<p>Perhaps the poorer folks used to be more thrifty and saved more. You must admit consumption is much higher at virtually all class levels. Many of us grew up in 3br 1ba homes of maybe 1200 sf. Now 2000sf with 2.5 ba is the minimum. We had one not new Chevy or Ford car and very few gizmos or vacations. The consumption standard is far higher which leaves less to invest. The real wealthy have much more leftover to invest.</p>
<p><a href=“%5Burl=http://talk.collegeconfidential.com/1059762426-post120.html]#120[/url]”>quote</a> Exactly what do you think it “proves?”
[/quote]
</p>
<p>The [assertion[/url</a>] that:</p>
<p>
</p>
<p>is a **[url=<a href=“http://en.wikipedia.org/wiki/Falsifiability]falsifiable[/url][/b”>Falsifiability - Wikipedia]falsifiable](<a href=“http://talk.collegeconfidential.com/1059751089-post91.html]assertion[/url”>http://talk.collegeconfidential.com/1059751089-post91.html)[/b</a>] assertion. (The emphasis on ‘All’ was in the original post/assertion.) </p>
<p>*All<a href=“pun%20intended”>/i</a> it takes to disprove this assertion is to show that someone at the lower and middle class level had a net benifit over the last thirty years. </p>
<p>[Jack</a> Levis<a href=“an%20individual%20that%20went%20from%20package-sorter%20to%20Director%20of%20Package%20Process%20Management%20in%2030%20years”>/url</a>, and all the millions of individuals like Jack Levis in our economy, directly disprove the “All of it goes upstairs” assertion. </p>
<p>Furthermore, Mr. Levis’ story also supports the [url=<a href=“http://talk.collegeconfidential.com/1059749348-post90.html]original”>http://talk.collegeconfidential.com/1059749348-post90.html]original</a> assertion](<a href=“http://talk.collegeconfidential.com/1059762332-post119.html]Jack”>http://talk.collegeconfidential.com/1059762332-post119.html) that the observable wealth concentrations we find across our society are attributable to wealth creation through [productivity</a> improvements](<a href=“http://talk.collegeconfidential.com/1059749348-post90.html]productivity”>http://talk.collegeconfidential.com/1059749348-post90.html) and not wealth redistribution. The compensation and wealth accumulation Mr. Levis has experienced over the last 30 years are directly related to his efforts to make UPS more productive.</p>
<p>Be it the disproved [“basic</a> truths”](<a href=“http://talk.collegeconfidential.com/1059752116-post100.html]"basic”>http://talk.collegeconfidential.com/1059752116-post100.html) argument or the disproved [“none</a> of the net benefit stays at the lower and middle class”](<a href=“http://talk.collegeconfidential.com/1059762332-post119.html]"none”>http://talk.collegeconfidential.com/1059762332-post119.html) argument, the [advocacy</a> for wealth redistribution](<a href=“http://talk.collegeconfidential.com/1059746743-post72.html]advocacy”>http://talk.collegeconfidential.com/1059746743-post72.html) sits on a logical foundation of sand.</p>
<p>“Be it the disproved “basic truths” argument or the disproved “none of the net benefit stays at the lower and middle class” argument, the advocacy for wealth redistribution sits on a logical foundation of sand.”</p>
<p>No, it doesn’t but nice try.</p>
<p>"The assertion that:</p>
<p>Quote:
…for thirty years, none of the net benefit stays at the lower and middle class level. All of it goes upstairs. </p>
<p>is a falsifiable assertion. (The emphasis on ‘All’ was in the original post/assertion.) </p>
<p>All (pun intended) it takes to disprove this assertion is to show that someone at the lower and middle class level had a net benifit over the last thirty years.</p>
<p>Jack Levis (an individual that went from package-sorter to Director of Package Process Management in 30 years), and all the millions of individuals like Jack Levis in our economy, directly disprove the “All of it goes upstairs” assertion." </p>
<p>Oh… and your argument in post #122 isn’t correct either. </p>
<p>Think about it.</p>
<p>StitchInTime, your posts are so far from proving anything at all that I’ve had to struggle to try to figure out what you thought they proved. I think this is your point:
So your point is that if any single individual, over the course of his life, transitions from poor to middle class, or middle class to affluent, then that disproves the fact of income redistribution? </p>
<p>But that’s not correct. In fact, it’s essentially silly. We’ve had a series of posts discussing the overall change in income and wealth which took place around 1980. Actual personal income at the 50th percentile has declined, at the 75th % it is static, at the 99th it has dramatically increased. Before 1983 all segments of society saw gradual increases in net household wealth; after that time the wealth of the top level of society increased dramatically while that of the rest of the nation stagnated. Cold, hard facts, true of the nation as a whole, carefully researched and doumented.</p>
<p>And you give us an anecdote about one guy. If, as you seem to believe, Jack Levis was actually a working stiff package sorter in 1976 and somehow after that acquired a college degree from CSU Northridge, Master’s certificate from George Washington U, and ended up as a presumably well paid executive by 1982, good for Jack. (Of course, the probability is that what you’ve assumed from the abbreviated biography you’ve posted is wrong, and Jack’s actual life story is similar to my own, as outlined in post #77 - but that doesn’t actually matter - lets use your version.) There’s always been some degree of movement between economic strata - although now it’s less than ever before, That doesn’t change the fact of economic wealth distribution between the haves and have-nots in America. The fact that one guy can improve his lot in life doesn’t change the fact that middle income Americans as a whole are worse off - or at best, no better off - today than they were in 1980, while the wealthiest among us have enjoyed dramatic increases in income and wealth. </p>
<p>And frankly, I can’t see why you think it does. Do you actually not understand the substance of this thread, or do you understand it and are actively trying to muddy the water? And does that explain the bold print and goofy links?</p>
<p>You still don’t know if this is the same group of families stuck in the middle levels. Maybe half of them moved up to the rich levels. The old rich die and drop off. I’d like to see a real cohort analysis–not just meaningless ranges that might be completely different people. Also my point about more consumption vs wealth building stands. All wealth is is deferred consumption with interest. If you are having it all now–as many people do–of course you are not building wealth too. I bet anything that your parents were more frugal day to day than your family is today and had more saved for their level of income.</p>
<p>Barrons, the Treasury department study linked to earlier <a href=“http://www.treasury.gov/press/releases/reports/incomemobilitystudyfinal.pdf[/url]”>http://www.treasury.gov/press/releases/reports/incomemobilitystudyfinal.pdf</a> has data from which some information can be gleaned about the overall level of upward and downward mobility. To begin with, a certain amount of change in income over time is normal, and doesn’t signify an actual change in economic status (such as my own life experience, sketched in post #77) Most people earn more as the get older, up to a point. At retirement, that trend may reverse. Also, people in certain occupations, such as professional sports and other entertainment field jobs, tend to have early income peaks, after which their income tends to decline. In addition, a person can be right at the top (or bottom) of an income quintile one year, and ten years later, have crossed the line to the adjacent quintile, with very little actual change. Certain occupations can have significant peaks and valleys (real estate sales, for example) while yielding actual economic status of an intermediate level over time. So a certain amount of cross-quintile movement would be expected in a study which compares a snapshot of incomes one year against a snapshot of those same people’s incomes ten years later, even in an economic environment which has very little actual income mobility, with a slightly greater trend of people moving up than of people moving down over time (and being replaced at the bottom with young new taxpayers.) </p>
<p>And that’s pretty much what you see in the Treasury Dept. study. Significantly, of the people who were in the top, or fifth, quintile in 1996, only 13% had fallen to the middle quintile or lower ten years later. Of those who started in the middle quintile only 12.5% made it up to the top quintile ten years later; 4% made it to the top 10%. (Cutoff for top 10% was about 120,000 in 2005.). Of those who started in the top 1% in 1996, only 12% fell below the top quintile by 2005. When you consider that the top strata include a certain number of “one-year wonders” (lottery winners, sellers of capital gains property, etc.) to begin with, that indicates to me that, yeah, it’s basically the same group of families at each economic level, year after year, with a small number of predictable exceptions.</p>
<p>That study is based on cohorts - it compares the same taxpayers in 1996 and 2005. So, no, “half” of the middle quintile group hasn’t gone anywhere - 80% of them are still in the second, middle and fourth quintiles ten years later, with the trend, as predicted, favoring moving up over moving down, but not by large sums. The data is imperfect, but I think it’s good enough to draw some fairly reliable conclusions from.</p>
<p>That does not answer the one other big question–a change in the propensity to save versus spend. I beliebe there is a much higher propensity to consume in the middle class as they try to more and more emulate segments of upper class consumption from high profile brands to bigger vacations. If you spend it now you won’t be building any wealth. This is a key variable subject to change over time.</p>
<p>Barrons, there are two somewhat parallel but separate data streams we’re talking about: the change in family wealth and the change in personal income. Personal income can be tracked because the tax returns identify the individual. Family net worth is harder to track because the composition of the “family” can change with time. I honestly don’t know if the middle class is less inclined to save today than they were forty years ago; I do know that their inflation-adjusted income is less per taxpayer, and that a lot of expenses faced by the middle class have increased at a rate higher than that of inflation - medical care, college expenses, housing costs, etc. - which makes it harder to save, since the data we do have says there’s just less paycheck left over at the end of the month even with the same spending habits for everyone below the 75th percentile in income. </p>
<p>I also think the family wealth data we do have tends to overstate the net worth of families today compared to those in the past since in the past retirement would be more likely to be funded by a defined-benefit pension plan, and I don’t think that the cash value of such plans is included in the personal “wealth” calculations, while IRA’s 401K’s etc. which people rely on today to fund their retirment are.</p>
<p>[Bloomberg.com:</a> Opinion](<a href=“Bloomberg - Are you a robot?”>Bloomberg - Are you a robot?)</p>
<p>"The second response is perhaps more powerful. Let’s see what happens when we allow mandatory spending to go up as it did. This lets Bush have his prescription-drug benefit, which is now part of mandatory spending. </p>
<p>If we had held the line on everything else that is discretionary, we could have had the prescription-drug plan, the Iraq war and the war against terrorists. We could have kept all the Bush tax cuts, made them permanent, repealed the AMT and added the stimulus package and still ended up with a balanced budget from 2008 to 2017. </p>
<p>Bloated Uncle </p>
<p>It makes you sick to think about it. All that money wasted on ethanol and bridges to nowhere has accumulated into a pile that massive. Uncle Sam ate a whopping helping of apple pie every day for seven years, and now he is obese. "</p>
<p>Dstark, the federal budget is too big, and too complex for me to claim to be able to figure out where or how spending could have been less than it was - and certainly how to cut it without actually hurting anyone. (Appearances to the contrary notwithstanding, I do have a day job!) But consider this: if the third largest item in the budget wasn’t paying the interest on the debt run up by Reagan and BushI, how much easier would it be to balance the budget? I think even BushII might have done it, particularly if the “starve the beast” pro-deficit policy hadn’t already taken over the Republican ideology.</p>
<p>“But consider this: if the third largest item in the budget wasn’t paying the interest on the debt run up by Reagan and BushI, how much easier would it be to balance the budget? I think even BushII might have done it,”</p>
<p>Bush 2 could have done balanced the budget even with the debt run up by Reagan and Bush 1. Instead, he pi**** away more money than anybody. </p>
<p>That was the point of the link.</p>
<p>Bush 2 could have done it and he didn’t.</p>
<p>We are going to live with what Bush 2 did for a long time.</p>
<p>Unlike his papa, it seems that Bush II is as big of a believer in “voodoo economics” as Reagan (and yes, I’m a fiscal conservative).</p>