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It's going away by design. There's more to it than people using too much credit or living beyond their means (although these things don't help). Middle-class jobs are going away and being replaced by high-end PhD/low-end service jobs.
According to the book what are the fallacies regarding the gap?
This is what I got. I hope I make the point as clearly as he did. If you have questions, do aske me so I may clarify what I wrote.
The first point he brings up is that people do not make a distiction between the terms "rich" and the "poor".
He explained the rich usually mean people that accumulated large wealth.
However, he says that that most many people talk about people that are earning a level of income but are not necessarily rich. There are people that at this moment in their lives may have a nice income but have not accumulated wealth.
In the case of the poor he also points out that they are looked at from the standpoint of income, not how much wealth they may have accumulated. You may ask, the poor cannot accumulate wealth! Good observation but let me go further.
For now do keep in mind the concept that income does not necessarily equate to wealth. Some people with low income are not necessarily poor either.
He list 6 types of people with low income that are not poor:
1. Wives of affluent or rich men and husbands or affluent or rich women.
2. Affluent or wealthy speculators, investors, and business owners whose enterprises are having an off year and many even be losing money in a given year.
3. Peope who graduate in the middle of the year from high schools, colleges, or postgraduate institutions, and who threrefore earn only one-half of what they will be earning the following year.
4. Doctors, dentists, and other independent professionals who are just beginning their careers, and who have not yet built up a clientele to pay office and other expenses with enough leftover to create an income at all comparable to what they will be making in a few years.
5. Young adults living in the homes of affluent or wealthy parents, rent-free, or living elsewhere at their parent's expense, while they explore their possibilities, work sporadically or in low-paid entry-level jobs, or as volunteers in philantropic or political enterprises.
6. Retirees who have no rent to pay or mortgage payments to make because they own their own homes, and who have larger assets in general than younger people have, even if the retiree;s current income is low.
None of these people are poor but are included in the statistics as such and are not distinguish from those that really are poor because they all are listed by income level regardless of any accumulated wealth.
At the top people are not necessarily at that level all their live and have not necessarily accumulated wealth either. By income may look that way but it is not necessarily the case and yet they are lumped in a group where they may look rich just as people with wealth may be lumped with people that look poor.
The statistics simply show a snapshop of incomes at a moment as they are being recorded.
Now, he says that the bottom 20 percent in 1975, those labeled as poor, were also at the top 40 percent at some point during the next 16 years. He says that many of the people that may have started in their young years or started at the low economic end rose to the higher levels, they did not stay there. There is a lesser gap between them and those at higher income levels. They did not stay "poor" as portrayed.
This same trend is shown in other countries Greece. Greeks has a 50 percent and Holland 66 percent of people that were at the lowest income level and rose above that within two years. Canada and New Zealand showed similar trends.
He points out some numbers that may not make sense. For example, As hundreds of or thousands of families with annual incomes below $20K living in homes of $300K. Many of these people are in transitory income stages. Some go up and some go down as changes in the economy, luck in the business interprises, etc.
He also points out that numbers show how that the average person in the lowest fifths spends twice as much than his/her income. How could this be? There must be some other supplementary income that is not counted as makes them look poor and yet increase their purchasing power. Some may be those that are at the moment at the low income level from a higher level and are using their savings from prosperous years, credit based on their past income and future prospects, money supplied by relatives, parents, government, etc.
Now, here is an interesting one. He says that despite the perception of the elderly people have of them, he states the 70 to 74 age group have the highest average wealth of any age bracket in American society. Their average income of household headed by someone 65 old or older is less than half of households headed by someone 35 to 44 years old. The average wealth of these older households is nearly three times the wealth of households headed by people under 35 years of age. Of people of 65 or older income, 24 percent come from earning, while 57 percent comes from Social Security or other pensions. What this reflects is that "income distribution" numbers based on earnings understate the incomes of elderly, which are four times higher than their earnings.
This numbers do not include elderly homeowners that tap in equity in their home with "reverse mortgages" to use and is not counted as income in the numbers. Also, 85 percent of 65 years or older are either homeowners or home buyers. Of these 80 percent, their median monthly housing costs in 2001 averaged just $339. This included property taxes, utilities, maintenance costs, etc.
85 percent have A/C in their homes. They do not spend much in transportation anymore because many of them are retired and other costs like raising kids. These and other savings make up for some of the extra medical expenses they incur due to their age related medical problems. At that point Medicare comes into the picture to help offset those expenses.
Now, the rich. Many of those people that have raised to that high income level are taxes heavily because they are not labeled rich but often do not have much accumulated wealth. Those that have accumulated wealth do not have their wealth taxed. Yet those are tag as rich and hit hard with taxes. Example: In 2001 a household with an income of of $84K was enough to be at the top 20 percent. A couple making $42K each would not be considered rich even to make the top 5 percent required a household income just over $150K which would be about a couple making $75K each. They are comfortable incomes but do you think they can go an buy a home at Beverly Hills? No, the real rich live there, those that have accumulated wealth. These people can at any time fall at lower level brackets yet the wealthy are still at their level.
The numbers simply show that the older people live the more experience the accumulated, more they saved, more they earn, and the more they wealth the accumulate and most often are not at the low level. That gap simple is not there as if the so called "rich" are getting further away from the "poor". The bottom 20 percent declined from 4 percent income in 85' to 3.5 percent in 01' did not prevent the real income of the households in these brackets from rising-quite aside from the movement of actual people out of the bottom 20 percent between two years.
I hope I explained his point clearly. This information is from his book in chapter 5. The next section cover the so called "Vanishing" middle class.
You are right Randomdude. I will let you live in your small sheltered world and believe that illegal immigrants don't cost our health care system much at all.
Im not saying they dont cost the healthcare system dollars. Im saying that you and others keep refering to emergency room stabilization required by law as "free health care", when its not even close to "health care".
He also points out that numbers show how that the average person in the lowest fifths spends twice as much than his/her income. How could this be? There must be some other supplementary income that is not counted as makes them look poor and yet increase their purchasing power. Some may be those that are at the moment at the low income level from a higher level and are using their savings from prosperous years, credit based on their past income and future prospects, money supplied by relatives, parents, government, etc.
I thought this was hilarious. This statement here was enough to completely discount this guy as a line toting bafoon. Maybe if he wasnt lost in his partisan speal, he might find data on debt spending in this country. He mentions that in passing, but attaches "based on their past income". Now, just about everyone on the planet knows that for the past 20 years, it required little more then a pulse to get a credit card and home loan. Even when income is examined, it is RARELY verified. Even people with terrible credit can routinely get credit.
I suppose the fact that income has been substituted with debt spending by the lower classes doesnt support his theories, so it is simply ignored. Typical.
I thought this was hilarious. This statement here was enough to completely discount this guy as a line toting bafoon. Maybe if he wasnt lost in his partisan speal, he might find data on debt spending in this country. He mentions that in passing, but attaches "based on their past income". Now, just about everyone on the planet knows that for the past 20 years, it required little more then a pulse to get a credit card and home loan. Even when income is examined, it is RARELY verified. Even people with terrible credit can routinely get credit.
I suppose the fact that income has been substituted with debt spending by the lower classes doesnt support his theories, so it is simply ignored. Typical.
So you are saying those situations do not happen?
In other words, there are not people in the low income level that were at a higher level?
In other words you do not believe that once people are in a higher income bracket they will never fall to a lower bracket?
Those that do, does it means they never accumulated good credit, maybe even paid for a home, some may hot decide to live with relatives in hard times, etc.
You comment seems to say that, correct?
In other words if someone that may have had success in a business and used bought property, saved some money, stablish credit, etc. but may not have lost some contracts or a high paying job and now due to circumstances his house disappears, good credit disappears, has not family to help, government help is does not exist in any shape or form.
You may not want to believe those situations exist but I have seen people that fall in hard times that will rely on these things and often they get up and get back on their feet.
Now, there are people that are in the low income bracket and yet still do spend money that their income. How so? Many get government aid of some form to start food stamps and other sources that are not counted as imcome but it is income because they did not pay for those services.
What is so funny about those situations?
The book has data on all these points. I did not have time to write every single source. I stated the chapter in the book so anyone can verify it and dissprove it.
Do you have data yourself to dissprove his point? If you do, then counter his data and points with your data. You may be right. However, just saying he is a bafoon is only a common ad hominen fallacious statement.
Last point, I did see the years some of these data come from. But are those situations do not exist anymore? Are people just staying in a income bracket forewer? People have not moved up and down at different bracket levels? People do not accumulate experience through the years and buy houses and accumulated retirements in some form and have not gained experience that make them move valuable? What are the present stats in different age groups as far as material possesions? What is the present data on age groups in their present income bracket? What are the percentages of older brackets being at higher pay brackets?
You may want to compare and then let me know if your counter point proves him wrong.
So you are saying those situations do not happen?
In other words, there are not people in the low income level that were at a higher level?
No, Im not saying that at all. However, the numbers of these people are a small fraction, mostly caused by retirement.
Quote:
Originally Posted by elamigo
In other words you do not believe that once people are in a higher income bracket they will never fall to a lower bracket?
If income alone is considered, and retirement is removed from the equation, yeah, Id say for the most part, in a normal economy, people will not fall income brackets, ESPECIALLY on the high end.
Quote:
Originally Posted by elamigo
Those that do, does it means they never accumulated good credit, maybe even paid for a home, some may hot decide to live with relatives in hard times, etc.
You comment seems to say that, correct?
I do not have statistics on hand, but speaking from personal experience, every person I know who is in consumer credit problems, has been habitually in debt forever. Today, its even worse, because more people are putting things such as food, clothing, shelter, and education on credit. Its no longer big screen tvs and boats.
Quote:
Originally Posted by elamigo
In other words if someone that may have had success in a business and used bought property, saved some money, stablish credit, etc. but may not have lost some contracts or a high paying job and now due to circumstances his house disappears, good credit disappears, has not family to help, government help is does not exist in any shape or form.
It is almost completely unlikely someone with a high paying job is going to fall in to poverty. Sure, some people get bad medical problems, or get injured in a car accident, but that is a tiny minority. This author is claiming that the AVERAGE person in the bottom 1/5 of income levels is doing this. Guess what, the AVERAGE person in the bottom 1/5 is likely someone with little to no marketable skills, and comes from a family of little to no marketable skills. It is not someone with high skills who is temporarily unemployed, or entrepreneurs who lost everything.
Quote:
Originally Posted by elamigo
You may not want to believe those situations exist but I have seen people that fall in hard times that will rely on these things and often they get up and get back on their feet.
I didnt say they didnt exist. Your author states that the average person in the bottom 1/5th spends twice their income. My argument is, that the average person in the bottom 1/5 has NEVER been in a higher income bracket, and is debt spending to survive.
Quote:
Originally Posted by elamigo
Now, there are people that are in the low income bracket and yet still do spend money that their income. How so? Many get government aid of some form to start food stamps and other sources that are not counted as imcome but it is income because they did not pay for those services.
Do you know how low of percent of people receive government assistance? Even with millions of people unemployed in a terrible economy, its still estimated at just 10% of the country receive food stamps, which is by far the most popular government assistance program. So, 50% of those in the bottom 20% AT LEAST, do not even receive food stamp benefits.
Quote:
Originally Posted by elamigo
Do you have data yourself to dissprove his point? If you do, then counter his data and points with your data. You may be right. However, just saying he is a bafoon is only a common ad hominen fallacious statement.
Here is a report by the US treasury on income mobility
In it, you will see that only 2.6 percent of those in the highest income quintile in 1996 moved to the lowest in 2005. The fourth, just 4.1%, Middle? Just 7.1%.
Almost ALL income mobility is between the lowest two quintiles and the two highest quintiles. In ten years, 28.6 percent moved to the second from the lowest, and 17% moved from the second to the lowest.
Interesting thing though, a full 42.4% of people who were broke in 1996, were STILL broke in 2005.
This fully supports my theory that people who are poor now, were poor pretty much forever (almost all people in the lowest quintile in 2005 who filed income reports in 1996, were in one of the lowest two in 1996, with the rest likely being newer entrants to the workforce).
Quote:
Originally Posted by elamigo
Last point, I did see the years some of these data come from. But are those situations do not exist anymore? Are people just staying in a income bracket forewer? People have not moved up and down at different bracket levels?
Once a person passes the middle quintile, they rarely move down, and if they do, it is just one quintile. Almost NOBODY loses everything. As the study I posted above suggests, at ALL income levels, a person is more likely to stay at the same quintile over a 10 year period then move anywhere, up or down. The most likely move is the fourth quintile to the 5th, which is supported by the Gini index growth.
Quote:
Originally Posted by elamigo
People do not accumulate experience through the years and buy houses and accumulated retirements in some form and have not gained experience that make them move valuable?
This wasnt my argument. My argument was that those in the lowest 1/5 percentile are debt spending, and usually for survival, because debt spending has replaced real income. Our poor are poorer then they were 30 years ago, our quintiles are spaced more apart on the low ends then ever before. The wealthy are getting wealthier, by reducing pay and benefits to their workers (many of which are in the lower quintiles), and manufacturing items in China, and then selling them back to the freshly laid off employees now working at McDonalds for prices which can only be purchased with debt.
Quote:
Originally Posted by elamigo
You may want to compare and then let me know if your counter point proves him wrong.
I think I sufficiently proved him wrong on the point I highlighted. He is nothing more then a right wing shrill towing the party line.
Last edited by Randomdude; 04-17-2009 at 11:24 AM..
Free treatment is not required. Emergency rooms are simply required to stabalize a patient. They are not required to issue medication, dispatch prescriptions, make a diagnosis, or administer preventitive or after care.
By the way, you are afforded the exact same "care" as these illegal aliens are "abusing". Why dont you use the emergency room for your primary care doctor for a while, you let me know how that turns out.
There are 2 differences between me and an illegal, I pay taxes and am a legal citizen here.
Say an illegal gets in a car wreck and is dieing and in a coma. Are you telling me that if someone brings him to the hospital he isn't going to spend a few months in there? Who pays for that?
Stop taking things people say and try to twist them all around. The bottom line is illegal's cost this country millions and millions of dollars when they go to hospitals.
This is a video for you to listen to. This is just a few cases in Florida. Estimated costs for Florida alone is 100 million in 2007.
There are 2 differences between me and an illegal, I pay taxes and am a legal citizen here.
Say an illegal gets in a car wreck and is dieing and in a coma. Are you telling me that if someone brings him to the hospital he isn't going to spend a few months in there? Who pays for that?
Stop taking things people say and try to twist them all around. The bottom line is illegal's cost this country millions and millions of dollars when they go to hospitals.
This is a video for you to listen to. This is just a few cases in Florida. Estimated costs for Florida alone is 100 million in 2007.
I did NOT ever deny that illegals do not cost the healthcare system money, even 100's of millions, not once. What I was debating was the fact that many right wing party towers continuously refer to this as "free healthcare", when "health care" would have to be loosely defined to the extreme to make that statement true. Stabilization in an emergency situation is usually the result of LACK OF HEALTHCARE. If illegals were getting such great care at the emergency rooms, they would not frequent them nearly as much. Agreed?
Additionally, illegals cost the healthcare system no more then the average poor person, who pays no taxes, and has no health insurance, and is forced to use the emergency room in medical emergencies. The only difference is that poor people can get their credit dinged because they have an identity in this country, even though they rarely pay the charges.
Please do not use this argument here
"Say an illegal gets in a car wreck and is dieing and in a coma. Are you telling me that if someone brings him to the hospital he isn't going to spend a few months in there? Who pays for that? "
When you fully know that 99% of illegals who go through emergency rooms are there for far more minor procedures. In fact, I can bet a majority are there for not much more then a virus. For which, the emergency room is required by law, to provide no more then a pat on the back for. If a hospital spends its resources to despense medicine, give unneccessary examinations, or other items not required by law to an illegal, they can not turn around and complain about it, nor is it honest to pass that cost along to others who do/can pay either. In my opinion, that should be described as charity by the hospital, and nothing more.
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