It's Not The Income, It's The Outgo

Inequality myth my ass. Hoo boy, where to start. Don't you just love when professors conveniently present "facts" that support their point of view and ignore reality as they drive down their privileged streets?

First, we can easily dismiss the notion that the poor are getting poorer. All the Census Bureau tells us is that the share of the pie consumed by the poor has been shrinking (to 3.4% in 2006 from 4.1% in 1970). But the "pie" has grown enormously. This year's real GDP of $14 trillion is three times that of 1970. So the absolute size of the slice received by the bottom 20% has increased to $476 billion from $181 billion. Allowing for population growth shows that the average income of people at the bottom of the income distribution has risen 36%.

They're not rich, but they're certainly not poorer. In reality, economic growth has raised incomes across the board.

And prices haven't risen at all. An apartment that rented for a few hundred dollars in 1970 now rents for over a thousand. The price of food, gas, and clothing have risen more than 36% in 38 years.

The supposed decline of the poor and middle class is exaggerated even more by the dynamics of population growth. When people look at the "poor" in any two years, they think they're looking at the same people. That's rarely true, especially over longer periods of time.

When Lisa Marie Presley (I'm sorry but talent definitely skipped a generation) feels that she can redo one of her father's records and picks In The Ghetto, maybe not all that much has changed for certain segments of the population. And once again, New Orleans is conveniently forgotten.

Being of the new breed of conservative, he brings up immigration.

Since 1998, the U.S. population has increased by over 20 million. Nearly half of that growth has come from immigration, legal and illegal. Overwhelmingly, these immigrants enter at the lowest rungs on the income ladder. Statistically, this immigrant surge not only reduces the income of the "average" household, but also changes the occupants of the lowest income classes.

Overwhelmingly? Well, I live here in Silicon Valley and there is plenty of immigration. From China and India. They have these cute visas and have taken away the well paying jobs from those who have blue eyes and those jobs that are left are either outsourced or pay so little that only illegals who live twenty to a home and don't mind eating rice and beans as their daily meal can afford to live on the salary. Caucasians are in the minority and if blacks aren't driving the buses, garbage and tow trucks, they are nowhere to be seen.

Something similar happens with the distribution of income. People keep entering the distribution line from the bottom. Even though individuals are moving up the line, the middle of the line never seems to move. Hence, an unchanged -- or even receding -- median marker could co-exist with individual advancement. The people who were at the middle marker before have moved up the distribution line. This is the kind of income mobility that has long characterized U.S. income dynamics.

Is that why with a Master's degree both my brother and myself are making less money than we did in the eighties? In reality, we entered from the middle and educated our way to the bottom.

That broad swath of economic advancement shows up in personal consumption. According to the Labor Department, personal consumption spending has risen by $2.5 trillion since 2000. More Americans own homes and new cars today than ever before, despite slowdowns in both industries. Laptop computers, iPhones and flat-panel TVs are fast becoming necessities rather than luxury items.

I live in a mobile home that I don't own and my brother has a house that is worth less than his home loan and he's had that house for over five years. Neither of us have new cars but I do have a flat panel tv. I got it when I wrecked my car and decided that since we were entering the digital age and it didn't look like my income was going to improve any time soon, I might as well bite the bullet and get a small one while it was on sale since going to the movies or a concert is not in my budget. A real vacation or buying new clothes is totally out of the question. So is the iPhone and I hate to break it to you, but a computer isn't a luxury anymore, it's what you need to survive in today's world. They recognize that in developing countries but I guess when you are devolving it just isn't considered important.

I made more money in the eighties on a secretarial salary and it certainly went a lot further than it does now. I lived by myself, had a new car and was able to go out to dinner whenever I wanted. Now my 77 year old mother and I share a trailer. I drive a fourteen year old car that guzzles gas and we go to the Vietnamese soup place every couple of months because it's cheap and I get tired of cooking sometimes. As soon as I get $1500 together, I'll be filing bankruptcy and can take those classes on how to spend money I obviously don't have so I won't get into debt again.

And during the summer, I grow my own vegetables. One, because they taste better and two, because then I can afford meat. Go back to your tenured job where you get to spout this crap and leave the rest of us alone. I can't afford the blood pressure medicines I need after reading your rosy view of your world.

3Bs