
Amber Waves of Green - ido
http://www.gq.com/news-politics/big-issues/201207/amber-waves-of-green-jon-ronson-gq-july-2012?printable=true
======
petercooper
The trials and tribulations of the poor and rich ends of the spectrum don't
tend to surprise me, but the wildly varying ways the middle class perceives
their incomes always does.

It surprised me that a family bringing in $900 a week ($47k per year) doesn't
feel comfortable in _Des Moines_ (statistically it's above local median). But
then they note every 2 weeks they pay $375 for health insurance.. 20.8% of
their pre-tax income! Yet their "state and federal" taxes are only about 10%?

For all the bleating about paying "less tax" than other countries, it's ironic
that an ostensibly "free market" healthcare system is less efficient, more
cartel-like and wildly more expensive for its users than, say, the "socialist"
one in the UK where you could live well on the same money and still be paying
your fair share without getting any handouts.

~~~
ams6110
Are you excluding the "free" healthcare in the UK from your definition of
"handout"?

What "fair share" of taxation would they be paying in the UK?

~~~
petercooper
(For simplicity, let's assume a household with a single earner of $47k /
£30k.)

Sort of, but not exactly. I was implying that a household with that income
would be making close to a median contribution to the tax base so, purely in
my own opinion, would be paying a "fair share" in absolute terms. That is,
they should not be either highly subsidized or a major contributor. But..
let's run the numbers to see if my hunch is wrong! :-)

Said household would have a gross income of £30000, pay £4505 in income taxes,
pay £2732 in "national insurance" (ostensibly to fund social security, sick
pay, and various benefits), and be left with £22,762, or 75.9% of pre-tax
income.

(A "hidden" part to this is that (most) employers also make employer "national
insurance" contributions, in this case of £3164 so it could be argued this is
a hidden salary cost for employees.)

The total NHS budget in 2008/2009 was £94bn and there are around 25 million
households in the UK. This gives an expense of £3760 per household or 36% of
the total earned in direct taxation on our imagined household. This is double
the percentage of the national budget dedicated to health, so my initial
assumption may have been wrong.

However, with indirect taxation, especially VAT at 20% and high fuel duties,
and subtracting the contribution of things like corporation taxes to the tax
base, the total tax paid vs the absolute "fair share" is likely to come
_pretty_ close for this family.

Sorry if this is boring but I was intrigued and thought I'd look into it! :-)

~~~
swombat
FYI, speaking as an employer, Employer's NI doesn't feel hidden at all! It is
basically part of the cost of employing someone. It may be hidden from the
employee, but that's just a sleight of hand...

------
mgkimsal
Was anyone else bothered by the pictures not matching up with the sections?
Each picture was followed by a section that wasn't related to the text, which
was a bit confusing.

~~~
tomerv
Also, for some reason all the 'ffi' trigraphs are replaced with 'ffl': For
example, the second sentence in the first paragraph starts with "The offlce
building..."

~~~
anothermachine
Some bizarre OCR technology, or special typesetting code from the print
edition getting misinterpreted?

------
BadassFractal
I wonder what folks on HN thought of PG's essay on this subject:
<http://paulgraham.com/gap.html>

I'm simply not sufficiently well versed in economics to be able to judge
what's best for society. I'm also hoping that this is not purely subjective,
and that indeed there might be an optimal golden middle.

On one hand PG's arguments make sense to me, on the other, I cannot but feel
pulled in the opposite direction by some kind of populist/socialist desire to
chip in more and make society a better place. That said, I don't have millions
(billionaires seem to be more generous, so I'm not going to consider them) and
thus if I ever were to become wealthier, I wonder if I also would really mind
sharing more.

I already don't particularly enjoy paying 30% or more of my income, but I feel
like I'm doing my part (being originally from EU perhaps conditioned me to
think that this is "the norm"), although I wish that money was better spent by
the people in power.

~~~
bonaldi
The essay is truly horrible. I don't have the time to take it to bits, but a
couple of starting points:

\- he conflates earnings and effort, as if by earning 100 times you were
necessarily 100x more productive at some point.

\- related: wealth is categorically different. The worst chess player and the
best chess player must both play the same game. But if chess were wealth, the
poor guy would have to carve his own pieces and rent the hall, while the rich
guy would turn up and sit while the game played itself, no effort required

\- he's right that the middle-classes are the true engines of wealth creation,
not the rich. This is the crux of the problem: income inequality _destroys_
the middle class. It leaves only very poor and very rich. No middle class = no
wealth generation. That is why it's an issue for everyone, and no amount of
"smart people who work hard deserve to control 99% of capital" changes that.

~~~
yummyfajitas
Could you define "middle class", and perhaps explain how income inequality
"destroys" it? By most common definitions, your statement can't be true.

Taking a typical relative definition, if the middle class is [50-X%, 50+X%],
then by definition the middle class always makes up 2X% of the nation and
nothing can destroy it.

If you take an absolute definition of middle class (i.e., middle class = home
with X ft^2/person, tv, car, refrigerator), then inequality is pretty much
unrelated to how many people are middle class.

In short, for your claim to be true, you must be using some uncommon
definition of middle class. It would help to explain what it is.

~~~
irishcoffee
[http://blogs.reuters.com/great-
debate/2012/01/13/a-shrinking...](http://blogs.reuters.com/great-
debate/2012/01/13/a-shrinking-middle-class-means-a-shrinking-economy/)

Go to figure 6.

~~~
yummyfajitas
Using that definition (people in the range of [0.5 x median, 1.5 x median]),
the middle class has only shrank because more people have become rich.

[http://www.nationalreview.com/agenda/288306/guest-post-
scott...](http://www.nationalreview.com/agenda/288306/guest-post-scott-
winship-obama-administrations-questionable-mobility-claims-reihan-sal)

The number of people who are _middle class or higher_ has remained contant
since 1970. Using Alan Krueger's definitions, all inequality has done is moved
people from middle class to rich. Is that a bad thing?

~~~
bonaldi
Yes, if it leaves in its wake massive income inequality.

The middle class is the engine of wealth generation. It both spends high
proportions of its income and has enough income to start new enterprises. A
middle class drives an economy.

What you are asking is if it's OK for the middle class of merchants to shrink
because many are now rich enough to be lords and kings. That may be, but it
still leaves a society with no merchants: only the very poor and very rich.

~~~
yummyfajitas
_It both spends high proportions of its income and has enough income to start
new enterprises._

Why can't a middle class person who became "rich" (although most people don't
consider >1.5x median to be rich) do the same thing?

Suppose my income dropped dramatically and I suddenly entered the "middle
class" (by Alan Krueger's definition - I'm actually middle class by the
definition of most people). How would this make it easier for me to start new
enterprises?

~~~
bonaldi
_Why can't a middle class person who became "rich" (although most people don't
consider >1.5x median to be rich) do the same thing?_

Starting new businesses: It's more a matter of "Don't" than "Can't." A middle-
class person who became rich is either tending the business that got them
there or has otherwise lost the impetus of need that drove them to start a
business. If your income suddenly dropped dramatically, what would you do:
adjust to your new income level and be happy, or strive immediately to retain
your previous level?

Spending income: It's easy to spend 99% of a median income. It's almost
impossible for the very wealthy to spend anything like what they make.

Additionally, there are only so many needs to be filled. It's more
economically productive to have a very large number of people willing and able
to buy modestly priced items than it is to have a very small number wanting to
buy very highly priced items.

~~~
yummyfajitas
You clearly haven't read any of the articles cited in this thread. Alan
Krueger defines middle class as more than $25k/year, but less than $75k/year
(at contemporary income levels). Rich is presumably $75k or more. The middle
class has shrank because people have moved from $65k to $85k.

This has _absolutely nothing whatsoever_ to do with the very wealthy.

If you have evidence that people going from $50k to $80k is bad for the
economy, go ahead and present it. You haven't yet. All you've presented are
vague misconceptions and demonstrated you don't understand the numbers under
discussion.

~~~
bonaldi
Sorry, if you want to turn this into a flame war, I'm out. I understand that
it's difficult to see or admit flaws in a system and an industry that has
personally benefitted you, but the flaws remain nonetheless.

In particular, you have not provided evidence for your contention that the
middle class has shrunk solely because people have moved "from 65k to 85k",
you have shown only that they have not dropped below 25k.

The facts -- income stagnation and wealth inequality -- are in direct
opposition to your "the disappearance of the middle class is fine, they're
just getting rich" fantasy. People have either gone to exceptionally above
85k, are stagnant, or are dropping towards the lower end.

What they are not doing is just edging into "rich". That's not a supportable
claim.

And, ultimately, irrelevant. The problem is income inequality, the shrinking
middle class is its symptom. If you have evidence that a society can survive
this level of wealth inequality, please present that.

~~~
yummyfajitas
_...you have not provided evidence for your contention that the middle class
has shrunk solely because people have moved "from 65k to 85k", you have shown
only that they have not dropped below 25k._

True - $65k -> 85k was an example. Let me be more precise: the middle class
has only shrunk because people have moved from X to Y, where $25k < X < $75k
and Y > $75k. I.e., no one became poorer, and some people became richer.

 _The facts -- income stagnation and wealth inequality -- are in direct
opposition to your "the disappearance of the middle class is fine, they're
just getting rich" fantasy. People have either gone to exceptionally above
85k, are stagnant, or are dropping towards the lower end._

No one is dropping towards the lower end. The number of people at the lower
end (below $25k) is the same (about 25%). Since the number of people between
$25k and $75k shrank, it must be because the number of people above $75k
increased. That's just basic arithmetic.

You still have yet to show how people's income exceeding $75k causes any harm
at all, short of vague hints that it's almost impossible for them to spend
anything like what they make.

~~~
bonaldi
"Let me be more precise: the middle class has only shrunk because people have
moved from X to Y, where $25k < X < $75k and Y > $75k. I.e., no one became
poorer, and some people became richer."

Again, you haven't shown this, either. Many people could have gone from $65k
to $35k while a few moved from $65k to $650k on the same set of facts. That
nobody has dropped below the baseline of the middle class does not mean it is
not shrinking or that nobody in it has gotten poorer.

"You still have yet to show how people's income exceeding $75k causes any harm
at all"

This is not the point. The point is that massive wealth inequality causes the
harm. A shrinking middle class is a symptom of that inequality.

Whether or not you continue to deny or justify the symptoms is not going to
change the facts of the underlying disease. I'm not going to show you how
dying causes cancer.

------
ido
TED talk from Nick Hanauer (2nd richest amazon guy in the article):
<http://www.youtube.com/watch?v=bBx2Y5HhplI>

------
encoderer
My wife and I are fortunate. We're not wealthy by our standards, but I do
recognize that we certainly would be considered wealthy by a lot of Americans.
Our household income is about 4-5x the national average, and we have no
children.

My understanding of the stats informs me that our household income puts us in
the top 2.5%. Certainly a very blessed situation to be in, and one that we
both work very hard to achieve.

But here's the striking truth about wealth distribution in our country...

The power-law-ish distribution of our wealth means that quantitatively, as a
percentile, I'm much closer to the "1%" than I am to the "50%". But
qualitatively, the struggles I face -- saving for retirement, knowing that if
I had a serious illness our cash flow would dry up, etc -- my life is nothing
like the "1%".

Another way to put it... I'm near the very top of the small pile of wealth
shared by normal Americans.

I'm having a hard time properly articulating this but I think you get the
point. It's almost as if, by percentile, you'd think "wow, I really have
earned a big slice of this pie" only to find out that more than half the pie
was taken by 0.5% of Americans before it was ever put on the shelf to cool.
That until you're invited to take a sliver from that first half, you'll never
get more than crumbs of the share that's split 298.5 Million ways.

~~~
muhfuhkuh
"knowing that if I had a serious illness our cash flow would dry up"

I will never in my life understand how Americans (myself included) can think
this is, in _any way possible_ , okay.

Or, how, if we just moved it more toward private companies having more control
over our healthcare than they already do, that it'll get better. It's asinine.

~~~
encoderer
I didn't mean that as a commentary on our healthcare system. I mean that my
income would be reduced to whatever level our long-term disability insurance
provides.

Since you mentioned it, though: for people that are well-off in this country,
the healthcare system works fine (more or less). That's probably a large
source of the complacency. For both my wife and I, our health insurance plans
are very good. They are paid 100% for us. They include a 10% co-insurance but
a relatively low out of pocket cap.

~~~
_delirium
I agree on the last point, but I'd say it's more like it works "acceptably",
as in you do more or less get healthcare in some fashion. If you're a salaried
professional and have good health, it's more or less ok, with some weirdness
around changing jobs (which is getting more common). It does become a _huge_
problem still if you end up unlucky enough to have a major health problem
earlyish in life, e.g. a congenital heart problem or cancer in remission. Then
you in effect have to work for large companies to get into their group plans,
be very careful about coverage gaps, and don't even think about doing
freelance or a startup. It also produces weird moral dilemmas; for example, if
you have a major preexisting condition and join a small company that offers
health insurance, you may inadvertently be punching a big hole in their budget
by massively worsening their employee risk pool from the perspective of the
insurer (and the business isn't allowed to ask you about things like that
before hiring).

The other big anger-relieving valve is Medicare, which removes a large
proportion of major illnesses (anything with onset age 65+) from the problem
space that private-sector health insurance has to address. If the elderly had
to buy health insurance on the private market, or alternatively have their
insurance covered via employer pension plans, I don't think the system would
work at all, and there would be a lot more angry people (who vote at high
rates).

------
register
It's a real scandal that a person that makes 500.000 $ a month pays only 11%
taxes. This system is completely unfair. This is not liberalism: this is
simply the law of the strongest.

~~~
yummyfajitas
I agree. It is a scandal that reporters constantly focus on the individual tax
bill of investors while completely ignoring taxes paid by the corporations
they own.

The solution is simple: stop taxing corporations and replace it with taxes on
capital gains/etc. (Also, while we are at it, equalize the taxation of cap
gains, dividends and interest.)

~~~
yequalsx
It's a simple sounding solution but I'm skeptical of the issue being that
simple. There's a world of difference between GE style corporation and an
S-corp owned by a single person.

The GE type corporations effectively pay very little tax in the present
system. They also have the right to spend an unlimited amount of money on
election campaigns. In the U.S. system corporations are treated as persons. If
a person makes an income (profit) they get taxed.

What we presently have is a broken system in my opinion. The very rich earn
their money through capital gains and the capital gains tax is very, very low.
The very wealthy in the U.S. do not pay a fair share of the tax burden or for
the cost of government. Perhaps eliminating corporate taxes while
simultaneously greatly increasing capital gains taxes would be good. There
could also be some bad consequences to eliminating corporate taxes altogether.

~~~
twoodfin
_The very wealthy in the U.S. do not pay a fair share of the tax burden or for
the cost of government._

They don't?? The top 1% of taxpayers paid 36.7% of all income taxes in 2009[1]
(yes, that includes capital gains). The top 10% paid 70%!

[1] <http://ntu.org/tax-basics/who-pays-income-taxes.html>

~~~
yequalsx
One needs to look at overall tax receipts. Not just income taxes. The very
wealthy primarily pay capital gains taxes and not income taxes. Also, the
36.7% figure is not meaningful without knowing the percentage of wealth the
very rich control.

~~~
luminaobscura
so actually Top 10% pays more than 70% of the taxes when we also consider
capital gains (because they are the ones who play with the capital)

well, i think we all should be grateful for the %10, we are basically funded
by them. Thank you rich folks!

~~~
yequalsx
The top 20% of the U.S. control 93% of the financial wealth of the country. I
don't believe they pay 93% of the total tax burden.

------
_delirium
I hope that if I ever find myself making $625,000 per week, I'll be a bit
happier with my life, and less angry about poor people getting too much, than
this Wayne fellow is.

~~~
Tobu
I was really worried at this guy managing to be so poorly educated for the
power he has (see: his SuperPAC contributions). I know this was a long time
ago and he is old now, but he must have interacted with a lot of poorer
people, especially when he had to earn money to pay for college, some of whom
must have been generous in their own way. It takes a high level of magical
thinking to think he was the only one to give the kind of selfless help that
_Dr. Hudson's Secret Journal_ recommends.

~~~
OpieCunningham
How selfless is it when you consider it the critical, deciding factor in your
own success.

------
funkeemonk
Considering how much the US has spent and is still spending on the military
for the wars in Afghanistan and Iraq, I don't quite get the perception that
taxing the rich more would fix anything. The bucket is leaking like crazy at
the bottom and the solution is to pour more water? It may be fairer, but will
it produce that much benefit, especially when compared to how difficult it
would be to make this change? Is this tax-the-rich issue a red herring?

How much more money would end up in Uncle Sam's coffers anyway if the richer
are taxed more?

~~~
sp332
Since just a few percent of the US population make 40%+ of the money in a
given year, increasing taxes on those relatively few people would have more
effect than taxing any other group of citizens. Also, since their effective
tax rate is actually lower than most peoples', bringing their tax rate into
line with the rest of the country seems like a no-brainer way to increase tax
revenues substantially.

~~~
yummyfajitas
_Also, since their effective tax rate is actually lower than most peoples'..._

No. The people with the highest incomes already pay a disproportionately high
portion of their income in taxes, far more than the poor or middle class.

Bringing their tax payments into line with the rest of the country would cause
them to pay a lot less in taxes than they do now.

[http://taxfoundation.org/article/new-data-top-1-pay-
greater-...](http://taxfoundation.org/article/new-data-top-1-pay-greater-
dollar-amount-income-taxes-federal-government-bottom-90)

~~~
sp332
Warren Buffet famously observed that he paid a lower tax rate than his
secretary. I'm mainly talking about income tax, but that chart seems to
include all kinds of taxes including real estate etc. It's not at all
surprising that the top few % are paying higher taxes on their property and
other static wealth, my point is that they're paying lower rates on income
taxes.
[https://en.wikipedia.org/wiki/Income_tax_in_the_United_State...](https://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Effective_income_tax_rates)

~~~
yummyfajitas
This data comes from federal tax returns. As far as I know, there are no
federal taxes on real estate (except for capital gains when real estate is
sold).

------
taylonr
I'm not sure that if the author tried to write an article that did nothing but
reinforce stereo-types he could have done a better job of doing so.

I read that article and I don't think anything in the article surprised me.

Immigrant working for next to nothing? Check. Middle class family living
paycheck to paycheck in middle america? Check. Millionaire who drops 100k for
a business manager? Check. Dot.Com millionaire who takes everyone he can on
his private jet? Check "Self-Made Man" who doesn't want to pay more taxes?
Check.

~~~
Tobu
There's a lot more detail than that. The way the lower-class people were paid
(prepaid cards!) and how they budgeted were interesting to me; the details and
evolution of the healthcare costs in particular were eye-opening. I'd have
appreciated similar detail for the richer ones, but it would take a lot more
virtual ink I suppose.

~~~
taylonr
"The details and evolution of healthcare costs in particular were eye-opening"

How long have you been working? I ask out of curiosity, because I've been
working for the past 12 years as a software developer. For the last 8 years if
I didn't change jobs or get a promotion there was only 1 time that my raise
out-paced the insurance increases.

The fact that the lowest paid guy got paid via pre-paid debit card is only
surprising because I assumed it was cash under the table. I know that in
central Missouri that if you work construction it's common practice to pay you
in cash for the first 2 weeks because too many people don't stay on for two
weeks. As a result employers see it as too expensive to fill out all the
paperwork etc.

I guess I just thought most (if not all) of this was common knowledge, and I'm
in a upper-middle bracket and come from an upper-middle class family, so it's
not like I "came up from welfare" and saw all this first hand.

However, I assume that the stories of these family run a lot deeper. I just
kept thinking "Is it really news that a dishwasher gets taken advantage of and
lives in a scary neighborhood?"

~~~
Tobu
I live in Europe. I was aware of some aspects of US healthcare: expensive
overall, a tendency to bankrupt people, failing to prevent easily avoidable
harm, it's just that the first item was a statistic to me. 21% of income for
someone who has a median income drove it home. The trend also escaped me, I
didn't follow the US social climate until recently.

I assumed cash as well, especially since the employer is shady; our cards also
have chips and would easily be tied to an ID, so I was a bit thrown off. We do
share the problem of catering relying on undocumented labour.

~~~
taylonr
Sorry, my clearly US centric bias was showing. I didn't even think about
someone who actually has decent insurance replying on this thread :)

I've been fortunate enough to get promoted & change jobs over the past 5 years
so I've actually out-paced insurance costs. We'll just see if that continues.

------
jimduey
On that great universal healthcare system in the UK,
[http://www.telegraph.co.uk/health/elderhealth/9362183/NHS-
fa...](http://www.telegraph.co.uk/health/elderhealth/9362183/NHS-facing-
colossal-care-bill-unless-system-is-overhauled-urgently.html)

------
batista
> _Frantz washes dishes at the Capital Grille restaurant, a posh steak house
> near the harbor in Miami's financial district. He nets $200 for a twenty-
> seven-hour week and receives no food stamps or government assistance of any
> kind._

I HATE any kind of posh establishment that doesn't pay it's employees well.

When I want to spend some money on a posh restaurant or hotel (not that I have
any money to do that often) I don't want the people tending me to be making
minimum wage, while dinner costs $200 per person. Pay your bloody employees
better.

To me, any establishment that does that kind of thing, are fake-posh. Paying
their staff like shit is like having a huge chandelier made of plastic, or
"silverware" made of nickel.

~~~
twoodfin
I bet there's some competition for those dish-washer jobs: If you believe the
article, he's being paid more than minimum wage since he's netting $7.40/hour
after FICA and other taxes.

Why is he only working 27 hours/week? If he's serious about raising himself
out of poverty, finding another part-time job would seem to be a priority.

~~~
fsidca3
I would like to politely suggest that a) finding full-time work when
desperately poor is maybe not as easy as you seem to believe, especially when
there are massive transportation issues at play and b) the tendency to focus
immediately on what the poor could be doing better, instead of on how the rest
of us could do a better job in _helping_ them, is kind of insane (though
extremely popular on the internet).

Could Maurose Frantz raise himself out of poverty if he just pulled a little
harder on them faithful ol' bootstraps? Maybe! You'll never know, of course,
since you don't know his actual situation and have almost certainly never
known anything like it, but your go-to move of imagining that this is the case
--that it's basically 'his fault' he's poor--is definitely a good way to calm
your conscience. We all sleep better when we're convinced the world is just.

Maybe you've gathered from my tone that I don't think this is exactly the
smartest way to go about fixing America's problem with poverty.

~~~
twoodfin
I think you're making an awful lot of assumptions about my point of view from
my merely pointing out that nobody, no matter what government programs are
available, is going to raise him or herself out of poverty working 27 hours a
week.

And seriously: The article doesn't tell us, but we can assume he's a first or
second generation immigrant from Haiti, a place of _truly_ grinding poverty.
"We" have already given him an absolutely tremendous hand up by giving his
family a chance to be here. We could easily deal with the "problem" of poverty
like Frantz's if we simply didn't let Haitian refugees and other extremely
poor individuals migrate here. But I think it's for the best that we do offer
that opportunity when we can.

~~~
batista
> _I think you're making an awful lot of assumptions about my point of view
> from my merely pointing out that nobody, no matter what government programs
> are available, is going to raise him or herself out of poverty working 27
> hours a week._

Actually people have raised themselves out of poverty by working far less.
IIRC, one guy in the article, just chanced upon Jezz Bezos and invested a
small sum in Amazon.

That said, there are people unable to work themselves out of poverty even by
working more than 40+ hours per week. Try talking with people working on your
nearest Walmart for example, for some insight. Those kinds of salaries are
spent as soon as they are received, in gas, rent, utility bills, foods, the
kids, etc, rarely leaving anything to pursue something more, enroll in some
educational program, etc.

Plus, people working 50+ hours a week in some office job, a lot of times
slack, browse the web, gossip around the water cooler, and such, that in the
end their productive time ends less (and much much easier on their body and
mind) than a guy working 27 hours a week in a restaurant kitchen, which could
be a no-breaks, work constantly, hell.

~~~
pstuart
> He invested all the money he had on hand—$45,000 cash

Not a good example for "raising oneself out of poverty"

> His parents made good money in the pillow trade, and after college he set up
> a few okay businesses

That is not poverty.

------
jws
The original title was useful. Changing a descriptive title to a useless
phrase is disrespectful of the HN reader's time.

~~~
nsns
...and probably killed this thread.

I wonder why its done, there's no reason for it.

~~~
SteveJS
Was it originally the same title as in the html?: <title>The Surprising Truths
About Income Inequality in America: Big Issues: GQ</title>

~~~
rprasad
It was when I first started reading the comments.

