Why do people think mobility is something that "makes up" for gaps?

Question

The gaps among various percentiles in US society, in terms of either income or wealth, are growing and have grown over the last quarter century, fairly steadily, as Presidents both Republican and Democrat have followed a path of deregulation and, for the most part, tax rate reduction (remember, Clinton opened huge corporate tax loopholes and dramatically reduced tariffs).

But at the same time, all such groups' incomes and wealth levels have increased.

Just not by equal amounts.

There is also significant mobility among these various groups.

But such RELATIVE mobility increased only slightly in the 1980s and has since leveled off, and it is about the same as relative mobility in more socialist areas like Scandinavia, where the gaps are less.

In other words, the ability of someone in the 70th percentile by income to rise to 20th is about the same as it was before the tax cuts and is about the same as it is in Scandinavia.

But the amount by which you have to increase your income to GET from 70th to 20th in the US keeps growing, and is much larger in the US than in Scandinavia.

That, coupled with the fact that all groups' incomes continue to move up, means that ABSOLUTE mobility is GREATER than in Scandinavia and is increasing.

Thus, the person at 70th percentile has an equal chance of increasing his income by $30K in today's dollars as he would have had of increasing his income by $18K in today's dollars back in the 1970s, or today in Scandinavia.

So, the question is, isn't he better off with another $30K than with another $18K???

A "yes" answer means that mobility and gaps must be looked at in tandem and they're not necessarily a matter of "good" and "bad" - they can, and in this case are, both good.

"The majority of people live and die in about the same economic status they were born into"

Well, um, no, that's simply not the case.

http://www.freerepublic.com/focus/f-news/1229294/posts
http://www.nytimes.com/specials/downsize/21cox.html
http://www.bls.gov/opub/mlr/1988/05/art1full.pdf
http://www.frbsf.org/econrsrch/wklyltr/el97-07.html#winners
http://www.dallasfed.org/fed/annual/1999p/ar95.html
http://money.cnn.com/2005/05/25/pf/record_millionaires/index.htm?cnn=yes
http://money.cnn.com/2005/09/28/news/economy/millionaire_survey/index.htm?cnn=yes
http://money.cnn.com/2006/03/28/news/economy/millionaires/?cnn=yes
http://www.heritage.org/Research/Labor/bg1773.cfm

Again, you could instead of taking a side first and making false assertions to support that side's conclusion LOOK IT UP and just be right.

Dr. Spanky you CAN measure it, and economists DO measure it.

THAT'S what's so frustrating about this - the data is out there, there are mountains of it, and you get on this board and people who don't know that decide to make it up out of thin air.

EVEN IF YOU DON'T KNOW THE DATA IS OUT THERE, you DO know that you don't know what it says, and if you know that you don't know, can someone please explain this tendency many people have to just MAKE IT UP?

What IS that?

You might think I'm boring always posting about the same 4-5 topics but I've read a lot about them and thus I think I have something to offer on the discussion - you don't see me posting about biochemistry and just making up compounds do you? Why do some people think economics is any different?

ChiGuy no, you're wrong - again, REAL means INFLATION - ADJUSTED.

Income levels are rising in all groups and has gone up for all groups over the last quarter century AFTER CONSIDERING INFLATION.

Dr. Spanky: "I think you are shootin' the bull... and your pants are too tight. "

Yeah, that's a REAL good retort to CENSUS BUREAU DATA.

Moron.

Answer 1

I assume you mean the ability of one income group to move into another. I doubt you can measure that. I do beleive though that the bottom of the bottom has moved up with the rest of society in reference to time. Poor folks in the '30s was poorer than now.

I think you are shootin' the bull... and your pants are too tight.

Answer 2

Voodoo economics at best. The point you seem to disregard is although ALL income levels rise, the lower income level to inflation ratio is shrinking while the upper income levels to inflation ratio is broadening.

Ergo, two working parents are struggling versus the $100 million CEO who simply wants more even if that means laying off thousands of career employees to get it.

These ludicrous love-the-rich observations doesn't put gas in anyone's car, nor nutritional food on the tables of our working class. Health care costs are enormous, energy costs are ridiculous, yet neo-cons have no empathy for the honest, hard, working-poor/middle class.

What incentive do the struggling have to keep working if their wages won't even keep up with the gas prices that they need to get to work in the first place?

edit: So, when I worked at JC Penney 20 years ago at $6.25 per hour, your theory is that 20 years later, the same job pays $30 per hour as in the 500% increase in CEO salaries?

Answer 3

Mobility is not as prevelent as the stereotypical American 'rags to riches' story would have us believe. The majority of people live and die in about the same economic status they were born into. That's regardless of /anything/ - social systems, governmental stystems, economics, personal talent, you name it - most people just plod through life doing about as well as thier parents. It's just human nature.