
We’ve Been Measuring Inequality Wrong - testrun
https://theconversation.com/weve-been-measuring-inequality-wrong-heres-the-real-story-56179
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jnbiche
I highly disagree about the conclusion that spending inequality is more
important to look at than wealth inequality. Wealth indicates security and
lack of economic precariousness, spending does not. If you're middle income
and in chronic debt because you have a disabled child and care for your aging
parents, you might look just fine if you look at spending. However, your
hardship will likely be clearly reflected in your lack of wealth.

The fact that they chose spending rather than wealth makes me wonder _why_ it
was chosen. The authors claim that spending inequality is the correct measure,
but then provide zero research-based justification for this decision.

Reading the paper, they claim in regards to wealth and related forms of
inequality, "none measures inequality in living standards, which should be the
ultimate concern when assessing economic fairness". Well, that's a fine
presumption, but perhaps we're more concerned by the increasingly capability
of the top 0.1% of the wealth of this country (ie, the vast majority of it, as
much as 80-90%) to buy our political process and start us down a feedback loop
of no return.

Point being, these economists seem to bring in an awful lot of political and
moral prejudgments into this study (as is their profession's frequent wont).

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Gibbon1
>Point being, these economists seem to bring in an awful lot of political and
moral prejudgments into this study (as is their profession's frequent wont).

I was reading this recently.

[https://www.marxists.org/reference/subject/economics/keynes/...](https://www.marxists.org/reference/subject/economics/keynes/general-
theory/ch23.htm)

Protip: Want to read any historical stuff on economics? You'll be slumming
with commies.

Anyway what is amusing reading that it's apparent that the policies promoted
by orthodox economists have not changed in 200-300 years. And actually predate
economics as a field. It would be like going to the doctor circa 2016 and
being told the results of your MRI indicate a vital need to apply leaches to
your nether regions. So yeah does seem that for economics political and moral
prejudgments trump theory 99% of the time.

~~~
jacobolus
John Maynard Keynes is a “commie” now? Here’s what he had to say about the
USSR:

“How can I accept a doctrine, which sets up as its bible, above and beyond
criticism, an obsolete economic textbook which I know to be not only
scientifically erroneous but without interest or application to the modern
world? How can I adopt a creed which, preferring the mud to the fish, exalts
the boorish proletariat above the bourgeois and intelligentsia who, with
whatever faults, are the quality of life and surely carry the seeds of all
human advancement? Even if we need a religion, how can we find it in the
turbid rubbish of the Red bookshops. It is hard for an educated, decent,
intelligent son of Western Europe to find his ideals here, unless he has first
suffered some strange and horrid process of conversion which has changed all
his values.”

~~~
Avshalom
Protip: anything that follows the word Protip is at least 50% tongue in cheek.

~~~
Gibbon1
It's that the stuff is usually on marxists.org

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skywhopper
There are lots of problems with this article.

The basic assumption--that "spending power" is more important than "wealth" or
"income"\--is questionable, but the authors don't really spend any time
defending it. The reason the richest 1 percent spent a lower percentage of
their income is because they don't have to, and because they are able to re-
invest their money (not counted as spending) in making themselves more money.
The poorest 20% do not have that luxury.

The arguments about how high taxes disincentivize work assume that income ==
work. But that's not correct. Productivity growth has been tremendous over the
last two decades, and workers have been producing more and more, but that
_hasn 't_ been translating into income gains, except for those in the top 2 or
3 percent, which is precisely what the income inequality gap reveals, which is
apparently why the authors of this study chose to use a different standard.

"Facts and figures are hard things. They upset prior views and demand
attention." Say the people who came up with an alternative model of measuring
inequality because the simpler model upsets their preferred policy, and would
rather ignore the problematic numbers by creating new ones.

~~~
ams6110
_Productivity growth has been tremendous over the last two decades, and
workers have been producing more and more, but that hasn 't been translating
into income gains_

People are (more or less) paid for their time and not their productivity. That
they are not getting paid more suggests that the supply of worker hours has
been more or less keeping up with the demand.

~~~
mdorazio
Yes, but for what reason? If productivity is going up, that means fewer hours
are needed to produce the same amount of products/services, so demand for
worker hours has remained roughly fixed (if you factor in population
increases) while production has been increasing. Who's been getting the
benefit of that increased production? Not your median household, which is the
whole crux of the problem.

~~~
ams6110
I think we all have. Many consumer products are far cheaper than they used to
be for one thing. A computer workstation in 1990 was $10,000. Today one with
far more computing power is under $1,000.

A "family" color television in 1975 was similar to what they cost today ($500
- $1,000) but that's not adjusted for inflation, and the same money today will
get one that's over twice the screen size, is far more reliable and has a far
better picture. In constant dollars today's far better product costs over 75%
less.

~~~
mdorazio
Fair enough, but every time I see examples like that, I have to ask - are
those really standard of living increases, or just technology advances? Yes,
electronics have gotten cheaper, but healthcare and education have gotten
massively more expensive. More importantly, can the average worker today work
less hours than his or her father did in order to live a middle class life? I
would argue it's actually the opposite in many cases.

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tdaltonc
> Remarkably, this debate has taken place based on partial and inappropriate
> indicators of U.S. inequality. . . . First, spending inequality – what we
> should really care about – is far smaller than wealth inequality.

No one really care about the exact level of inequality. They care about the
trend (that inequality is much higher then it used to be). If they showed that
that trend was different then what everyone thought that would be interesting,
but just showing that this measure reports a different level is not so
interesting.

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scotty79
> Another key finding is that U.S. fiscal policy acts as a serious
> disincentive to work longer hours or harder for more pay.

And yet they work longer hours than most of civilised countries an sometimes
work two jobs. Either they are really stubborn or the research or the
conclusions from it have some flaws.

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takno
The emphasis on lifetime spending power in this paper is odd, since most
people wouldn't choose to starve through their 20s and 30s in return for the
ability to spend more on luxuries towards the end of their lives. I suspect
they are also assuming that young people today will end up with the same
spending power as today's seniors, which is a pretty questionable scenario.

Overall the article leaves the impression of authors with a conclusion in mind
and a determination to find data which matches

~~~
ams6110
And yet if people did save and invest aggressively in their 20s and 30s we
would not be talking about wealth inequality to nearly the degree we are now.

~~~
wott
Invest? Invest what???

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wott
Each parameter (declared or hidden) that they inject in their calculation is
carefully designed to decrease the inequality. No wonder they obtain a
measurement with less inequality. Anyway, they did not really need all to go
to such great lengths to get this result, since they do really care about it
and their conclusion is mostly unrelated to it.

Economists... Economic science... It would be more honest not to disguise
oneself under scientific methods, and that should be renamed "economic
politics" (and while we are at it, let's rename sociology to "politics" and
philosophy to "religion", everything will be clearer).

~~~
ap22213
The statement about economics rings true. When I think of science, I think of
models that accurately and precisely reflect reality. That is, a tested and
validated model should be predictive and consistent.

I have no trust for 'sciences' that cannot tell me precisely and accurately
what the effect of an action will be. If the author's of the paper could tell
me that an implementation of policy X would yield an effect of Y within an
error of Z, within a certain timeframe then I'd have at least a small degree
of trust. But, even then, they'd have to also specify metrics to track so that
an observer could validate that the effect is 'on course'.

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hifier
Lots of hate here so far. I agree more explanation of their premise would go a
long way towards convincing skeptics. However, I think this is an interesting
perspective and deserves better conversation. Fiscal policy is progressive and
has a dramatic impact on individual finances. Contrary to popular belief not
everyone in the 1% pays the capital gains rate.

~~~
jnbiche
I read a lot of criticism, but no "hate". Can you show me a comment here that
you consider hateful?

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spdy
I never understood why cutting taxes creates more jobs. Before the full force
of globalization "trickle down economy" made some sense as the investments
would go locally (factories etc.) but at the current point in time it does
not.

We have a distribution of wealth in the world that looks like a hockey stick
and we actually need something like a bell curve.

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woodandsteel
The reason the wealthy spend less of their income is they have more than they
need, and they put the rest into investment, which increases their own wealth.

In fact, that is the basic conservative argument as to why the government
should let the rich keep their income. The idea is that investment by the
wealthy increases total size of the national economy, which in turn leads to
everyone's income going up.

The problem is that this process hasn't been working for about three or four
decades. The rich keep investing their money and getting richer, but income
for most other people is stagnant or going down.

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woodandsteel
The authors claim that the progressive tax system provides a disincentive to
work. So what they are saying is, on the one hand, things are just great, and
on the other hand, things are just terrible because people are voluntarily not
working.

Also, if the wealthy are not working, how come they keep getting wealthier?
And furthermore, why is it that studies show that Americans work more hours
than people in other industrialized countries?

The nice thing is that these sorts of propaganda attempts are failing because
people know from their own experience that income is stagnating.

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woodandsteel
Oh, and here is another thing. The authors say we need to take into account
future income.

So on the one hand conservatives say Social Security is going to collapse in
15 or 20 years and no one will get anything, and on the other hand they say
everyone is going to retire to a life of wealth and luxury.

Speaking of which, I wonder how many young or middle age conservative voters
would consider it a good deal to sign away their future SSA income for one
cent on the dollar.

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lumberjack
Did they really introduce a new bogus metric without even defining it, much
less justify its use? Never heard of "spending inequality" until this article
came along.

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dang
Url changed from [https://newrepublic.com/article/131517/weve-measuring-
inequa...](https://newrepublic.com/article/131517/weve-measuring-inequality-
wrong), which points to this.

