menu

Notes From the Fieldby Martin Weil

Posts Tagged ‘income disparity’

June 3, 2015

Marriner Who?

CGiU7Q6UYAAKtJj eccles

 

 

Interesting historical quote via @StephanieKelton

 

 

 

 

 

 

 

And who is Marriner Eccles some might ask?

The building at left is named after him. Home of the Federal Reserve.

May 31, 2015

A Tragic Tale of Racial Hatred Becomes One of Redemption

One of my favorite Ted Talks of the year is Anand Giridharadas’ “parable about the two paths an American life can take, and a powerful call for reconciliation.” It is also a concise narrative of two Americas, one full of promise, one with none.

If you live near a Whole Foods.  If no one in your family has served in the military. If you are paid by the year, not by the hour. If most people you know finished college…. If you are not one of 65 million American with a criminal record. If any or all of these things describe you, then accept the possibility that you may not know what is going on. And you may be part of the problem.

May 19, 2015

Who Makes Less Than $15 An Hour?

42% of the US workforce is the startling answer according to this chart from Fortune.workers-by-demographic-group

July 29, 2014

So Warren Buffett Walks Into a Bar…

Ten working class guys are in a bar when Warren walks in, goes the tale. As soon as Buffett crosses the bar’s threshold, the average person’s wealth in the room skyrockets.

This is a classic example of how statistics can be used to make utterly misleading statements. It is preamble to this more than a little shocking bit of data from Marginal Revolution

The inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36 percent decline, according to a study financed by the Russell Sage Foundation. Those are the figures for a household at the median point in the wealth distribution — the level at which there are an equal number of households whose worth is higher and lower.

The median is the statistical measure that provides real insight here regarding how the typical American household’s wealth has fared. Average wealth and income in the US has certainly risen since 2003. But this information is of no value if we are trying to explain how the typical household is doing. Average in this case is not “average.”

Much like Warren walking into the bar, this rise in average income is a consequence not of rising wealth across the board, but of extreme wealth increases at the very highest end of the spectrum. This rising tide has not raised all boats this time around and most people affected “get” this fact. The typical household, as shown by this study, has not benefited from an increase in wealth at all, but has instead suffered a substantial decline.

It is data points such as these that betray for me the factors underlying the ongoing discontent with the current economy in the US.

inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36 percent decline, according to a study financed by the Russell Sage Foundation. Those are the figures for a household at the median point in the wealth distribution — the level at which there are an equal number of households whose worth is higher and lower. – See more at: http://marginalrevolution.com/marginalrevolution/2014/07/were-not-as-wealthy-as-we-thought-we-were.html#sthash.xK1atyzm.dpuf

July 19, 2014

Global Income Inequality is Falling

Income inequality has surged as a political and economic issue, but the numbers don’t show that inequality is rising from a global perspective. Yes, the problem has become more acute within most individual nations, yet income inequality for the world as a whole has been falling for most of the last 20 years. …

Policies on immigration and free trade, for example, sometimes increase inequality within a nation, yet can make the world a better place and often decrease inequality on the planet as a whole….

The message from groups like Occupy Wall Street has been that inequality is up and that capitalism is failing us. A more correct and nuanced message is this: Although significant economic problems remain, we have been living in equalizing times for the world — a change that has been largely for the good. That may not make for convincing sloganeering, but it’s the truth….

Yes, we might consider some useful revisions to current debates on inequality. But globally minded egalitarians should be more optimistic about recent history, realizing that capitalism and economic growth are continuing their historical roles as the greatest and most effective equalizers the world has ever known.

Tyler Cowen in the NY Times

 

Income inequality has surged as a political and economic issue, but the numbers don’t show that inequality is rising from a global perspective. Yes, the problem has become more acute within most individual nations, yet income inequality for the world as a whole has been falling for most of the last 20 years. It’s a fact that hasn’t been noted often enough…

The message from groups like Occupy Wall Street has been that inequality is up and that capitalism is failing us. A more correct and nuanced message is this: Although significant economic problems remain, we have been living in equalizing times for the world — a change that has been largely for the good. That may not make for convincing sloganeering, but it’s the truth…

– See more at: http://marginalrevolution.com/#sthash.tVnFynL5.dpuf

Income inequality has surged as a political and economic issue, but the numbers don’t show that inequality is rising from a global perspective. Yes, the problem has become more acute within most individual nations, yet income inequality for the world as a whole has been falling for most of the last 20 years. It’s a fact that hasn’t been noted often enough…

The message from groups like Occupy Wall Street has been that inequality is up and that capitalism is failing us. A more correct and nuanced message is this: Although significant economic problems remain, we have been living in equalizing times for the world — a change that has been largely for the good. That may not make for convincing sloganeering, but it’s the truth…

– See more at: http://marginalrevolution.com/#sthash.tVnFynL5.dpuf

Income inequality has surged as a political and economic issue, but the numbers don’t show that inequality is rising from a global perspective. Yes, the problem has become more acute within most individual nations, yet income inequality for the world as a whole has been falling for most of the last 20 years. It’s a fact that hasn’t been noted often enough…

The message from groups like Occupy Wall Street has been that inequality is up and that capitalism is failing us. A more correct and nuanced message is this: Although significant economic problems remain, we have been living in equalizing times for the world — a change that has been largely for the good. That may not make for convincing sloganeering, but it’s the truth…

– See more at: http://marginalrevolution.com/#sthash.tVnFynL5.dpuf

Income inequality has surged as a political and economic issue, but the numbers don’t show that inequality is rising from a global perspective. Yes, the problem has become more acute within most individual nations, yet income inequality for the world as a whole has been falling for most of the last 20 years. It’s a fact that hasn’t been noted often enough…

The message from groups like Occupy Wall Street has been that inequality is up and that capitalism is failing us. A more correct and nuanced message is this: Although significant economic problems remain, we have been living in equalizing times for the world — a change that has been largely for the good. That may not make for convincing sloganeering, but it’s the truth…

– See more at: http://marginalrevolution.com/#sthash.tVnFynL5.dpuf

June 28, 2014

The Pitchforks Are Coming

Hedge fund colleague forwards this cautionary piece from Seattle tech billionaire Nick Hanauer.

Unless our policies change dramatically, the middle class will disappear, and we will be back to late 18th-century France. Before the revolution.

And so I have a message for my fellow filthy rich, for all of us who live in our gated bubble worlds: Wake up, people. It won’t last.

May 29, 2014

Good News, Less Good News

Stephanie Pomboy reports in Barrons that US household net worth has rebounded sharply from the depths of the financial crisis. Since March 2009, US household wealth has increased an astonishing $20+ Trillion and now sits at an all time high.

In the less good news, the WSJ, reporting on the same data, agrees with Pomboy that the majority of this wealth increase has gone to the already wealthy while the middle class has seen little of the gain.

Holdings of stocks and bonds as a share of overall net worth, at 35%, is at the highest level since the dot-com bubble burst in 2000, Fed data show. That means that even as wealth increases, it’s increasingly going to the affluent.

In addition to the affluent, much of the wealth surge is going to older Americans. Both groups are less likely to spend their gains and more likely to save, Mr. Emmons said. Meanwhile, sheer demographics—the retirement of the baby boomers and America’s aging population—are increasing the ranks of the nation’s savers.

The upshot: While American households overall are getting wealthier, the benefits for the economy may prove limited until such improvements reach more people

Thus it seems the US economy may be stuck in slow until both the middle classes and younger earners, who spend a far greater percentage of their incomes and wealth, receive a larger share of economic growth.

May 28, 2014

Offered Without Comment

New York City mommies with money to burn are hiring professional organizers to pack their kids’ trunks for summer camp — because their darlings can’t live without their 1,000-thread-count sheets.

Barbara Reich of Resourceful Consultants says she and other high-paid neat freaks have been inundated with requests — and the job is no small feat.

It takes three to four hours to pack for clients who demand that she fit all of the comforts of home in the luggage, including delicate touches like French-milled soaps and scented candles.

At $250 an hour, the cost for a well-packed kid can run $1,000.

From the NY Post. Pointer by Tyler Cowen

September 28, 2013

“An imbalance between rich and poor is the oldest and most fatal ailment of all republics.”

That cheery quote is from a 2012 Harvard study cited in Washington’s Blog. The anonymous, but generally well-researched and highly credible, Wash Blog continues with the following:

  • It’s the highest level of inequality ever recorded in the U.S.

These are ominous allegations to be sure and suggest that we may be closer to a tipping point than normally thought. While I am in no position to argue the merits of the historical comparisons, Wash Blog also notes that Americans are unaware of just how far inequality has progressed in the US. That is an assertion I can attest to from personal observation.

Many have commented previously that the Tea Party and Occupy movements are reactions to the degrading economic situation for the middle classes in the US. The causes of this decline are hotly debated, with the prime culprits viewed as either the competition from foreign labor and/or tax policy in the US. A lack of infrastructure and education spending, which proportionately provides a higher benefit to those with less income, is also cited.

Winston Churchill famously quipped that you could “always count on the Americans to do the right thing, after they have exhausted all the other possibilities.” Let’s hope that Winnie was correct, as the historical record is filled with great cultures that have foundered on their internal inequality.

November 19, 2012

Preschool May Be THE Answer

If there was just one simple program that could dramatically reduce the incidences of teenage pregnancy, drug use, and crime, as well as increase both high school graduation and employment rates for at-risk populations, I would say we had found something truly momentous.

According to this Planet Money podcast, the state of Oklahoma has found and is implementing just such a program … and it is universal pre-school.

This is not just wishful thinking. The OK project is based on hard data of social outcomes and cost benefits that have been documented over fifty (yes, that says “50”) years by various research projects, see here and here. A recent University of Chicago study finds a lifetime financial return on investment of 300% for preschool spending.

The Oklahoma project is being funded by George Kaiser, one of America’s richest 20 persons according to Forbes, who says he was persuaded by the research data that preschool had the highest rate of return of any possible social program he could support.

© Copyright 2018 MW Investment Strategy All rights reserved. Site Credts
Site Credits

Site Design
Tracey Lebedovich
tracey@gloriousday.com

Copywriting
Andrea Scheve
Martin Weil

Photography
Jim Erickson www.ericksonstock.com
Kelvin Geis