
Trends in Income From 1975 to 2018 - cheye
https://www.rand.org/pubs/working_papers/WRA516-1.html
======
PaulHoule
1/3 of that is health insurance.

Health insurance is a weird one because even though people think they want it
when "daddy" is paying for it, if they got to trade health insurance for
something that cost about as much such as

* two months of vacation a year * free housing for life, etc.

many would pick the later. Michael Foucault, in his "birth of the clinic"
points out that rich people who could afford (say) Heart Bypass Surgery
couldn't get it unless somehow other people who couldn't afford the surgery
could get it, because otherwise the surgery wouldn't be done often enough to
not be a death sentence.

~~~
api
But this also means that the average person now has access to heart bypass
surgery, which is still (I think) the most powerful "life extension"
technology ever developed (statistically speaking).

That means the _actual_ reduction in income is less than it appears, as a lot
of it is just going to far superior but more costly health care. That being
said, US health care costs are higher than many other developed nations for a
variety of reasons and this could be improved.

What's the other 2/3 then?

I am going to take a wild guess: outsourcing / labor arbitrage, the collapse
of unions, and automation reducing labor demand. I would prefer hard evidence
though to wild but reasonable guesses.

~~~
PaulHoule
"Superior" is not always clear.

In the case of heart-bypass the economics have always been ambiguous and are
more so now when you put it in competition with angioplasty, statins,
aggressive treatment of hypertension and type II diabetes, etc.

I remember Issac Asimov writing about his circa-1970 thyroidectomy and
circa-1980 heart bypass and being amazed at how few articles he'd have to
write to pay for these services. (I found out 30 years later that he got AIDS
from that heart bypass operation and that was why he wrote all of those
sequels that he said he wasn't going to write.)

Note though that the surgeon's job is checklistable (Asimov wouldn't have
lasted 10 hours if either surgeon had displayed much creativity or had to
wrestle with contractions while working) whereas Asimov's monthly essays
involved reading maybe ten scientific papers, resolving contradictions,
probably rewriting a few times just to get the organization write, never mind
catch all of the errors you'll find in a piece like I am writing now where I
have neither the time nor the tools set up to do that work.

Although the surgeon seems to be "restoring order" to the body, Asimov's mind
was directly engaged in removing entropy -- taking a wide area of scientific
information and composing it to create meaning.

My wife works (part time) as an aide for an extraordinarily nice dementia
patient and is own the other side of the "cost disease" problem from myself, a
computer programmer.

Even distant relatives of the man she works for might think is he high
functioning if they saw him most of the time, but left on his own he might
"get stuck". Basically my wife and other aides help him get through his daily
checklist. This guy is fun to hang out with, but other people get paid the
same to do the "same" thing for a person who might not recognize them, think
they are a home invader, and try to strangle them. (e.g. don't wear a necklace
if you do this job)

Me? Asimov inspired me to study physics and I became a computer programmer and
if something is checklistable either my team decides that I'm going to spend
my time programming the computer to do it, or it decides that it is going to
spend somebody else's time doing the work. So I spend a lot of time seemingly
"in a daze" or "going in circles" because I am often in a place where I
haven't yet resolved the contradictions in the situation, don't really
understand the problem, etc. I do figure it out and then spend some fraction
(less than 50%) of my time looking "engaged" in the way that my wife looks
"engaged" when she does her work.

The work of all four people are hard to compare because of those differences.
Unlike the other three, I'm in the one sector of the economy that seems to be
improving in productivity, but even that seems to be questionable.

The spectre of marxism (not leninism, stalnism, maoism, trotskyism ...) is
that behind it all our life lacks a dignity of work that makes all we toil for
meaningless. That is, the root cause of the heart problem might be in your
"other" heart as opposed to the physical organ -- the emotional stress caused
by not being engaged where decisions are made about where we spend our time.

We could say that we're getting "half our share" of the produced by our labor,
but we might be happier (get more utility) for less currency if we had more
choice about what we buy and sell as individuals.

------
clairity
> "Capital income amounts for two percent of income for the bottom 99 percent
> of households." (page 7 of the pdf)

so 98% of capital income accrues to the 1% who have no monopoly on how best to
allocate capital--see irrational capital flight into tech stocks and real
estate, and a lack of real innovation, rather than iteration, in the past 50
years.

blind faith in market efficiencies in a profoundly unfair and corrupt
marketplace only worsens our economy overall. this must be kept in mind in any
discussion of the captured regulatory environment and tax policy.

we're losing economic dynamism to the whims of the rich, and to the detriment
of all.

~~~
dasudasu
Free markets tend to become positive feedback loops for those with skills or
access to capital. Calling this feedback loop "unfair and corrupt" really does
not necessarily follow from this fact alone. At the very least, it is not the
best choice of words.

~~~
bhupy
One of my favorite professors in college was my economics professor, who
forbade us from using the word “fair” during lecture seminars. Even referred
to it as the “F-word”. The idea was that “fairness” is subjective and ill-
defined.

~~~
pydry
Could be relevant: [https://evonomics.com/more-evidence-that-learning-
economics-...](https://evonomics.com/more-evidence-that-learning-economics-
makes-you-selfish/)

~~~
bhupy
“In a study of over 28,000 students in Switzerland, 62% of economics students
gave money at least once to help students in need, compared with 69% of non-
economics students. These differences were already present before the students
took a single economics course: students with lower giving rates were drawn to
economics. As freshmen, before their first lectures, 71% of the students who
chose economics contributed, compared with 75% of non-economists.”

That’s...not a significant finding by any means.

Secondly, I would take these psychological studies with truckloads of salt. In
what is possibly the most damning indictment of the social sciences: they have
among the lowest replication rate of any of the sciences, and even after
retraction (due to replication failure), the vast majority of positive
citations continue after retraction, specifically in the social sciences:
[https://fantasticanachronism.com/2020/09/11/whats-wrong-
with...](https://fantasticanachronism.com/2020/09/11/whats-wrong-with-social-
science-and-how-to-fix-it/)

------
rdlecler1
People are much more mobile today than in the 60s. So while the top 5th may be
improving, I would guess that much of that is in major cities where the cost
of housing and education far exceeded income growth. It’s not just growth in
income it’s growth in income relative to your local cost of living.

~~~
klyrs
A quick search located a study on mobility from 1940 to 2000, finding that
mobility is on the decline. Do you have evidence that mobility has been
increasing since then?

> We find that mobility increased from 1950 to 1980 but has declined sharply
> since 1980.

[http://jhr.uwpress.org/content/43/1/139.refs](http://jhr.uwpress.org/content/43/1/139.refs)

~~~
kaczordon
They are definitely more mobile. One example(adjusted for inflation and family
size):

“Eighty-four percent of Americans have higher family incomes than their
parents had at the same age, and across all levels of the income distribution,
this generation is doing better than the one that came before it.”

[1]
[https://www.pewtrusts.org/~/media/legacy/uploadedfiles/pcs_a...](https://www.pewtrusts.org/~/media/legacy/uploadedfiles/pcs_assets/2012/pursuingamericandreampdf.pdf)

~~~
AlexandrB
I think a flaw here is adjusting for overall inflation and not measuring
something like "disposable income" from one generation to the next.
Healthcare, housing, and education have all increased faster than inflation
and are non-optional expenses[1].

[1] [https://slatestarcodex.com/2017/02/09/considerations-on-
cost...](https://slatestarcodex.com/2017/02/09/considerations-on-cost-
disease/)

~~~
kaczordon
In terms of percentage of income spent, the amount spent on food and clothing
has gone way down, housing has stayed the same more or less. Education and
healthcare both have very very heavy government involvement in the US so
there’s your common factor.

------
seibelj
We all agree that people in general act in their economic self interest. We
also agree that people prefer to donate money to specific causes they support
rather than pay extra in taxes - I think this is a fair statement.
Redistribution as a concept has widespread support, but the mechanism to do so
has wide disagreement, so each person tends to prefer selecting their own
mechanism of redistribution through donations to non-profits rather than pay
extra to the government.

Therefore, any solution proposed through the (long, compromised, imperfect,
special-interest ridden, full-of-holes) government legislative process will be
relatively easy to bypass by motivated rich people with the means to pay
professionals to structure their assets accordingly, as has been the case for
centuries. And the rich won't necessarily do it with sinister intent - they
may still give a huge amount of money to causes they support, but simply
disagree with giving it to the government as a blank check. Or maybe the rich
are just greedy and self-interested. But either way, the government will be
unable to take this money.

I don't think any redistribution mechanism implemented by the government can
attack the rich long-term. They may get snagged initially, then quickly
reorganize their assets to avoid such issues. The true people who get snagged
are the middle class, who actually do pay taxes (while the poor often have
negative-taxes and receive the redistribution), but do not have the means to
restructure themselves to avoid the taxes.

So we are left with 2 options - the first are broad, universal tax increases
(which no one advocated for in the US election except Bernie Sanders) rather
than (inevitably-failing) soak-the-rich taxes, and the second being to
restructure society to provide the same or more services to people using less
taxes.

I prefer the latter - we should be adding efficiency to the state, while
giving people more choice on how to help each other. I don't want to delve
into the details in this comment. But my overall point is that taxes targeting
the rich and super-rich will fail, as they always have and always will, so we
need some other solution if we desire to reduce inequality.

~~~
adaisadais
> I prefer the latter - we should be adding efficiency to the state, while
> giving people more choice on how to help each other.

Agreed. The state has become much too inefficient. Sadly, much of that is the
state’s own doing by continuously adding layers of bureaucracy and complexity.
Many of the problems could be solved with technology at scale. We could use
software to measure government like we measure every other business process.

We can and must enforce checks and balances.

~~~
AlexandrB
> Agreed. The state has become much too inefficient.

This is frequently stated as fact, but no evidence is provided.

> We could use software to measure government like we measure every other
> business process.

Perhaps we could get SoftBank to measure government efficiency. They seem to
be trusted with vast sums of money so they must be particularly good at
evaluating business efficiency.

~~~
bhupy
I mean, when a corporation is unable to collect enough money to continue
operating, it goes out of business. When a government program is unable to
collect enough money to continue operating, we increase its budget.

SoftBank is a good example; as long as they continue to lose money, they lose
the confidence of shareholders. If their track record continues, they risk
going the way of other big banks (Bear Stearns, Lehman Brothers).

Ask yourself how many companies from the 20th century are now defunct vs
government programs. Efficiency is a byproduct of change & evolution.
Inefficiency is a byproduct of institutional sclerosis.

~~~
stephenhuey
> when a corporation is unable to collect enough money to continue operating,
> it goes out of business

This is different from saying an organization is inefficient. From my
experience in the corporate world, some businesses can be VERY inefficient
compared to other businesses and still be getting enough done to move the ball
forward to the satisfaction of stakeholders. As much as people complain about
bureaucratic government organizations being too inefficient, I'm not convinced
that they are less efficient than many "successful" large corporations. The
difference is that they are essentially like a non-profit and complaints are
made without sufficiently measuring the value of their work (especially in
comparison to massive for-profit organizations). I'm not saying more nimble
organizations cannot produce more per-capita value, but there are
disadvantages with size and also sometimes advantages such as economy of
scale.

~~~
bhupy
It’s not different, because businesses that are “VERY inefficient” often end
up dying. There’s no structural permanence baked into the corporate system
that guarantees that a corporation will exist forever. On the other hand,
governments and state actors are largely static. The institutions and systems
that govern them seldom change. And the larger the polity, the harder it is to
build up the political will for democratic institutions to evolve/change. It
is very difficult (IMO impossible) for an inefficient government to “go out of
business”, so to speak.

> There are disadvantages with size and also sometimes advantages such as
> economy of scale

This is absolutely correct, but the market system ensures that whichever
corporation becomes large enough to deliver on those economies of scale is
selected as a function of their ability to deliver (for the most part). Ask
yourself what would happen if we democratically granted Sears a legally
authorized monopoly to essentially exist in perpetuity like states and state
programs exist today. Would they have been able to efficiently continue
delivering value as the world changed? Would we have allowed them to die and
be replaced? The fact that they were defeated to the point of bankruptcy by
Amazon et al is a feature of the system that is notably lacking in state
institutions.

In fact, the state institutions that perform the best are the ones that are
the smallest/most decentralized: [https://www.reuters.com/article/us-health-
coronavirus-podcas...](https://www.reuters.com/article/us-health-coronavirus-
podcast-breakingvi/breakingviews-the-exchange-too-small-to-fail-idUSKBN21P3E3)

~~~
ncallaway
> It is very difficult (IMO impossible) for an inefficient government to “go
> out of business”.

The Soviet Union will be glad to hear that.

~~~
bhupy
As with most data distributions in life, there are notable
exceptions/outliers. You can probably count the number of inefficient
governments that “went out of business” in the last 50 years on one hand.

You’ll need several people to tabulate the set of corporations that have gone
bankrupt, defunct, or M&A’d out of existence over the same timespan, in the US
alone.

------
MichaelZuo
Hasn’t the definition of taxable income changed over this period? I wonder how
a normalized version would look.

~~~
twoodfin
Indeed. Also strange not to consider transfer payments and other (non-taxable)
government benefits: How else are we supposed to be rebalancing against
market-determined income?

