The Millennials are the real “Greatest Generation.” (reluctantly acknowledged by a grouchy aging boomer)

Most readers will want to skip this post.

One of my great frustrations is that I am frequently misunderstood by commenters.  It’s my own fault—I try to say EXACTLY what I mean.  The prisoners in the Soviet “gulags” had enjoyable days. I really believe that.  Seriously.  But almost any other human who said something like that would have an ulterior motive.  “Communism wasn’t as bad as many people think.”  In contrast, I really believe the gulag inmates had numerous enjoyable days, and I also believe communism was far worse than even Ronald Reagan believed.  No wonder I’m always misunderstood.

A few comments on the recent comments:

I don’t think young people are lazy.  I’m glad America today is much richer than in the 1970s. I’m glad the dorms are much nicer.  I’m glad teens don’t have to work as hard, and can have more fun.  I wish I hadn’t had to work as hard when I was 15.

The current generation of young people seems like the best ever.  Simply removing lead from gasoline boosted IQs by 6 points.  My generation had their brains addled by breathing in lots of lead, and I made it much worse by playing with lead.  Hacking off chunks from a big sheet of construction debris, melting it down to make soldiers.  Even worse, the sheets of lead had paint all over them, and it might have been lead paint!  Seriously, as a teacher I can see the improvement in students, even since the 1990s.

Go back another generation before me to the “Greatest Generation.”  My dad was 5 inches shorter than me, and he told me that he was the tallest kid in his class. WWII was won by a bunch of nutritionally-deprived midgets, many of which couldn’t read or write.  My dad occasionally wrote letters home for them. (In making these generalizations I exclude my 88 year old mom, who is still 5 foot 9! And my 89 year old stepfather, who showed more bravery in Okinawa than I’ve shown in my entire life.)

Of course the “Greatest Generation” that won WWII really was the greatest ever at the time. Generations like the Italians of 1500-1525 were so far inferior that it’s an act of generosity to even consider them human.  And let’s not even talk about Periclean Athens.  (OK, I guess I don’t always say EXACTLY what I mean.)

Now about those comments:

Finally, people have been grousing about college students for over a century. That means you are officially a grumpy old man. Sorry.

I am a grumpy old man, but one of the few I know that doesn’t look down on younger people. (Unless they are on my lawn.)

And from another:

You are basically saying the middle class should be happy because they have a higher standard of living than their parents. You don’t believe that that is the relevant point of reference, rather than peers at the top of the income scale. Why? Is your belief self serving?

These comments are so vague it’s hard to know how to respond.  I don’t think anyone “should be happy.”  I’d like it if everyone was happy.  I don’t believe middle class people should worry about their “peers” with more money.  I do believe middle class people should worry about their peers with less money—the poor.  That should be their “point of reference.”

I guess you either care about equality or you don’t. I can imagine your response: “those at the top have *earned* their wealth”. I guess you believe it is fairest to distribute income in exact proportion to people’s ability to produce.

I recently did a post arguing exactly the opposite—that people at the top don’t deserve their wealth. I would add that I also don’t believe that rich people (like Robin Williams) deserve their suffering from depression. I’m a utilitarian, and there is no “deserve” in utilitarianism.

Inequality makes people unhappy. If it has been rising, that raises the probability that doing something about it would increase aggregate utility, no?

If inequality were increasing, then that would make it more likely that redistributive policies could raise aggregate utility.  But remember, if you are going to make a “happiness” argument you need to use consumption (not income) data, and it’s not at all clear that consumption inequality is increasing.

Some on the left mock the “technology” argument for improved living standards. “Let them eat cell phones.”  But that’s exactly the point—revealed preference. Peasants in low income countries will buy cell phones before they can afford TVs, or indoor plumbing, or even “health insurance.”  (HT: Morgan.)

A third commenter:

I am having some difficulty understanding your exact stance here. Your post seems to involve a lot of hand-wringing, essentially stating that the American middle class is not your concern, should not be anyone’s concern, and certainly any problems it has have been self-inflicted (laziness).

I’ve addressed the “laziness” charge.  Is the American middle class “my concern?” I don’t even know what that means.  Is Robin Williams “my concern?”  Are the Yazidis being massacred in Iraq “my concern?”  All I can say is that I favor public policies that maximize aggregate happiness.  I want people to be as happy as possible.  I favor lots of public policies that I believe would help the American middle class.  But I don’t believe global utility can be improved by transferring bags of money to the American middle class from other groups.  Nor will it make them significantly more “happy.” Something is a “problem” if there are policy counterfactuals that address it while boosting aggregate utility.  If not, then focus your “concern” on something else.

Here’s what I read yesterday morning:

U.S. jobs pay an average 23% less today than they did before the 2008 recession, according to a new report released on Monday by the United States Conference of Mayors.

So I decided to check the actual data.  Average hourly earnings have risen from $21.63 in July 2008 to $24.44 today, that’s up 13%.  And PCE price index has risen from 219.016 in July 2008 to 237.693 today. That’s up 8.5%.  Everyone needs to take a deep breath; the “American middle class” will be fine.

And just so I’m not misunderstood, let me remind readers that I’ve spent the last 6 years of my life pushing for policies that would boost the incomes of the middle class by creating more jobs.  I hope actions speak louder than words “concern.” But I’m willing to furrow my brow if that will help.

PS.  Speaking of misreading me, who can forget Noah Smith:

What’s also interesting is how mad people get when their friends get called “stupid.” Kotlikoff is mad at Krugman for calling his pal Paul Ryan stupid (whether or not Krugman actually did this is beside the point). I guess it’s good to feel protective of one’s friends. But as a politician, doesn’t Ryan take much worse abuse on a daily basis from hundreds or even thousands of people? Compared to what Ryan gets in the political sphere, Krugman’s disses must seem like pretty weak tea.

In the end, I think people overreact to the “stupid” insult because, as a society, we use arguments the wrong way. 

Yes, let’s not overreact.  Why would someone feel “protective” when their friends are called “stupid?”  And yes, does it really matter if the charge is true?  No, that’s “beside the point.”

PS.  Please don’t write comments saying that some kids still live in houses with lead paint.  I know that, one of them is my daughter.

PPS.  The grumpy old reactionary in me liked this Kevin Erdmann post:

Again, thinking of Jane Austen characters, or even of people in many pre-capitalist societies today, for peasants, human capital would be largely unattainable or pointless.  For the landed elite, it would be insulting.  Traders and commercial innovators – producers – became tolerable, and capitalism was the result.

Because of the capitalist revolution, not only is being personally productive tolerated today, but we would find it incomprehensible to imagine it another way.  In fact, we are concerned about it!  We say: It’s not fair that rich kids get the opportunity to be more productive!  Today, high income workers work longer hours than low income workers.  Imagine the look of confusion you might get from a pre-capitalist gentleman if you told him that in your society, the poor work fewer hours than the rich and the government is implementing school lunch programs to make sure poor kids don’t ingest too many calories.  He wouldn’t just have a hard time understanding how that could be.  Those words literally could not form that sentence.  You might as well speak martian to him.  Don’t even try to explain to him that you’re outraged by how the richest kids have an advantage in attaining productive employment.  He’ll think you’re crazy before you even get to that.

PPPS.  About the gulags.  I recall one interview where the description of life by a former inmate was so horrific it seemed almost unreal.  At the end they said some thing to the effect; “not that there weren’t some fun days, when we sang and danced and joked around.” It’s all about your happiness thermostat set point.


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61 Responses to “The Millennials are the real “Greatest Generation.” (reluctantly acknowledged by a grouchy aging boomer)”

  1. Gravatar of Brian Donohue Brian Donohue
    13. August 2014 at 06:16

    I get you. And I like you. And I don’t like a lot of Baby Boomers. Keep on truckin’.

    If you haven’t, you should read One Day in the Life of Ivan Denisovich.

  2. Gravatar of ant1900 ant1900
    13. August 2014 at 06:20

    Tremendous post. Bookmarked for posterity.

  3. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    13. August 2014 at 06:33

    As Thomas Sowell says, the most important question for an economist is, ‘Compared to what?’

    Also, Eric Falkenstein surfaces with his review of Piketty;

    http://falkenblog.blogspot.com/2014/07/pikettys-terrifying-dystopia_27.html

    Apropos the Greatest Generation; ‘…(it seems people can no better imagine their grandparents sheltering income than having sex, another generational conceit).’

  4. Gravatar of honeyoak honeyoak
    13. August 2014 at 06:58

    Like you I (a millennial) am in awe of what my midget of a grandfather did during 1930-1945. Him and my grandmother (who survived the Blitz) are more foreign to me than immigrant Pakistanis who speak little English and have elaborate weddings.

  5. Gravatar of Doug M Doug M
    13. August 2014 at 07:20

    In the income in equality story, the arguement is that we are returning toward a 18th century wealth distribution.

    In the 18th (and though the 19th century) it was standard for a wealthy person to have a staff of dozens of maids, cooks, laundresses, valets, housekeepers, gardeners, stable masters, etc. Dozens of people whose sole function is to support the luxury of the one person, or one family. Note, we are not counting the 100s who are paying rents and driving the aristocrat’s income, just those who are is servants.

    That was income inequality! No matter where the numbers go, I can not see that we ever return to a world where it is standard for the “0.1% ers” to demand that level of resources to support their concept of luxury.

  6. Gravatar of Peter K. Peter K.
    13. August 2014 at 07:40

    As a Gen-Xer I’ve found the Millennials I’ve worked with and known to be great. They’re hard-working, courteous and fun.

    But I just disagree with you and Erdmann. Increasing inequality is distorting politics such that conservatives will reject rational policy like NGDP path level targetting. So you’ll get shocks and falls in NGDP which invite government intervention in the economy. 2008 gave us the Obama stimulus, Dodd-Frank and Obamacare.

    Polls of millennials say they are more pro-government than previous generatoins. It’s probably because they have witnessed private sector failure first hand and the Reagan/Kuznets story isn’t panning out for them.

    http://nymag.com/daily/intelligencer/2014/08/how-libertarians-snookered-the-times-magazine.html

  7. Gravatar of Paul Zrimsek Paul Zrimsek
    13. August 2014 at 08:07

    While it’s certainly cretinous of conservatives to insist on refighting the Carter-era inflation wars, I don’t see how inequality is contributing to that. I find it simpler to assume that they do it for the same reason liberals keep trying to turn everything into the civil-rights movement: because refighting old battles is what politically engaged people tend to do.

  8. Gravatar of Paul Zrimsek Paul Zrimsek
    13. August 2014 at 08:37

    Of course the biggest problem with Noah Smith’s post is that the same reasoning which implies that you shouldn’t care if Krugman calls Ryan stupid, also implies that you shouldn’t care if Kotlikoff calls Krugman childish.

  9. Gravatar of Joe C Joe C
    13. August 2014 at 08:37

    “I’m a utilitarian, and there is no “deserve” in utilitarianism.”

    Reminds me of a scene from Unforgiven –

    Little Bill Daggett: (Gene Hackman) “I don’t deserve this… to die like this. I was building a house.”
    Will Munny: (Clint Eastwood) “Deserve’s got nothin’ to do with it.”

    Then Eastwood’s character kills Little Bill.

  10. Gravatar of Jim Glass Jim Glass
    13. August 2014 at 08:56

    if you are going to make a “happiness” argument you need to use consumption (not income) data, and it’s not at all clear that consumption inequality is increasing.

    True enough — but also, perhaps one should also consider the welfare value of being alive to be able to consume?

    Life expectancy in the USA has risen a good eight years since 1970 — and by more for the poorer than the richer, e.g. by 11 years for blacks versus 7 years for whites.

    What’s a year of life worth? Should this amount times increase in life expectancy be counted when measuring the welfare of the middle class, and the inequality gap?

    One thing is for sure, nowhere else in all history has such a surge life expectancy been associated with stagnating or declining welfare.

    (Of course, as today’s life expectancies are the highest ever, nowhere else in all history has there even been a surge in life expectancy to such levels — so perhaps the ‘stagnators’ will object that the lessons of history do not apply.)

  11. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    13. August 2014 at 08:59

    Two French economists walk into a restaurant…and find a collapse in aggregate demand;

    http://www.voxeu.org/article/unemployment-and-product-and-labour-market-tightness

    ‘In the data we observe that output is positively correlated with product market tightness, which suggests that labour demand shocks mostly reflect aggregate demand shocks and not technology shocks. To explain the argument, we turn again to the world of restaurants. If the aggregate demand for meals increases, more meals will be sold, and the share of tables that are occupied will increase. Formally, output and product market tightness move in the same direction with demand shocks. In contrast, if restaurants suddenly have access to better technology – for instance microwave ovens that allow them to prepare in meals in only 15 minutes instead of the usual 30 minutes – more meals will also be sold, but the share of tables that are occupied will decrease significantly because customers will wait a shorter time in restaurant queues. Formally, output and product market tightness move in opposite direction with technology shocks. Figure 3 shows that product market tightness and output are positively correlated over the business cycle. The implication is that labour market fluctuations are mostly driven by aggregate demand shocks and not by technology shocks. In particular, product market tightness fell sharply during the Great Recession in 2009, consistent with a collapse in aggregate demand.’

  12. Gravatar of Jim Glass Jim Glass
    13. August 2014 at 09:18

    Btw, a link to those life expectancies…

    http://www.infoplease.com/ipa/A0005148.html

    Moving on…

    Some on the left mock the “technology” argument for improved living standards. “Let them eat cell phones.” But that’s exactly the point””revealed preference. Peasants in low income countries will buy cell phones before they can afford TVs, or indoor plumbing, or even “health insurance.”

    Aside from the fact of how the cost of food as a share of income has plunged, I was just reading an article explaining how the technology found in every kid’s smart phone today existed circa 1990 only in hundred-million-dollar supercomputers used to design nuclear weapons.

    Imagine if then someone has said: “You can have a $100 million supercomputer small enough to carry in your pocket, only customized to meet your every personal want and need — phone calls, videos, games, mail, calendars, electronic banking, etc etc, plus countless things you can’t even imagine, such as a direct connection to an immediately searchable world-wide-network of all published knowledge … plus the same supercomputer and instant communication network would be in the pockets of all of your family members, your doctors, your lawyers and all your professional advisers…”

    Back then, would you have considered that a meaningful qualitative *and* quantitative welfare gain? Or would you have preferred 15% off at the A&P?

    What’s a $100 million supercomputer in your pocket worth welfare-wise if you get it free with a phone service plan at WalMart?

  13. Gravatar of Daniel Daniel
    13. August 2014 at 09:41

    Jim Glass,

    Just so you know, a life expectancy at birth of 50 doesn’t mean that you drop dead at 51.

    Those figures are meaningless without checking for infant mortality, which is where most life expectancy gains come from.

    In short – you’re not lengthening people’s lives by a decade, you’re saving children who wouldn’t have reached maturity.

    Scott,

    I’ve had relatives in the gulag. Based on their stories, life as a political offender was really unpleasant.

  14. Gravatar of mpowell mpowell
    13. August 2014 at 09:58

    I don’t agree with you a lot on fiscal policy, but I think you’re mostly correct in this post. Keep up the goood work.

  15. Gravatar of brendan brendan
    13. August 2014 at 10:03

    Scott, did you read Murray’s “Coming Apart”? If so, were you not convinced that, at least at the lower end of the social spectrum, people have gotten worse?

    —–

    Paul Zrimsek is right: Most political delusions derive from fighting old battles, victorious battles, long beyond the point at which marginal benefits exceed costs. Libs accumulated a particular skillset/vocab from civil rights, they were on the “right side of history”, and so they’ll never shut up about it. Same w/ conservatives and inflation, or conservatives as foreign interventionism, which was more defensible in cold war. Financial incentives explain much less delusion than simple intellectual momentum.

  16. Gravatar of Chris H Chris H
    13. August 2014 at 10:33

    To Daniel,

    You’re largely correct but it is also true that death rates have fallen for all age cohorts. The infant mortality decline is the single biggest factor probably, but a higher percentage of people really were dropping dead at age 50 in the past than today, if not quite as dramatically so as just looking at raw life expectancy at birth data would suggest. This presentation gives some of the data on that with pages 10 and 11 being the most useful for this discussion. http://www.ipss.go.jp/seminar/j/seminar14/program/john.pdf

    Also see pages 33 thru 38, since the 70s, which is when Jim particularly specifies, the majority of life expectancy growth has been from increasing maximum life spans and helping adults live to older ages. Child mortality has already been dropped so low in the Western world that few advances in that area can continue making significant life expectancy contributions. While the poor in the US probably saw some catch-up from child mortality decreases, another very significant part has been living longer generally.

  17. Gravatar of AbsoluteZero AbsoluteZero
    13. August 2014 at 10:34

    Scott,

    “It’s my own fault””I try to say EXACTLY what I mean.”
    This is a feature, not a bug.

    “WWII was won by a bunch of nutritionally-deprived midgets …”
    Slightly off topic, but I highly recommend Lizzie Collingham, The Taste of War: World War II and the Battle for Food.
    http://www.amazon.com/Taste-War-World-Battle-Food-ebook/dp/B005GSZZBU/
    It’s well written and very well researched, and it’s about far more than food. Even people who are already knowledgeable about World War II history will likely learn something new.

    Concerning “concern”: “I don’t even know what that means.” I agree. Often I think “Aren’t you concerned about this?” is really code for “How can you not agree with me?”

  18. Gravatar of Bob Bob
    13. August 2014 at 11:15

    Scott,
    I totally agree with you about the millennials. Higher quality young people than us Gen-Xers. I still struggle with your focus on consumption. My consumption now is similar now to what it was before I was divorced. However, before the divorce I had a good deal of wealth and security, and now I have a good deal of debt and I’m vulnerable to income shocks. Despite near identical consumption, my current situation is not equal to the situation I was in a few years ago. I don’t see how wealth and security aren’t a factor in equality. I’m honestly asking, because most of your arguments are very convincing. I don’t find your dismissal of income inequality convincing (except when you point out that college students are poorer that 40 year olds, but that’s only part of the story). BTW: I’m much happier now, but not because of consumption or savings.

  19. Gravatar of Kevin Erdmann Kevin Erdmann
    13. August 2014 at 11:25

    Bob,

    I think you make Scott’s point, in a way. I addressed your point here:
    http://idiosyncraticwhisk.blogspot.com/2013/11/family-structure-and-income-statistics.html

    And, it so happens that tomorrow’s post at my site revisits the same data. The last line of your comment should have been the tagline on that post.

  20. Gravatar of Bob Bob
    13. August 2014 at 12:31

    Kevin,
    Read your post and enjoyed it. Will take time to read it again. I’m not yet convinced that I was making Scott’s point. Your article correctly describes my experience. I am much happier as a single father than I was as a married father. I paid a significant amount of money to get divorced and I would pay it again. I was able to make that choice because I have a relatively high income. I was told by our marriage counselor and my lawyer that many couples stay married, because they cannot afford to get divorced, which supports your post. I paid for my divorce with my current income and the wealth that my income had created over my adult life. A different man who has lower income and lower wealth, but the same consumption (fueled by debt and lower savings), is still in a miserable marriage. To me, that argues that income inequality matters. I look forward to your post tomorrow; you’ve made my reading list. And thanks for the reply.

  21. Gravatar of David Harris David Harris
    13. August 2014 at 13:17

    @Scott

    “But remember, if you are going to make a “happiness” argument you need to use consumption (not income) data, and it’s not at all clear that consumption inequality is increasing.”

    You define utility pretty narrowly. Income confers an option to spend, which has value whether you use it right now or not. And higher relative income confers power and status, which are things humans just innately value.

    So it’s not very convincing to try to exclude income from your utilitarian calculus…

    Whether it’s *practically* possible to mitigate income inequality in a way that improves aggregate utility is somewhat of a separate question.

    But I don’t see how you get to the issue being “phony”.

  22. Gravatar of Kevin Erdmann Kevin Erdmann
    13. August 2014 at 13:41

    Bob, thanks for the kind words, and for sharing your experience with honesty…

  23. Gravatar of Benny Lava Benny Lava
    13. August 2014 at 15:31

    Could you elaborate on the current crop of students being great? Every time I read something about the current students these days it is negative. Every time. I am told that they are the laziest and most entitled students yet. I hear much complaining about how they were raised with the everyone gets a trophy mentality and can’t handle even minor criticisms. I don’t necessarily believe it but I’ve yet to hear anything contrary.

  24. Gravatar of ChrisA ChrisA
    13. August 2014 at 16:52

    I am going to argue my precedence over Morgan on the cell phone revealed preference argument;

    http://marginalrevolution.com/marginalrevolution/2012/08/assorted-links-550.html

    I am even seeing tablets now in the hands of street poor people in developing countries.

  25. Gravatar of Jim Glass Jim Glass
    13. August 2014 at 17:35

    Jim Glass, Just so you know, a life expectancy at birth of 50 doesn’t mean that you drop dead at 51.

    Those figures are meaningless without checking for infant mortality, which is where most life expectancy gains come from.

    Daniel:

    First, are you *seriously* claiming that your own welfare isn’t improved by being alive today, and probably onward to an age circa 80, instead of you being dead since your infancy? Seriously??

    And are you claiming that if you someday seek to be a parent your welfare won’t be improved by having your children not die??

    This to make an argument that increasing life expectancy is “meaningless” as to increasing welfare? That would seem a bit glib and superficial. Gee.

    Second, not only has life expectancy increased at every age level (where is the projected rising tide of centenarians coming from?) but if you bother to check the data you’ll find that expected years of “quality” life — years in good health, without debilitating illness — have increased correspondingly, for all the greater numbers now getting out of infancy alive. (Again, see the projected rising tide of centenarians.)

  26. Gravatar of Major.Freedom Major.Freedom
    13. August 2014 at 18:24

    Nobody who advocates for initiations of force is an advocate of human welfare, happiness, prosperity, or utility.

    Any actual welfare, happiness, prosperity and utility that takes place, does so despite the advocacies and uses of violence. They derive from the individual’s own motivations, own preferences, and own actions constrained to respecting others.

    The grumpy old curmudgeon baby boomers just need to get the hell out of people’s way and stop trying to force their own views of happiness and welfare onto others against their will. You are only reducing what otherwise would have been more welfare, more happiness, more prosperity, and more utility.

    The millenials are doing well? They do well not because of violence based central banking, violence based redistribution, or any other coercive control. They do well despite government. But “compared to” a world with less or no violent control, they are poorer like gulag prisoners are poorer than we are now.

  27. Gravatar of maxk maxk
    13. August 2014 at 19:05

    You note that average wages have increased in the last 6 years and conclude that the middle class will be fine. But the issue is inequality and I think average is clearly the wrong statistic. Isn’t it possible for the average to rise because the high end of the wage distribution is rising while the middle and low ends are staying static or losing (but losing less than the high end is winning)? Isn’t that more or less exactly what people are saying is happening?

    Wouldn’t median be a better statistic? I think this table from the BLS shows that median wages have not grown at all relative to inflation over that same 6 year period. Sure, that isn’t saying that wages are falling. But no growth in 6 years is worrying. The economy has certainly had substantial net growth over that period, despite the deep recession at the beginning.

    http://www.bls.gov/news.release/wkyeng.t01.htm

    Here’s a chart from the SSA comparing average wages to median wages through 2012, and showing the recent trend of average pulling away from median, which indicates that the distribution must be spreading. There is something real and substantial going on. I don’t think Piketty has a coherent explanation for it, but ‘it’ is happening. Seems reasonable for people to be worrying, especially those of us whose children will soon be looking for jobs.

    http://www.ssa.gov/oact/cola/central.html

  28. Gravatar of maxk maxk
    13. August 2014 at 19:53

    On this topic (inequality and how the government might react), I think you should have more courage of your convictions. Maybe make an argument like this.

    1. Over the last 20 or 30 years the US economy has evolved in ways that have (somewhat) increased inequality. Economic winners are earning a larger share. The median wage has been flat or at best grown significantly slower than GDP.

    2. There are certainly multiple effects behind this phenomenon. Maybe Tyler Cowen has the best take. But this is a hard puzzle.

    3. I am very wary of government ‘solutions’ to inequality. People who want to solve problems via the government usually don’t appreciate the unintended consequences of government intervention. The free market has got us where we are today (see the USSR and North Korea). Let’s be careful.

    4. Although the effect is real, let’s also not overstate it. The median wage isn’t shrinking, it just isn’t keeping up with GDP. Technology has improved our lives in ways that are hard to measure. People who say we are worse off than our parents can’t tell the difference between 1300 square feet and 2300.

    5. And by the way, if the Fed had taken my advice in 2007/8, we’d all be better off. That doesn’t necessarily affect inequality, but better off is better off.

    What frustrates me (sorry, not trying to put words in your mouth anymore) is when you (and others) seem to argue that inequality isn’t increasing (e.g., your comments about average wages). As though admitting that inequality has increased must necessarily mean you support government intervention.

    I also don’t get at all these arguments that we shouldn’t worry about this anyway because the world has bigger problems. We’re going to do something, right? Even if that something is keeping fiscal policy, etc., exactly the same. You’ve made that observation in the context of Fed policy. We can think about more than one problem at a time. We can think about the (smaller) problem of US inequality while also thinking about the (larger) problem of global inequality.

    Myself, I disagree somewhat with item 3 above. I’d increase top end taxes a bit (or implement a VAT or a carbon tax) and use the funds to provide a bigger earned income tax credit or a minimum guaranteed income. I think you would too, and I apologize for putting words in your mouth!

  29. Gravatar of Daniel Daniel
    14. August 2014 at 00:18

    Jim Glass,

    Yo dude – don’t get your panties in a twist. Of course I’m happy to have survived a difficult birth.

    I was just pointing out your interpretation of the increase in life expectancy is not entirely correct.

  30. Gravatar of Morgan Warstler Morgan Warstler
    14. August 2014 at 02:37

    David Harris,

    The type of equality you should concern yourself with is “time scale inequality”

    HOW LONG does it take for the new technologies the rich enjoy today to become affordable to to poor tomorrow?

    There will never be physical yacht equality, or beach home equality, but I can rig up a VR solution that is BETTER than real life yachts and beach homes! I can literally make rich people want yachts less, because it’s not as crazy as in VR.

    But the rest of it?

    How quickly can poor get the VERY BEST TEACHER ON EARTH?

    This is easy!

    We just need to take the very best teacher and record them teaching a class, and then put our R&D $ to making that one video better than any teacher.

    Which is easy. We can watch millions of kids watch the video in real time, see where they stop and pause the video, see what questions they ask, see what parts of the video are getting the most of the same questions, and add in more video layers (alternate streams that can get spliced in on fly based on the kind of viewer). We’re getting very close to a true video wikipedia system.

    I’m 100% SURE that in 10 years no rich parent will think their kid’s teacher in geometry is better than the video teacher.

    The classroom will flip FOR SURE, and the live teacher will just be like a TA for the video. And THEN you will be complaining about the inequality between the quality of the TA.

    When I was a young man, I went out and chased down Rawls and talked with him at Harvard, and he made an observation that to me always stuck…

    The people who are claiming to be concerned with raising up the poor, are really never concerned about them.

    They are really concerned with the distance between themselves and the rich. You atleast have the nuts to say it outloud!

    The poor ALWAYS think in absolute real consumption, they just want MORE hamburgers, a bigger TV, another pack of smokes, a nicer car.

    But that’s not what you want.

    You REALLY want the guy at the top to have less! That’s your precious!

    And EVEN IF that means the poor get less hamburgers, or it takes 5 more years for that VR rig to happen, WHO CARES! As long as the rich guy loses some of his stuff, you are happy.

    I’m not a christian but I find it interesting the 5 of 10 commandments are:

    1. HONOR CONTRACTS (honor mom and dad, honor marriage, don’ lie)
    2. DO NOT STEAL, DO NOT COVET

    The rest are about god himself.

    But half of them are counselling what I’d say are core free market liberty kind of things. Ultimately, you are going to be confronted with others having more than you, and there’s a real Q that you need to answer, and PLEASE don’t say “people” are like this… say DAVID HARRIS IS LIKE THIS…

    Why does David Harris covet?

    Is there really an amount we could take from someone and give to you, that shut you up?

    The thing is, I don’t think you WANT something tangible, I think you want the rich to be UNHAPPY. If the rich are happy, you are unhappy. If the rich are unhappy, you are happy.

    The poor I know what they want, they want another X,Y,Z.

    I know how to make an infinite amount of loaves and fishes.

    But I’m not sure I can make the rich stay unhappy, which means I’m not sure I can make you happy.

    What’s it really take for you to be happy?

  31. Gravatar of Nick Nick
    14. August 2014 at 03:27

    Morgan,
    I’ll be very interested to see the rich give up on teachers and move to an all video education model. You lay out a sensible case, but I just don’t see it. Do the rich seek out the most efficient forms of education, or is the best way to educate you kids always going to be to slip them in the wealthiest nursery regardless of its methods? Likely the truth is somewhere in between. And, with money to burn and conspicuous consumption on ones children rewarded by society, cost effectiveness is not going to lead the list of wealthy peoples concerns on education.
    Also, at elite universities, much of the real education happens through competative interaction with peers in non-academic pursuits: working at the Harvard crimson or the Yale daily news, campus political unions, debate teams, robotics competitions, Bands, theater, and on and on. Video courses will never change this.
    At a very basic level, many elite private grade and high schools already underperform public magnet schools in math and sciences but focusing on the humanities has remained a priority. Even if discussing Jane Austin with other 15 year olds while being judged by a well educated adult is seemingly useless, it does recreate a cooperative / competative form of debate that, for better or worse, is endemic to human society.
    Anyway, a great set of video references will do a lot–no doubt. But part of school is always going to be getting the children together and having them compete in various ways.

  32. Gravatar of Matt McOsker Matt McOsker
    14. August 2014 at 04:20

    Study on happiness and inequality trends:

    http://www.nber.org/papers/w14220.pdf

    ABSTRACT
    This paper examines how the level and dispersion of self-reported happiness has evolved over the period 1972-2006. While there has been no increase in aggregate happiness, inequality in happiness has fallen substantially since the 1970s. There have been large changes in the level of happiness across groups: Two-thirds of the black-white happiness gap has been eroded, and the gender happiness gap has disappeared entirely. Paralleling changes in the income distribution, differences in happiness by education have widened substantially. We develop an integrated approach to measuring inequality and decomposing changes in the distribution of happiness, finding a pervasive decline in within-group inequality during the 1970s and 1980s that was experienced by even narrowly-defined demographic groups. Around one-third of this decline has subsequently been unwound. Juxtaposing these changes with large rises in income inequality suggests an important role for non-pecuniary factors in shaping the well-being distribution

  33. Gravatar of ssumner ssumner
    14. August 2014 at 06:09

    Peter, I don’t think conservatism caused the Great Recession. I think it was bad monetary policy, and both sides of the spectrum are to blame. Obama could have appointed people who supported Krugman on monetary policy, and didn’t.

    Joe, My favorite Eastwood film (excluding the spaghetti westerns.)

    Jim, Don’t just look at life expectancy, also look at lifestyle. There are tradeoffs. Would whites and blacks accept an Asian diet if they could have Asian life expectancies? Maybe, maybe not.

    Patrick, It’s about time! And that example made me think of long waits in getting served in Paris.

    Brendan, No I didn’t. I’d like to see the data. I seem to recall that IQ scores have risen over time, on average. Perhaps the dispersion has also widened—does anyone know? Since 1990 there have big big improvements in other social indicators (violent crime rates, teenage pregnancy, etc) And those problems are associated with lower class people.

    Bob, Good point. Much of “happiness” is actually anticipation of future happiness. So if two people have the same current consumption, but one is much wealthier, then the wealthier person has happier expectations, and is thus happier today–if that makes any sense.

    David, You said:

    “Income confers an option to spend, which has value whether you use it right now or not.”

    That’s true of income as a theoretical concept, but not the actual income we measure in society. Also see my response to Bob.

    I have many posts explaining why actual measured income is a pretty meaningless statistic, it adds wage and capital income, which is like adding watermelons and blueberries, and talking about the number of “fruits” you have.

    Benny, My impression is that they are better behaved, and also that they get higher grades.

    ChrisA, It’s not who gets there first, it who gets there LOUDEST. 🙂

    maxk, No, I don’t conclude that the middle class is doing fine based simply on that data point, but rather that what you read in the media about the middle class is worthless. I look around me and see the middle class doing much better than in the 1970s, and then read about how real wages are falling. I don’t believe it.

    I mostly agree with your longer second point, but my inequality claim is more nuanced. I do believe that inequality between the rich and middle class has widened. But I think the gap between the poor and the rest of the population has fallen. I also favor some policies to reduce inequality–low wage subsidies, weaker intellectual property laws, etc. Progressive consumption taxes on the super rich. So my views are not as “conservative” as you seem to assume.

  34. Gravatar of maxk maxk
    14. August 2014 at 07:13

    Thanks, Scott. One of the very nice features of this blog is the time that you take to answer comments.

    In fact I don’t at all think you are as conservative as my mild parody (and I tried to say so at the end of my second note). But I do think you sometimes sound more conservative than you are. (Why is that?) You had two long posts on the topic of the media’s descriptions of middle class struggles, with the takeaway line: “The plight of the American middle class is perhaps the phoniest issue I’ve ever seen.” But only late in the comments of the second note do you acknowledge that inequality is widening and that you favor some policies to address it. Sure, the point of your original post was not ‘how to address inequality’, rather, ‘holy cow, the media has gone off the rails on this issue’. But when you leave out the caveats, you sound like someone who thinks the whole thing is just a liberal plot to justify more government. I know you’re not that person!

    I agree, there is a lot of wild overstatement on this topic. The middle class (and even more the poor) are way better off than they were in 1970. So they should be. 1970 was a long time ago! But I also think that the bottom half of our population has taken a worryingly small share of the economic gains of the last 20-30 years. That surely doesn’t qualify as a ‘phony issue’.

  35. Gravatar of TravisV TravisV
    14. August 2014 at 08:06

    Pethokoukis: “Please, can we stop talking about a return to the gold standard?”

    http://www.aei-ideas.org/2014/08/please-can-we-stop-talking-about-a-return-to-the-gold-standard

  36. Gravatar of TallDave TallDave
    14. August 2014 at 08:45

    Inequality makes people unhappy. If it has been rising, that raises the probability that doing something about it would increase aggregate utility, no?

    Yes, some people resent those that are better off, but the “doing something about it” part usually turns out to be horribly coercive and counterproductive. Burning witches at the stake might have improved aggregate happiness, but that doesn’t mean it was a good policy.

    Fortunately, in most societies very few people today still prefer a policy of burning witches. We can hope someday that irrational resentment of economic status will be considered nearly as retrograde.

  37. Gravatar of brendan brendan
    14. August 2014 at 08:47

    Scott: Murray’s Coming Apart is less IQ/gene centric than the Bell Curve. Its focus is on:
    -outward behavior
    -of lower class relative to upper class whites
    -and how that’s changed since 1950

    He shows- conclusively- that *gaps* in terms of happiness, marriage rates, marriage satisfaction, labor force participation (big time), community involvement and even religiosity (lower class less religious, surprisingly) have widened. And he shows that they have not narrowed since 1990.

    Worth noting that these factors, relative to something like violent crime, affect a much broader swath of the population.

    The widening cultural gap is real. But the left and right differ in their interpretation, respectively, i.e. driven by declining opportunity, or driven by reality that the behavior of the less genetically depends relatively heavily on stuff like religion, moral paternalism and good financial incentives- all of which have waned.

  38. Gravatar of TallDave TallDave
    14. August 2014 at 09:13

    But I also think that the bottom half of our population has taken a worryingly small share of the economic gains of the last 20-30 years.

    There’s an implicit fallacy of composition there, though — the “bottom half” is a different set of people every year. A large proportion of the people in the bottom half 20-30 years ago are in the top half today. And much of the bottom half today is people who were not in the distribution at all 20-30 years ago.

    Too many people are asking “how do we seize more of those manna-like economic gains and give them to the bottom half?” and too few are asking “why is freely contracted income at the bottom half of the income distribution not increasing in value as quickly as at the top?” Future living standards can only rise if someone is producing economic gains.

    As it turns out people like shopping at WalMart even in full knowledge they are making the Waltons wealthier, because that makes their lives better. People like Ipods and Facebook. Some people even like giving their money to HFMs and Vegas blackjack dealers. Income distributions are a function of choice (rents aside).

  39. Gravatar of Morgan Warstler Morgan Warstler
    14. August 2014 at 09:37

    Nick,

    The rich gave up on horses.

    The flipped classroom is literally the car. It. Just. Is.

    The only reason the current Khan model is held back is that course work has to be recreated from scratch.

    What I’m agitating for in TX govt. is to have the executive lay claim to IP of teacher work product as it’s own (already has), and then release it under a for profit Creative Commons license, where everything is free to TX citizens, charge anybody else.

    The idea is then startups get $3K worth of cameras to fit a classroom for 1 year. Say best teacher in TX using the Holt 9th Grade Geometry Version 7.

    Blur out children and no actual art from textbook.

    Capture the 150 hours of video on a timeline, and then sync the video timeline to to metadata about page # and chapter the teacher is discussing.

    Basically architect the video to the textbook without paying or asking the textbook company.

    Then improve the video constantly, let people suggest / add in to append any examples they make – animations, game play, all of it, but then SYNC THAT to the Khan style testing.

    The point is the even a super rich classroom, it’s still 15 kids of varying capabilities and 1 teacher.

    That’s the horse.

    The car is each kid moving at his own pace.

    And only tapping the teacher, the TA, when they are stuck.

  40. Gravatar of maxk maxk
    14. August 2014 at 10:40

    @TallDave:

    “There’s an implicit fallacy of composition there, though “” the “bottom half” is a different set of people every year. A large proportion of the people in the bottom half 20-30 years ago are in the top half today. And much of the bottom half today is people who were not in the distribution at all 20-30 years ago.”

    Scott has made this point before and I don’t really buy it. The argument is something like: of the young adults in the bottom quintile in a given year, some significant portion (30%?) will be in one of the top two quintiles 15 years from now. If true, that has a couple of consequences. If there is enough mixing, then we don’t really need to worry much about poverty. Most of the poor will eventually find their way out. Also, if a significant portion find their way up and out every year, then there must be straightforward steps you can take. So the ones who don’t bear some responsibility, and if you now turn around and help them … big moral hazard.

    But I think the group of young adults in the bottom quintile actually come in two very distinct flavors. Some, like me at 25 (or Scott at that age, presumably) are students (or interns or …) who are poor in income, but already have considerable human capital and excellent prospects of future economic success – way higher than 30%. We were poor in dollars, but rich in family culture, connections, prior and future educational opportunities, support, etc. It’s a kind of temporary poverty, just after you leave your parent’s relative wealth and before you start building your own.

    But the guy who is poor at 25, working as a warehouse picker at Amazon, and with no college degree has nothing like a 30% chance of some day joining the top quintiles.

    When you look at statistics about people moving among income levels over time, and presume that those statistics apply equally to everyone, that it’s the same random draw for everyone, that’s a different sort of fallacy.

    Put it this way, do you think a ‘large proportion’ of the young adults in Ferguson Missouri will be in the top half of the income distribution 20 years from now? I don’t.

    Of course there are lots of studies of this sort thing. E.g., looking at a person’s wealth at 50 as a function of his parent’s wealth at 50. My impression (but I don’t have links offhand) is that the US has considerably less wealth mobility now than it did 50 years ago. I think I read that 50 years ago, we were a more mobile society than Western Europe and now the reverse is true.

  41. Gravatar of Brian Donohue Brian Donohue
    14. August 2014 at 11:39

    @Morgan,

    ‘literally’?

    Hipster.

  42. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    14. August 2014 at 11:54

    ‘Put it this way, do you think a ‘large proportion’ of the young adults in Ferguson Missouri will be in the top half of the income distribution 20 years from now? I don’t.’

    I don’t see why not. The dead-enders who are currently rioting are small proportion of the people of Ferguson. As the rioters of the 1970s were a small proportion of that era’s. And even many of those rioters went on to become prosperous, say Friend of POTUS Bill Ayres.

    Young people have a funny way of growing older and wiser, even those who don’t have college degrees.

  43. Gravatar of Kevin Erdmann Kevin Erdmann
    14. August 2014 at 12:00

    “Put it this way, do you think a ‘large proportion’ of the young adults in Ferguson Missouri will be in the top half of the income distribution 20 years from now? I don’t.”

    Please, maxk. Enlighten us all about how you come to that conclusion… I know one young adult in Ferguson who won’t be in the top half of the income distribution in 20 years. But, please, do tell us about the rest. What is it about them that leads you to this conclusion? You must know a lot about them.

  44. Gravatar of brendan brendan
    14. August 2014 at 12:29

    Guys, Max is obviously right.

    Think of this as a conditional probability problem.

    x=in top half of income distribution in 2050
    y=in bottom quartile today

    Scott says P(X given Y)= whatever

    Max is saying that you can improve P(X) by taking more info into account. Kevin is baiting Max to say the obvious: that race improves your prediction P(X).

    But Max’s broader point, right or wrong, is that, relative to times past, more folks gave a predictably terrible P(X).

    Less ought, more is, clearer thinking.

  45. Gravatar of brendan brendan
    14. August 2014 at 12:30

    *But Max’s broader point, right or wrong, is that, relative to times past, more folks *HAVE a predictably terrible P(X).

    typo

  46. Gravatar of TallDave TallDave
    14. August 2014 at 12:34

    The argument is something like:

    No, the argument is just that it makes no sense to talk about what “the bottom half of our population” is doing over 20-30 years because there is no such group of people. What you can talk about is the market value of lower-half income over that period and why it hasn’t increased as fast.

    When you drag people into the equation, you immediately run into the problem that people make choices, and all utility lies in the eye of the beholder. It’s fine to project the future incomes of Amazon warehouse, residents of Ferguson, and children of upper-decile income earners, but the implication that those income distributions are wrong just leads to all sorts of messy coerciveness that tends to cause the most pain to those the help is directed at.

  47. Gravatar of TallDave TallDave
    14. August 2014 at 12:53

    Scott — I look around me and see the middle class doing much better than in the 1970s, and then read about how real wages are falling. I don’t believe it.

    Revealed preference suggests that inflation is exaggerated — i.e. living standards have risen more quickly than is reflected by “real” measures. By extension, that suggests Fed policy is more contractionary than it appears.

    Today, high income workers work longer hours than low income workers. Imagine the look of confusion you might get from a pre-capitalist gentleman if you told him that in your society, the poor work fewer hours than the rich and the government is implementing school lunch programs to make sure poor kids don’t ingest too many calories. He wouldn’t just have a hard time understanding how that could be. Those words literally could not form that sentence. You might as well speak martian to him. Don’t even try to explain to him that you’re outraged by how the richest kids have an advantage in attaining productive employment. He’ll think you’re crazy before you even get to that.

    This is a great passage. Many would prefer to be in the top decile, relatively few are willing to work 70 hours a week for forty years to get there.

  48. Gravatar of ssumner ssumner
    14. August 2014 at 18:48

    maxk, OK, Let’s say I change it to the following, will you accept my response?

    “The plight of the middle class is not a phony issue, it’s a real issue, but it’s 10 times less important that unemployment, 100 times less important that the war on drug using Americans, and 1000 times less important than global warming. So why are left wing bloggers spilling so much ink on this issue, of all the possible issues they could be talking about?”

    brendan, I won’t prejudge the book, as I have not read it. But I do think that some affluent, educated types tend to freak out a bit when lower class people don’t share their lifestyle preferences. That’s not a knock on Murray, who has been excellent when I have read him (the only book of his I read was Losing Ground.) It’s just a general observation.

    Having said that, I’m open to the view that the welfare state has distorted the behavior of the lower classes in some undesirable ways. I’m just not as negative on their overall approach to life as most people in my income class seem to be.

  49. Gravatar of Paul Zrimsek Paul Zrimsek
    14. August 2014 at 19:38

    Even if we could only get everyone who comments on these issues to agree that cross-sectional income quantiles shouldn’t be mistaken for social classes, that would be a nice step forward. We’d be able to argue a lot more sensibly about whatever questions remain.

  50. Gravatar of Jim Glass Jim Glass
    14. August 2014 at 20:03

    @ Daniel

    Jim Glass, – don’t get your panties in a twist. I was just pointing out your interpretation of the increase in life expectancy is not entirely correct.

    I didn’t interpret anything, I reported that since 1970 life expectancy has increased by 8 years for all Americans and by 11 years for blacks, and I asked a question:

    “What’s a year of life worth? Should this amount times increase in life expectancy be counted when measuring the welfare of the middle class, and the inequality gap?”

    To the contrary, even now you insist on being glibly wrong:

    In short – you’re not lengthening people’s lives by a decade, you’re saving children

    First, increasing life expectancy by X years does indeed lengthen the expected average life by X years. I mean, that’s why the life expectancy table is published with the number X in it.

    Second, you should check factual claims before repeating them. http://www.cdc.gov/nchs/fastats/life-expectancy.htm

    Life expectancy of all Americans: 1970, at birth 70.8, at age 20 53.0; 2009 at birth 78.5, at age 20 59.3. Increase in life expectancy after age 20, 6.3 years or 82% of the 7.7 year total.

    It is not even *close* to true that the bulk of increase in life expectancy since 1970 has come from reducing child mortality. It has come from lengthening the lives of adults. Please be sure note for future reference.

    Third, to the extent life expectancy is increased by saving the lives of children, well, children are people too! How does lengthening their lives not count? Do you not consider yourself better off for not having died as a child?

    OK, instead of sticking with such silliness, perhaps you’d like to address the question I asked?

  51. Gravatar of Joe Eagar Joe Eagar
    14. August 2014 at 21:38

    Scott, I think one reason a lot of us Millennials feel shafted is that the government pulled out all the stops to employ the boomer generation, to the point of letting inflation spiral out of control in the 70s. Such effort has not been expended for us.

  52. Gravatar of Joe Eagar Joe Eagar
    14. August 2014 at 21:47

    Ah, that wasn’t meant as a criticism of Scott, it was a description of how many of us are feeling emotionally. Scott’s preferred policy mix would obviously do a lot to help Millennial employment.

  53. Gravatar of Jim Glass Jim Glass
    14. August 2014 at 22:45

    “Inequality makes people unhappy.”

    This is, to a first order, bunk. (Which is why the “inequality” issue has never yet won an election for the Dems, dating back to William Jennings Bryan, but has been only served as an intra-party fund-raiser and base motivator. Remember who reads Piketty).

    There’s a ton of happiness research out there, and it shows that economics has very little to do with it. The sole significant exception is that when people are actually impoverished, stressfully lack the means to get by, they are prone to unhappiness. But that is worry over their own situation, not at all any general concern that there is a “top 1%” out there.

    Once their basic situation becomes safely OK, “happiness” resolves to about 50% genetics and 50% behavioral issues — mostly regarding family and other people. Kahneman has said the greatest single key to happiness is being with friends and family who want to be with you, and cites studies saying the relationship between happiness and household income exceeding $75,000 (in high-cost cities) “is precisely zero”. And not much above zero approaching that figure.

    Why should economics have the job of making people “happy” and be judged by that? Where does this idea come from, what’s the logic in it? Cave men, medieval peasants, subsistence farmers, couldn’t be happy? Of course they could, with no modern economics.

    Economics is about welfare. Let’s stipulate that our economic system adds zero to human happiness. Does anyone want to go back to being a medieval peasant, with just as much happiness as today but only a peasant’s welfare? That’s the test of whether one really believe economics is about “happiness”.

  54. Gravatar of Jim Glass Jim Glass
    14. August 2014 at 22:50

    @ssumner

    Jim, Don’t just look at life expectancy, also look at lifestyle. There are tradeoffs. Would whites and blacks accept an Asian diet if they could have Asian life expectancies? Maybe, maybe not.

    The welfare gains from a 7-year increase in life expectancy for whites and 11 years for blacks since 1970 have been offset by incurring lifestyle cost tradeoffs? What ones? I’m looking, but I don’t see them.

    (I know about such tradeoffs. In the last two years I’ve gone from a 250-pound couch slug with blood pressure 190/150 to a 180-pound marathon runner with BP 120/80. It’s possible the utility cost of sacrificing pork rinds and MonsterThickburgers from my lifestyle has partially offset my welfare gain from increased life expectancy — but in my personal observation of America since 1970, that’s not how the rest of the country has picked up its 8 years overall.)

    Of course, there are tradeoffs with increasing consumption and income too.

  55. Gravatar of Jim Glass Jim Glass
    14. August 2014 at 23:09

    @ summner

    But remember … you need to use consumption (not income) data, and it’s not at all clear that consumption inequality is increasing.

    And also, it is very clear that the consumption gap is not anywhere as big as the income gap to begin with.

    People cite “income” inequality assuming it to be a proxy for welfare inequality (else what’s the point?) although its connection to welfare is distorted and very myopic. “Consumption” much is less bad — but still doesn’t capture the great increase in welfare, and how this has helped the poorest the most — all the ways the poor of today are better off than the “top 1%” of not so long ago, even in my own lifetime. Ways that are not caught in consumption data either, because they are recorded at current market price (often historically plunging, assuming the benefit existed at all previously) instead of at their value to people.

    I cite life expectancy to illustrate this — what is more important to welfare than being alive and well? Eight years added to life expectancy since 1970. What’s a year of life worth? Times eight for the average person, *more* for the poor, *less* for the rich — should this not be counted in discussions of welfare levels and inequality?

    But that’s just one thing. Every kid supermarket clerk with a smart phone has in his/her pocket millions of dollars worth of technology by 1990 standards, and a more advanced personal communication system than Bill Gates had as a billionaire 20 years ago. But it is counted in consumption data at WalMart prices. Medicine … in the 20th C, President of the USA Calvin Coolidge lost a son to a blister incurred playing tennis at the White House — every person alive in the USA today can walk into a pharmacy and get better medical treatment than the President of the USA then. Is this welfare increase reflected in our “welfare and inequality data” anywhere? Nope. Examples are countless.

    This is why “inequality” has been such an impotent political issue in the USA forever — people know their lives have been getting better — and continually ranks so low in polls outside of left-side partisans. http://www.pollingreport.com/prioriti.htm

    people at the top don’t deserve their wealth. I would add that I also don’t believe that rich people (like Robin Williams) deserve their suffering from depression. I’m a utilitarian, and there is no “deserve” in utilitarianism.

    Nobody alive today — nobody in our society, top or bottom either — deserves to be so far atop all the rest of humanity that came before us. None of us did anything to earn that.

    A huge failing of all macro econ courses in my mind is that I have never seen one that starts by describing the truly, by our standards, horrific nature of the world before our times, as an intro to the real importance of the course. Forget the life expectancy of 50 for us a hundred years ago, of 25 for all the world across all time before that, the hunger, disease, daily pain from injuries and broken teeth, and all that. Forget it all. Just consider the horrific levels of brutal tortuous violence humans inflicted on each other on a daily basis.

    Stephen Pinker’s data-loaded book should be required reading on this, otherwise it is hard to conceive even for the historically literate. Here’s a short Ted talk as an intro…
    https://www.ted.com/talks/steven_pinker_on_the_myth_of_violence#
    … note the level of violent deaths in the 20th C including WWI and WWII compared to in highly egalitarian hunter-gather societies.

    He also notes how the increase of human rights and decline of violence has continued strongly right through the last 40 years. Who gains the most from this welfare-wise? The big continuing decline of crime and violence and increase of rights? The poorest. Does this count? None of this has ever come from anything else but a capitalist economy growing richer. It is tied at the hip to economic growth. Civil rights, like ecology, is a luxury good.

    The point is, all arguments today about “who deserves what” should start from the point:

    “First, of course, none of us deserve what we have today, the *utopia* we have by the standards of all prior history, and second, we must not do anything to upset the process that has created such immense welfare gains for us, with the largest welfare gains for the poorest, but must protect and improve the process … but within those bounds, *you* don’t deserve more than *I* get…”

  56. Gravatar of ssumner ssumner
    15. August 2014 at 08:18

    Paul, Exactly,

    Joe, Millennials have a right to be pissed off at boomer policymakers for the unemployment situation.

    Jim, Lots of good points. I’d add that causality can go from happiness to income. Depressed people are less motivated to get out of bed in the morning and energetically try to make lots of money.

  57. Gravatar of Nick Nick
    16. August 2014 at 03:42

    Morgan,
    I agree with you–in he subjects where individuals CAN move forward on there own. I fear you are using too literal a definition of ‘education’ where the goal is to increase the crystallized knowledge base of a child in a portfolio of academic subjects. Yes, this is about half of education and the digital revolution is totally remaking it.
    However, the other half of our education system is having our children engage in all kinds of games, competitions, and other esoteric activities (like student news papers) not to ascertain who has retained he most information but simply to see who excels in these contexts bc the real world is made up of tons of contexts like those.
    As long as getting a group of rich people to agree with you about something is a valuable skill, there will be a lot of value in sending your kid to discuss Jane Austin with a bunch of rich kids.

  58. Gravatar of Liam Donovan Liam Donovan
    18. August 2014 at 13:36

    I’m curious as to why you cite consumption inequality as a better utilitarian measure than wealth inequality. What if someone is consuming at a middle-class level, but the need to take more debt/not have more comfortable savings/work longer hours/not be able to comfortably retire means that they derive less utility from the consumption than would a higher-income individual? Middle and lower-class savings are currently worryingly low, and a focus on consumption inequality would only exacerbate the problem.

  59. Gravatar of Scott Sumner Scott Sumner
    19. August 2014 at 09:07

    Liam, Wealth measaure properly is the present value of future consumption, of you and those you give money to. But wealth meausres generally ignore human capital. Debt is a way of smoothing consumption when income is unstable. Consider a farmer than makes $0 on odd years and $200,000 on even years. Average income is $100,00. He smooths consumption by borrowing and lending so that his consumption level stays at about $80,000/year. Which is a better measure of the farmer’s welfare each year, consumption or income?

  60. Gravatar of Jim Bales Jim Bales
    19. August 2014 at 09:25

    Mr. Sumner,

    I am afraid that Mr. Wynton Hall at brietbart.com has misled you by misquoting the report from the US Conference of Mayors (USCM).

    What the USCM found was that:
    “Jobs gained during the economic recovery from the Great Recession pay an average 23% less than the jobs lost during the recession. … The annual wage in sectors where jobs were lost during the downturn was $61,637, but new jobs gained through the second quarter of 2014 showed average wages of only $47,171.”

    So the result (new jobs created are paying 23% less than the jobs lost during the 2008 recession) is consistent with your finding of increased average hourly wages.

    Best
    Jim Bales

  61. Gravatar of Jim Bales Jim Bales
    19. August 2014 at 09:26

    To be complete — my source for the USCM report is actually their press release:
    http://www.usmayors.org/pressreleases/uploads/2014/0811-release-metroeconwagegap.pdf

    Best
    Jim Bales

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