that, but it’s interesting to me.
[1] https://en.wikipedia.org/wiki/1996_United_States_presidentia...
(I agree, it seems unthinkable today.)
This is essentially meritocratic feudalism.
> They then pass those advantages onto their children, with parents placing a “glass floor” under their kids. They ensure they grow up in nice zip codes, provide social connections that make a difference when entering the labor force, help with internships, aid with tuition and home-buying, and schmooze with college admissions officers. All the while, they support policies and practices that protect their economic position and prevent poorer kids from climbing the income ladder: legacy admissions, the preferential tax treatment of investment income, 529 college savings plans, exclusionary zoning, occupational licensing, and restrictions on the immigration of white-collar professionals.
While I agree that superior education etc. absolutely helps the children of the upper middle class, the 'social connections' part is pure fantasy. The vast majority of regular people secure employment based on actual credentials and not 'connections', especially in tech
Is that really true? Anecdotally, I have been far, far more likely (perhaps 95% of the time vs <25% of the time) to secure an interview at a company when I get a referral from a current employee who I know socially than when I apply blind through some web application form.
I'd be very surprised to hear if you've had a different experience.
Occupational licensing is a weaker argument (it's not covered in Reeve's original nytimes article: https://www.nytimes.com/2017/06/10/opinion/sunday/stop-prete...), but there's something to be said for how expensive it is to get through medical or law school (in part due to licensing requirements).
I haven't read the book, but I imagine immigration and licensing connect. It's known to be difficult for foreign-trained doctors to ramp up in the US (https://www.pri.org/stories/2018-03-26/highly-trained-and-ed...) and lawyers have difficulties just changing states due to state-level bar exams.
Poverty today is closely linked with housing prices. If your housing is too expensive, it’s up to fix it (looking at you California).