Richest 1 percent own nearly half of world's wealth

[Centurion40]

Beiber's been busted in Miami.  DUI.  Please don't deport him.

[GDS_Starfury]

^^^  that is not newsworthy here.

[FarAway Sooner]

I'd concur with a lot of the methodological issues that AB cites.  However, those methodological issues don't contradict a number of trends that are widely acknowledged.

First, as was widely acknowledged in the "redistribution" thread on this topic where Steelgrave professed his undying love for Lenin, the trend in America over the last 20+ years has definitely been towards the concentration of wealth in the hands of a few Americans at the tippy top.  It's attributable in part to a reduced tax burden on the wealthy, but it's also attributable to a lot of other things that are highly debatable.  Nobody thought it was a good trend that I recall, although lots of folks were worried that trying to do anything about it would cause more problems than it solved.

Rehashing those topics here would be kind of silly.  But anybody who cares to review that discussion can just search for a post with the keywords "Steelgrave + Stalin fetish".

In terms of the world as a whole enjoying unprecedented growth since the end of the Cold War, I'd generally agree with that.  Anybody who wants a high-level overview of this topic should check out Fareed Zakaria's The Post-American World, at least as a starting point. 

However, it's also widely acknowledged that, while the average standard of living in the developing world is exploding, the resulting concentration of wealth in those countries is pretty dramatic.  If you're a math geek, the mean per capita income is rising a lot more quickly than the media per capita income.  That's not uncommon among developing economies, where you see a concentration of wealth at the top before you see the emergence of a full-fledged middle class.  But it also means that most of the people in the still-dirt-poor developing world aren't yet seeing many benefits from this unprecedented historical growth.

The open question remains, at a high level, what might we be able to do about them?

The most heated disagreement here comes around the question of what can or should government do about this.  Without getting into too many specifics, I myself favor policies that emphasize mobility (e.g., assistance getting a college education or adequate medical coverage for children) over redistribution (e.g., boosting social security payments or handing out free government subsidies to 98% of the public).

There's a slippery slope there for conservatives, but it's all in the implementation.  I don't think it's in the philosophical aspects of it.

The argument always bogs down in how many resources we should spend there, but we ought to be able to separate the two discussions.  However, ethical thought is more of an instinctual activity than a rational one, so those conversations seldom work out as sensibly as one might hope.

[airboy]

Front page article in the Wall St. Journal this week was that the "lack of income mobility" in the US has been measured inacurately.  Article stated that income mobility in the US has been largely unchanged for 30 years.

Been a very busy week for me - and I have not looked at the paper the last 3 days other than scanning.

[FarAway Sooner]

Interesting.  I don't pay to play there, but I am curious to hear what the NBER's study concludes.  I'm sure other sources will pick the story up shortly...

[airboy]

Interesting.  I don't pay to play there, but I am curious to hear what the NBER's study concludes.  I'm sure other sources will pick the story up shortly...

Article is "Study Says U.S. Economic Mobility Remained Unchanged, page A1 on Jan 23., 2014 Wall St. Journal.
The article was published in an excellent source and carefully reviewed.  The authors managed to get income tax data for a long period of time.  In the USA, if you claim a child deduction on your taxes you must supply a social security number on the tax return.  This enabled the researchers to both know  the household income of the child, and the child's income as it aged.  This is much better data for an income mobility study in the USA than has ever been previously published.

They broke income into quintiles and compared the economic mobility to move to the top quintile from your starting quintile as a child.  The rates of economic mobility were very consistent over time.  Lowest quintile had about a 10% chance to reach the top quintile.  2nd lowest quintile - about 15%; middle quintile, about 20%, 2nd highest quintile - about 25% chance and top quintile about 33% chance.

The key finding was that the ability to move into (or stay in) the top quintile was largely unchanged for all groups over an extended period of time.

Also note that this is moving to the top 20% of US incomes - not the ability to better yourself by moving up a quintile (or lower yourself by moving down a quintile or quintiles).  Overall, there is a lot of economic mobility.  The income category you are born into does not "rule your destiny."  But moving from the very bottom to the very top in one generation is relatively rare (about 1 in 10). 

Another thing about income breakdowns.  Almost everyone moves between income quintiles during their life.  While I was in graduate school (and my wife managed a retail store), we were in the bottom or next to lowest income quintile.  We moved into the 4th quintile when I completed my degree and started working.  After about 10 years or so of working, we moved into the top quintile.  [If you don't spend all of your income, invest your savings, and don't go into debt you will gradually improve over time].  The income quintile my family is in depends on our age.  And this pattern of changing income strata over time is very common in the US economy.

This also does not address income or wealth concentration, especially among the extreme tails of the distribution.  But politicians mix up income concentration and income mobility all of the time.  They are related, but still quite different things.

So at least some of the alarmist talk about the lack of income mobility in the USA currently, or how it has gotten worse recently has been proven to be false.

[Note: I have not read the underlying paper.  I lack the time to do so right now.  But the Wall St. Journal almost always gets their economic facts right].

[FarAway Sooner]

Interesting synposis, Airboy.  That's really dramatic.

I'm a little puzzled by the sampling methodology description, because I know lots of kids in older generations don't have socials.  I didn't get mine until I was 16 in the mid 80s.  But the findings certainly do raise some interesting points, and one open question over methodology doesn't mean the study's bogus.

I'll definitely try to track down other mentions of this stuff.  As you say, the WSJ (like any publication) certainly has its biases, but crappy methodologies haven't generally been a problem there.