The Geography of U.S. Inequality

http://www.nytimes.com/interactive/2016/09/06/upshot/up-geo-inequality.html

by martgnz • 10 years ago

90 74 10 years ago

anovikov7• 10 years ago

If the per capita GDP of U.S. grew by 12.4%, how it happened that all classes of society were worse off in 2014 than in 2000? I don't trust that chart at all.

Bahamut• 10 years ago

Excepting the very rich is what the point of the article is I believe.

sprafa• 10 years ago

The growth of economic indexes is meaningless. The gains are going massively onto the people who already own capital. That's the engine of inequality.

Also... You don't "trust" that chart? You can probably calculate it yourself if you want. That chart is data. If you have any reasonable arguments against the accuracy of that data Id love to hear it.

yummyfajitas7• 10 years ago

Not trusting a chart because it's numbers seem to contradict other numbers is perfectly valid and reasonable. Your comment about gains going to people who own capital (who, incidentally, are primarily middle class homeowners) is not a refutation of it. In fact, it's completely irrelevant.

A refutation would be explaining why GDP and income don't necessarily correlate, which is more a matter of accounting identities. Specifically, GDP != income, income is merely one component of it.

fumplethumb3• 10 years ago

The gains are going massively onto the people who already own capital. That's the engine of inequality.

This is a main point in Capital in the 21st Century by Thomas Piketty. He explains the capital/income ratio and its effects on the economy. Decent write up here: http://www.robertdkirkby.com/blog/2015/summary-of-piketty-i/

throwanem• 10 years ago

That chart is data.

No chart is ever data. A chart, like the result of an SQL query, is a projection via analysis. The analysis may be trivial, or it may not. You can hide a lot in non-trivial analysis if you want to. I don't say that the NYT did so here (and I don't say that it didn't), but it's hard to have any kind of productive discussion when something this basic is overlooked.

anovikov7• 10 years ago

OK, so what? That is still income isn't it?

fumplethumb3• 10 years ago

If the per capita GDP of U.S. grew by 12.4%

Where did you get that number? No way that's right. Here are the numbers from the Fed: https://fred.stlouisfed.org/series/A191RP1Q027SBEA

Annual per capita GDP growth never exceeded 7% from 2000-2014.

yummyfajitas7• 10 years ago

Wrong series. This is the right one:

https://fred.stlouisfed.org/series/A939RX0Q048SBEA

Real GDP/capita = $43,935 in Q1 2000, $50,549 in Q4 2014. That's 15% growth.

Your own numbers don't disagree with this if you integrate them and divide by population.

wavefunction2• 10 years ago

All the gains went to the richest in this country.

The middle class in America shrank considerably following 2009.

LizardLarry3• 10 years ago

Numbers of this sort are usually fucking worthless because of the manipulation applied to them in accordance with political goals.

Forget the government figures and look at the market. Sure you might make a buck more an hour but the price of meat has doubled (roughly) in the past five years.

But the curious thing is we live in an era where being poor isn't as fucking horrible as it was in the past. While homeless I was able to have a smartphone, a laptop, and a couple of things of liquid nicotine. That's a sanity keeping pack right there.

I don't care if the rich guy can order custom-made marbelized sculpted horse anuses, my quality of life as a homeless man was increased precisely because rich men were assholes enough to create products general and well-built enough for many environments.

The problem of course is the almost never-ending stream of propoganda which tells people to eat sub-standard food and adopt sub-standard lifestyles. You stuff a population full of terrible diets, little personal physicality, and constant dopaminergic stimulation...

Well I suppose if I were a rich man I'd be chuckling at the peons who are literally segregating themselves physically as a separate species. It'd make breeding and consolidation a bit easier if you could tell a peon visually by their body fat ratio.

mwfunk• 10 years ago

If I were addicted to nicotine I wouldn't be quite so smug about people eating junk food.

Shivetya• 10 years ago

except I don't see how the NYTimes can bend these numbers to serve their party of choice.

being poor in a developed country has rarely been bad and its hard for many to realize that is true. as for the price of meat the government intervention in grain pricing with regards to pushing ethanol and similar didn't help that.

the rich can weather a bad storm better than the poor but only if they are properly diversified and not relying on the boom to keep them there

mempko• 10 years ago

Except you are wrong about them creating the Technology. Most of the tech you mentioned was created in the public sector and then handed over to the private.

Same public sector could have provided you a home. You could have had a smartphone, a laptop, AND a roof.

But those smug rich assholes don't make money off that, so therefore you don't have it. You only have the droppings of gov research after it was privatized.

albertsun• 10 years ago

GDP growth and income growth are not equivalent - for example, corporate profits that aren't distributed would count towards GDP but not towards individual incomes.

alanwatts• 10 years ago

GDP != quality of life or standard of living

tuna-piano3• 10 years ago

One reason could be that they are using average household income - which is also affected by marriage rates.

ionised• 10 years ago

GDP is a piss poor way of measuring the prosperity of a nation across all of its people.

It's heavily skewed towards the richest in society, and yet people keep harping on about GDP increases in all of these questionable free-trade agreements we keep hearing about.

Increased GDP should not be a reason for adopting anything.

PopsiclePete2• 10 years ago

GDP is a horrible measure of prosperity. If one giant corporation exchanged 2 trillion dollars with of goods with another giant corporation in some way, you'd see an uptick in GDP. Doesn't mean that 99.9999999999999% of people ever saw any change.

anovikov7• 10 years ago

That especially looks incredible (if not outright impossible) that since 1990 to 2014, real GDP per capita in the U.S. has increased by 39.8%. And the chart somehow implies that average income remains approximately unchanged.

There must be something distorting that chart, like: it is a chart of household income dynamics, and the average size of household has decreased.

readhn2• 10 years ago

Rich getting richer and poor getting poorer. This is ultimately the goal of the modern capitalist system.

We can talk all we want but we are all disposable material, unless we own the business we work for.

How many people in this country ( middle class included) are 3-6 months away from being on the street if job suddenly disappeared?

tuna-piano3• 10 years ago

A - The "capitalist system", much like evolution, does not have goals. Capitalism is just people trading with each other. The USA has had a similar system for hundreds of years, where the rich have gotten richer, but the poor have also gotten richer. So blaming capitalism itself is not a good answer. What has changed within capitalism to make the results from 1776 - 1990 different from 1990 - 2014? Either this is just a temporary decrease for the bottom percentiles, or there are other factors that have caused this shift (globalization, technology, government policies, personal choices, etc).

B - Do you really want to own the business you work for? If you work at a chocolate factory, and own the chocolate factory - your entire livelyhood is tied to that chocolate factory. If the company goes under, you lose your job and your savings. Wouldn't you rather own bits and pieces of many other companies, to share in their success?

But regardless, I believe your point is that it sucks not having savings / capital. Obviously true - but how do you propose people get savings / capital? Confiscate capital from the rich to give to the poor?

natrius• 10 years ago

Capitalism is not just people trading with each other. We invented lots of legal fictions to get where we are today, and they're pretty effective. For instance, if you contribute your capital to a corporation, you'll be rewarded with an agreed upon portion of the corporations dividends. It looks like the company is rewarding you, but it's really society. We create and enforce rules like these—private property, limited liability, etc.—because they make us more prosperous. But they're artificial. They're not laws of nature. They can have flaws.

RobertoG• 10 years ago

'The "capitalist system", much like evolution, does not have goals'

That's true. Markets are just feedback mechanisms. Like a thermostat. It's politics and public discourse what decide what the temperature in the room should be.

You say that we should try to know what have changed within capitalism but I think that the answer is that nothing have changed.

The times we are living have a lot of similarity to the 20's and 30's and they are the opposite of the age from the end of the Second World War to the 70's when the pendulum swung to the other side.

It's just the old history of capital vs. labour, everyone of them in one side of the rope, the rope being the government.

I suppose that automation of mental work is what could make this time different.

czep• 10 years ago

If you work at a chocolate factory, and own the chocolate factory - your entire livelyhood is tied to that chocolate factory. If the company goes under, you lose your job and your savings.

Not true. Owners risk no personal stake because of incorporation. The company can go bankrupt and their personal wealth will not be touched. Just take a look at Hanjin. The firm can't pay it's employees but their kids are still driving around in MacLarens.

PopsiclePete2• 10 years ago

What changed? I believe technology changed. Instant information exchange. Selling/buying globally with no barriers. I believe technology is changing too quickly for our system to even be able to adapt. Look at the Financial sector, for example. High-frequency trading, "insurable securities", by the time we create new laws and regulations, they've thought of 4 new ways to make money that avoid those regulations. And who is the winner from all that? Certainly not the 99.9%.

Same with the IT sector or BioMed or any other "knowledge economy" sector - we're doing great. Problem is, we need to figure out how to make the wealth really start trickling down, or we're in for rough times.

Trump and the angry pitchfork mobs are real, today, and they're pissed. The Tea Party, the Occupy movement, Brexiters, Trump supports - all feeling left behind and abandoned and betrayed and pretty angry. I sincerely hope we figure something out quick.

readhn2• 10 years ago

A. Capitalism by definition leads to concentration of wealth in hands of a few. That to me is the unwritten goal of the system. Historically wealth always consentrated in capitalistic societies.

B. Yes, if you work at a chocolate factory and at the same time own part of it you will enjoy both its success and its failure. Co-ownership and sharing both outcomes is what we don't have at most work places today.

No, I'm against this socialist/communist extreme where you take money from the rich. I am for creating mechanisms and tools that allow entire society to prosper and better itself. The way we educate people, the way we run businesses and governments is all messed up today. It simply needs to change.

clavalle6• 10 years ago

"In addition to wages, the census includes dividends, rental income and cash benefits (like Temporary Assistance for Needy Families and unemployment benefits). But it excludes noncash benefits like food stamps (which benefit the poor) and capital gains (which tend to benefit the rich)."

This is really a strange way to look at it. It is comparing the 'rich' middle class to the rest of the middle class and ignoring the extremes.

Whenever a great profit is being made, basic theory says that the market should work to push things back to normal. When that doesn't happen it is an indicator that something is off-kilter.

So, what is off-kilter here? What occupations are at the tip of the elephant's trunk? Why aren't the people riding the elephant's back pushing into that part of the market? Is it an education problem? A capital allocation problem? Regulatory capture? This is the question that needs answering.

rayiner2• 10 years ago

You're confusing two different things. Theories of markets say that in the long term competition will drive profits in any given industry to a nominal level. They don't say that the people who already have capital won't be able to use that capital to keep riding the wave of large profits in industries before they hit equilibrium.

clavalle6• 10 years ago

The only think I'm confused about is what 'long term' means.

Seems like this has been trending since at least the 80's.

How long does/should the wave of large profits last until we recognize it as a symptom of a problem?

yummyfajitas7• 10 years ago

Actually it's you who is confused. The return on capital is currently very low in most sectors, and people who have capital have no particular ability to keep profits high.

Income inequality is primarily about two things: earned income and capital gains from housing wealth. The latter is a non-competitive market due mainly to NIMBYs keeping supply artificially low.

yummyfajitas7• 10 years ago

It's not profits that will drop to zero, it's economic profits. That includes implicit costs, which are excluded by accounting profits.

http://www.investopedia.com/ask/answers/033015/what-differen...

Of course, this is irrelevant to a graph of market income. Market income simply reflects how scarce certain skillsets are, income is not profit.

The answer of why people aren't riding the elephants back onto the trunk might simply be because they can't - the implicit costs are too high. For example, suppose I gave you $1M to spend. Could you turn a nurse into a top trader, managing a $50M book? What if I gave you $2M?

One very interesting theory about why this increase is happening now is the headhunter theory: historically, oligopolistic corporations were keeping pay down for the highest productivity employees. Now, as the market has become more competitive, executives/traders/high end developers/etc are better able to capture a larger piece of their true economic value.

https://editorialexpress.com/cgi-bin/conference/download.cgi...

clavalle6• 10 years ago

Can income be considered a type of profit in this context?

I'm not an expert, but at first blush the term 'implicit costs' seems to be so much handwaving. I'm sure there is something concrete there somewhere but to just say 'Well these top earners naturally far outstrip other people and maintain that position over long periods of time without anyone jumping onto their boat because of implicit costs' seems a bit too magical to be useful.

jackcosgrove• 10 years ago

So, what is off-kilter here?

Unfortunately, at least in the software industry, not everyone can do the work. There is a barrier to entry that may be grounded in innate ability and is exacerbated by educational inequality. As evidence of the former, I would point to all of the first-year engineering students who drop their major because they struggle with the work. These people have same educational opportunities at the collegiate levels as those who don't drop. There may be inequalities with primary and secondary educational opportunities that follow a student into college, but this is not the problem in all cases.

In the terminology of Michael Porter, this is an almost perfect moat: it limits barrier to entry, it's widely accepted by those who must pay higher prices as a result, and it costs little to enforce. Contrast the latter point with medical careers, whose practitioners must pay much in time and money to dig an institutional moat that prevents competitors from entering their employment market.

If software is indeed eating the world, this problem will only get worse.

tuna-piano3• 10 years ago

Some other charts to explore this stuff. But man, economic statistics are hard - a lot of the fine print can really affect the results (household vs individual income, labor force participation, etc):

Filter by years to see growth: http://stateofworkingamerica.org/who-gains/#/?start=1995&end...

Job growth by job type: http://www.nytimes.com/interactive/2014/06/05/upshot/how-the...

Income by demographic: http://www.nytimes.com/interactive/2015/01/25/upshot/shrinki...

Percentile income distribution: http://blogs.wsj.com/economics/2016/07/01/the-99-got-a-raise...

astazangasta5• 10 years ago

Can we talk about what a fucking terrible visualization the elephant chart is? We often note how useless "fastest growing" is, because it is easy to get large changes when you have a small denominator. So income can grow worldwide for the bottom by 100% and only add a few dollars to their wealth. Meanwhile the top 1℅ might add 25% to their income at millions of dollars.

This is a chart designed to make us feel good about poor people getting a pittance. Meanwhile the top 100 people in the world have more wealth than the bottom fifty percent. We need growth of tens of thousands of percent at the bottom for decades to move forward.

vslira• 10 years ago

Marginal utility of money decreases, which means these "pennies" at the hands of literally billions of poor make a whole world of difference to them.

The American Middle Class has the right to be angry about their stagnation, but it's undeniable that the world is better for most people if you compare it to the 90's and early 00's.

astazangasta5• 10 years ago

However, my point is that those "pennies" could easily have been "dollars" instead at the cost of a fraction of the top of the income distribution, and this graph is celebrating "pennies" for the poor as a victory and masking millions or billions flowing to the wealthiest.

Hondor2• 10 years ago

What harm is there in the richest people being richer? If they hoard their money, they're temporarily increasing the value of everyone else's. If they spend it, they're trickling it back down to the poor.

astazangasta5• 10 years ago

Easy: they appropriate a greater portion of humanity's productivity towards themselves. Wealth is power, the ability to express desire and recruit human effort to its fulfillment. When the rich have all the money, the poor cannot express their own desires and end up just working to satisfy the ends of the rich.

harryh2• 10 years ago

Someone living on $2/day (the generally accepted figure for extreme poverty) is living on about $730 per year. A single year of 10,000% growth would get that person to an annual income of $73,000 which would be well into the global 1%.

Annual growth of 10,000% for even a single decade would give that person an annual income of:

$73,000,000,000,000,000,000,000

That's 73 sextillion dollars. For reference Gross World Product is around 100 trillion.

I think you're setting the bar a little high!

astazangasta5• 10 years ago

Yeah, I didn't think that out very carefully, obviously exponential growth at any substantial rate would have that kind of effect. The perils of composing text in the loo. My main point still stands, though...

Bartweiss2• 10 years ago

I mean, I think it's informative even if percentage results are misleading in some ways. In particular, it's relevant because growth is a good representation of status relative to local prices.

If I remember, a tantalum miner in the DR Congo makes several dollars a day - a bit above the $2/day threshold, but then you have to correct for extortion/pay-to-work. In those Congo mining towns, buying a hot dinner costs around $0.05.

So for those miners, seeing your income double is a hell of a big deal, even if it's only to $4/day. Getting $10/hour wouldn't be a big raise, it would be bizarre hyperinflation.

To be clear, I don't think this means $4/day is a good outcome. Even with low local prices, it's still a pittance and the people getting it are living horribly in global terms. I share your annoyance with "extreme poverty is being eradicated!" stories, because they imply movement to a good position, rather than a less atrocious one.

But for the sake of analysis like this, I think percentage change is still a useful way to go. Raw dollars just means that everything at the bottom is effectively zero, while growth reveals interesting effects like the 5th percentile seeing near-zero gain while the 10th sees real growth.

ap22213• 10 years ago

I find these type of posts on HN to be curious things. Clearly, there's lots of interest in the subject and desire to change things. And, most HN readers are highly educated and many are even high-income (i.e. have position to affect real change). But, I never see posts advertising ways to take real action.

I love you guys, but making your cohorts know that you're aware and sympathetic of the cause only feels good. Let's see some posts that help organize and activate. Let's set some achievable, tangible goals and do something.

Bartweiss2• 10 years ago

I can appreciate the general sentiment, but at least for this post specifically I'm not sure I agree.

The subtle aspects of these two charts are really interesting. Like, the only non-rich group to see income gains in the US is the ~15th percentile group? That's striking, and deserves some consideration. (At a guess, EITC and Clinton's work-for-benefits programs have helped the employed-near-minimum-wage cohort, but not the very poor.) The 2000-2014 numbers are similarly interesting - we see that the ~90th percentile (e.g. surgeons) was insulated from the crash better than the middle class or the very rich, but that the very rich have rebounded completely.

So yes, signaling is different from actual action, but I'm filing this one under 'education'. For me at least, I'm interested more by the subtleties than by the basic restatement of "this is an issue".

plandis• 10 years ago

I feel like I am educated and fairly high income (will clear $200k this year) but I honestly feel like I have no way to affect change.

Contacting representatives yields nothing but form responses, protesting has had no real effect. Volunteer work and charitable donations are about all I seem to be able to do and that's not on any appreciable scale.

I honestly feel like I have no way to cause anyone to make changes outside of voting. Which, to be honest even when I vote I feel like my voice is not heard.

protomyth• 10 years ago

"In North Dakota, in the heart of shale mining country, it made everyone richer."

Well, mostly on the western side of the state, but that was the poorer side to begin with. It did make for some problems with some folks on fixed incomes.

Klockan3• 10 years ago

Income inequality will continue to grow as technology lets us produce tremendous amounts of value with comparably small amounts of employees. Said value is often not accounted for in graphs like these so we can't really know if people are better off today than 20 years ago. I mean, would you rather live today with cheap internet, awesome computer and more free content on the internet than you can ever consume or would you want to live without those things with 10% higher inflation adjusted wage 20 years ago? I know what I would choose, hence I would say that the middle class has gained a lot.

The nice things about those things is that they are wealth agnostic as well. Bill Gates doesn't have better internet than me, nor does he have a better personal computer, better youtube, better facebook, better internet search etc. All of those are extremely valuable and are spread evenly between almost everyone in the west.

dsfyu404ed• 10 years ago

Well, the glass half full is that California's drought will soon be fixed by the tears of everyone in SV who's upset that, despite all their, intelligence, big data and economic prodding by the government, the middle class in those "backwards, flyover states" did better.

On a more serious note, the pattern I saw here was coastline = bad.

The Geography of U.S. Inequality

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