This video clip has appeared on other blogs but it’s worth posting again.
How fortunate the world was to have had both Margaret Thatcher and Ronald Reagan in office at the same time.
17 thoughts on “Margaret Thatcher on Income Inequality”
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This appeared recently as well…
http://graphics8.nytimes.com/images/2012/01/14/opinion/0114krugman1/0114krugman1-blog480.jpg
…and it’s not nice to Reagan/Thatcher fans.
Completely meaningless graphic SO. There have, of course, been massive changes in family structure over the period. Krugman, as usual, abuses economics/statistics to promote his favored politics. There has been a major switch in families to one parent families thanks, in part, IMHO to the policies of the Great Society and other Democrat experiments which have backfired.
Tim gets it.
Two other contributors to the graph, in addition to single-parent families:
* Corporations and wealthy individuals can generally protect themselves from the effects of a debased money supply better than the average individual. Inflation hurts the poor and middle class the most.
* Regulatory capture and other forms of crapitalism allow for sustained excess profits that under a free market would tend to be driven down by competition. The excess profits forgone due to competition would otherwise have naturally reverted to consumers. To the degree that corporatism has been aided and abetted by the Right, I “agree” with SO.
(For the economically challenged out there: this latter point is not due to any supposed benevolence on the part of the companies. If a business is making less profit, that money still has to go somewhere. Whether in the form of lower prices, better products, higher wages, or more money to vendors, it eventually ends up in the hands of consumers. It doesn’t matter whether management “wants” this to happen or not; competing companies force their hand.)
Any other factors I forgot to mention?
Setbit…I think one of the major causes of increased economic inequality, and especially of reduced class mobility, is the obsession with educational credentials. Consider..
–a really sharp factory worker who in a previous era would have been promoted to department supervisor, and maybe eventually even to plant manager, but who is now barred from those positions because he lacks a college degree
–a bank branch manager who would make a good region manager, but won’t ever get the job because she lacks an MBA
–a recent college graduate who DOES have an MBA, but will not get hired by a McKinsey or a Goldman because his MBA isn’t from an Ivy League school
In addition to the effect on individuals, the aggregate economic productivity lost via credentialism has to be very considerable.
David Foster, bullseye.
Lets not forget that the credentialism is the result of Griggs v. Duke Power,which basically told employers that employment tests would face strict scrutiny if they had a disparate effect on some minorities. So we have Policemen who are stupid because an exam requiring some intelligence would be “unfair”to minorities. Given the legal climate here,the tendency for any organisation is to CYA on hiring by doing the safe thing. The safe thing also,if you are a small business is to be wary of hiring a member of a protected group,for if they turn out incompetent,they can claim discrimination after being fired. We would be better off if all the anti-diiscrimination laws were erased from the books. The only exception I can see would be covering employers requiring illegal acts or demanding sexual favors of workers. That aside,we have created a monster and choked off opportunity. My guess would be the cost is perhaps five to ten percent of GDP.
The SOTUS over the last 80 years has done little to protect the citizen’s right to conduct his business honorably,from the depredations of a selfish and incompetent political class. They have failed miserably in their role of enforcing the constitution.
Griggs vs Duke….one interesting point is that the original court decision found that not only intelligence tests, but also ***the requirement for a high school degree*** could be discriminatory unless a clear relationship to job performance could be demonstrated. Not sure whether the degree part was eroded in later court decisions / legislation, or whether it simply tends to be ignored.
Renminbi – It is the same in Britain. They have created a protected class … which includes “immigrants” who have managed to get the plane fare together to get to Britain, where they “squat” in “vacant” (the owners are out of the country) houses, take possession of the house and its furnishings and contents under some arcane law they happen to know about, and find their way to the welfare office, where an army of intepreters and translators in a dozen languages await their pleasure.
I would add only that the spearhead’s plane fare is often paid by the whole family/tribe/whatever, on the promise of signing them in as relatives once they’re comfortably settled and signed up for an income and, of course, free health care on Britain’s free national health system. Then come the “brides”.
David Foster, re the obsession with educational qualifications over solid experience on the work floor, this applies in Britain as well, now, and I think it is attributable to a hunger for votes and forwarding an agenda.
The criteria for a college education in Britain have been so watered down (as they have in the US) that basically now every 17 or 18 year old can qualify for a college (formerly a technical training school and now renamed so the kids can get a “degree” instead of a qualification certificate)degree. I am in the dark about where the pressure comes from to hire a kid with a “degree” from some newly elevated technical school over the more sensible course of promoting an individual who has been on the shop floor or in middle management, solving problems, for yonks.
I don’t know how they engineered, so to speak, such a destructive arrangement.
Renminbi said: “The safe thing also,if you are a small business is to be wary of hiring a member of a protected group,for if they turn out incompetent,they can claim discrimination after being fired.”
Been here, done that, got two t-shirts. Sad, but true.
Hope you guys are open to facts, for I did spend some minutes of my time for this:
http://img638.imageshack.us/img638/4688/statisticsmedianincome.jpg
source:
http://www.census.gov/compendia/statab/cats/income_expenditures_poverty_wealth.html
699 – Median Income of Families by Type Of Family in Current and Constant (2009) Dollars [Excel 84k] | [PDF 65k]
exact link to data file: http://www.census.gov/compendia/statab/2012/tables/12s0699.xls
used data: “Median income in constant (2009) dollars”, xls file cells O 6 – Q 69 (without the incomplete 1947-1948 data)
I can’t make it more easy to factcheck the diagram’s underlying data than this. The source is no doubt the best available to anyone.
The data is about the Republican ideal of a family with man + woman (and possibly children):
“Median income in constant (2009) dollars”, “Married-couple families”
with the only exception being a statistically totally insignificant same-sex marriages in the last very few years.
The data is already in 2009 dollars, thus no inflation effects are left.
Now what does this graphic tell us?
It tells us that there was TOTAL stagnation for no-earning-wife median household income. All growth was in regard to the income contribution of women (whose liberation led to rising income for them). This stagnation is even more extreme than what Krugman shows (he showed merely substandard growth, not real stagation).
This is income before taxes.
There’s been stagnation in the group since 1973 (quite the same as in Krugman’s graphic as well), and this does not fit well to the fact that economic growth of the period included about 2% technological progress per annum.
This should have led to a major (bigger than 30% for sure) accumulated median income growth for the stagnating group!
So no, nothing’s fine in regard to income distribution in the U.S. even after focusing on the married couple subset of households. Progress came to a screeching halt during the late 70’s and nothing was improved since then.
The same applies to the UK and Australia; even some continental European countries experienced deterioration in income distribution.
There are statistics about how the top income group (narrowed down to 1% or even only 0.1%) made huge progress in its income during the same period, we all know that.
There IS a problem. It can be discussed how much Reagan and Thatcher contributed to it either way (I guess in the very long run picture they were little more than symptoms of a trend caused by large and slow societal dynamics), but it’s pretty sure that they were no problem-solvers in regard to the income development of middle and lower class families at all.
SO, thanks for providing the additional information.
However, it does not show what you say it shows.
First, family size has decreased over the past decades, so comparisons of family income unadjusted for family size will tend to understate recent income values as compared to older ones. This is the main problem with your argument.
Second, the percentage of two-earner families has increased over time and there are now relatively few one-earner families. I don’t know the numbers but my guess is that there are systematic differences between average one-earner families now and in the past that skew incomes lower for current one-earner families. Perhaps relatively more one-earner families now have one earner due to the other partner’s incapacity or some other negative factor. Again, I don’t know but the answer should be easy to find out. My main point is that you really need to look at income statistics for individuals rather than families.
http://papers.nber.org/papers/w17164
This is a paper disputing your claim by Cornell researchers. It turns out that when you make the proper adjustments for family composition, age distribution and things like fringe benefits, the narrative you are making is simply not true. The middle class is doing fine.
One other factor that is playing a part: the establishment of two-track employment systems. This is most blatant in the case of academia, where a highly-compensated class of tenured professors coexists with an increasing number of “adjuncts” and such, who are basically migrant workers with no security and minimal pay…but it is also present in some manufacturing firms, where unions have been unwilling to cut pay/benefits for workers with seniority but have been willing to agree to the hiring of newer/younger workers at substantially lower compensation levels.
SO,
It can be discussed how much Reagan and Thatcher contributed to it either way…
Well, maybe. But it certainly can’t be argued, based on the graph that you link, that Reagan or Thatcher caused the stagnation of per-family income. That trend got rolling during the stagflation of the 70’s, before either of them were in office.
One of the things that the graph clearly does show is that “the Republican ideal of a family with man + woman” certainly has economic benefits, since it gives such families the option of adding a second income.
When I hear the debate over wealth inequality I am reminded of the story of Grasshopper and the Ants. By the end of the story the Ants have all the wealth and the Grasshopper has nothing. The Ants worked and saved, the Grasshopper played and never worked.
Now. Obama, the Grasshopper has called on the Ants to share the wealth. Why is this fair, right and proper?
As everybody knows gay people are born that way. They have no choice. They are born to be gay. Similarly, Ants are born to work and Grasshoppers are born to play. The elite media tells us that “Progressives” are born to rule.
Ants are born to work and the support the grasshoppers and the Progressives. Naturally Ants need to be regulated (lest they harm the environment) and they must be taught to share. That’s what this election is about. Keeping the Ants in their place.