I’ll have to settle for the 5% bracket then. Anyway, I must be one of the lucky ones. I certainly didn’t come from fabulous wealth, but things turned out well. No cat food and Walmart in my future. None of my siblings are geniuses and they seem fine too/ I do know richer people, but they all work much harder than me.…so I have no desire to punish them. Your post is quite cynical.

But rgbact’s argument explains it. Some voters really do believe that as they age, they will move through all the income brackets, and will be millionaires (or better) by the time they are in their sixties.

It doesn’t work that way. It used to be that you could expect to do a bit better than your parents did. But since about 1980, that hasn’t really been so. Look at your parents. That’s you thirty years from now — if you’re lucky.

In Ronald Reagan’s America — that is, the America that thirty years of his policies of deregulation and tax cuts for the wealthy and condemnations of gubbermint services has created — in the America now shaped by thirty years of conservative economics, if you do as well as your parents did, you’re lucky. Chances are good you’ll never make it to that point. Unless you were born into a family of wealth, the deck is stacked against you ever getting there.

And it has happened on purpose, because most of the One Percenters don’t want to share. Their annual income has skyrocketed while the rest of America has (at best) flatlined. With the taxes for the extremely wealthy being slashed, they get to keep more of what they gain — while the rest of us tend to spend every dollar we get, just to stay alive and to treat ourselves to McDonald’s once a month. This means wealth is increasingly concentrated in the hands of a few families.

rgbact, you will never, ever get into the 1% tax bracket. You’ll never have to worry about the tax rates they pay. Not unless America changes a lot. Simply living long enough isn’t going to do it. In fact, if the Romney/Ryan plan goes into effect, Social Security and Medicare will evaporate, and you’ll have to live on cat food and work as a Wal-Mart greeter — for subminium wage and with no health benefits — well into your nineties. If you live that long.

If you assume stocks perform better in the long run than houses…maybe so. That seems the implication. You’ve laid out that housing suffered worse in the recent downturn and that led to inequality. I suppose you could find a period where stocks way underperformed housing and then come to the opposite conclusion and I guess that would be a period of less inequality.

The recent downturn may have added to the inequality but it was not the sole determinant. If you totally exclude the downturn and look at 1989 to 2007, the change from the lowest 25 percent, second 25 percent, third 25 percent, next 15 percent, and top 10 percent were 333.3, 60.0, 58.0, 69.5, and 71.5 percent, respectively. The percentage for the lowest 25 percent is not meaningful because it’s so close to zero. The 333.3% gain from 1989 to 2007 is just a rise from $300 to $1,300 and the 100% drop from 1989 to 2010 is just a drop from $300 to zero. However, the remaining numbers show increasing gains for the top 25 percent. And, as can be seen in the first graph at http://www.econdataus.com/worth08.html , this was during a period when housing was booming much more than the stock market. Hence, this boom likely served to mask some of the growing inequality but not all of it.

The aging issue confuses me. Seems as we live longer, we should have more inequality. I suppose if we all died at age 30.…few people would live to see high wages or have time to accumulate wealth.

Once again, the graph in my prior post shows that the net worth of those 65 and older steadily increased from 1989 to 2007 but the net worth of those 44 and younger generally went down or stayed even during that period. Life expectancy changed too little over that 18 year period to explain the change. In addition, the change in life expectancy would offer no explanation for the first graph at http://en.wikipedia.org/wiki/Wealth_inequality_in_the_United_States which shows one measure of inequality that was very high in the 1920’s, was at a very low level from the mid 50’s to the mid-80’s, and is now returning to those 1920 highs.

Not having inequality seems almost a bad thing—means even older people haven’t accumulated more than younger. I’ll review it more once this dumb Disqus is gone.

Nobody is talking about having equality of result. However, having a growing inequality of result suggests that there may be a growing inequality of opportunity. I recently listened to an interesting podcast interview with Joseph Stiglitz of Columbia University about the ideas in his recent book, The Price of Inequality. The podcast can be found at http://files.libertyfund.org/econtalk/y2012/Stiglitzinequality.mp3 and there looks to be a full transcript of it at http://www.econtalk.org/archives/2012/07/stiglitz_on_ine.html . Regarding opportunity, following is the start of Stiglitz’s comments:

Well, the United States has distinguished itself as having the highest level of inequality of any of the advanced countries. But even perhaps more disturbing is that it has become the country with the least equality of opportunity. And what that means is the chances of somebody going from the bottom to the middle, bottom to the top, or the top down, are lower than in any of the other advanced countries. An implication of that of course is that a child’s life prospects are more dependent on the income and education of his parents than in any of the other advanced countries.

If I understand it correctly, vaporized pensions are replaced by the Federal Government, but only up to a fixed $ amount. I recently saw someone bitching about how the Govt didn’t protect his pension, however he ignored the fact that without Govt, he would have received zilch.

If you assume stocks perform better in the long run than houses.….maybe so. That seems the implication. You’ve laid out that housing suffered worse.in the recent downturn and that led to inequality. I suppose you could find a period where stocks way underperformed housing.…and then come to the opposite conclusion and I guess that would be a period of less inequality.

The aging issue confuses me. Seems as we live longer, we should have more inequality. I suppose if we all died at age 30.…few people would live to see high wages or have time to accumulate wealth. Not having inequality seems almost a bad thing—means even older people haven’t accumulated more than younger. I’ll review it more once this dumb Disqus is gone.

There’s several conclusions that can be drawn from the data. One is that inequality has grown over the past couple of decades. The table I included looked at the percent change from 2007 to 2010. Looking at 1989 to 2010, however, the change from the lowest 25 percent, second 25 percent, third 25 percent, next 15 percent, and top 10 percent were –100, –9.3, 7.6, 36.1, and 60.5 percent, respectively. Hence, the lower half of Americans, on average, grew poorer over those 21 years.

Does it really make sense to compare people’s net worth? We know a) many people have no net worth b) middle people usually have a house which accounts for alot of their net worth c) rich people have investments, which typically grow much faster than other assets.

So are you saying that a growth in inequality is inevitable? Of course, history tells us it is not. The first graph at http://en.wikipedia.org/wiki/Wealth_inequality_in_the_United_States shows one measure of inequality that was very high in the 1920’s, was at a very low level from the mid 50’s to the mid-80’s, and is now reaching those highs that it reached in the 1920’s.

It almost seem like all you’re doing is showing the aging process. When we’re young—we’re broke. We get older and buy a house. Then we get gray haired and start putting together a nest egg and have investments.

It is important to keep the aging process and other factors in mind. However, the fifth graph at http://www.econdataus.com/scf10.html shows that it is not simply a factor of age. I’ve reposted that graph below:

Notice that the net worth of those 65 and older steadily increased from 1989 to 2007 (before the housing crash). However, the net worth of those 44 and younger generally went down or stayed even during that period.

There is some other interesting information in some of the other graphs at http://www.econdataus.com/scf10.html . For example, the last graph shows that home owners have a much, much higher net worth as renters. This does raise the question of whether we really should be offering quite so many tax breaks to homeowners. In any case, I may analyze and write more on the other graphs, likely after the election.
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http://www.businessinsider.com/how-i-caused-the-1987-crash-2012–10

Deflation, since it’s defined by purchasing power, and not value of goods and services, would exacerbate the differences above.

The interesting data that isn’t usually seen, is how much ‘wealth’ is held in nonperson reservoirs, leveraged by each bracket.