The top 1% is not a stable group.....

Parent Cafe
1

<p>[The</a> Wild Ride of the Wealthiest 1% - WSJ.com](<a href=“http://online.wsj.com/article/SB10001424052970204346104576638981631627402.html?mod=WSJ_hp_mostpop_read]The”>http://online.wsj.com/article/SB10001424052970204346104576638981631627402.html?mod=WSJ_hp_mostpop_read)</p>

<p>"Yet today, Versailles sits half-finished and up for sale. The privately owned Westgate Resorts was battered by the 2008 credit crunch and real-estate crash. It had about $1 billion in debt—much of it co-signed by the Siegels.</p>

<p>The banks that had loans on Versailles gave the Siegels an ultimatum: Either pay off the loans or sell the house. So it’s now on the market for $75 million, or $100 million if the buyer wants it finished.</p>

<p>As she stands on her deck in the Florida sun, Ms. Siegel wipes away her tears. “Maybe it will still work out,” she says. “It always does, right?”</p>

<p>The Siegels’ Versailles may be the nation’s most extravagant monument to the debt-fueled, status-crazed real-estate binge of the past decade. Like many Americans, the Siegels borrowed too much, spent too much and bet that values could only go higher. Even in the age of excess, Versailles was excessive."</p>

2

<p>For those households that were in the highest earnings quintile (top 20 percent) in 2001, 34 percent had moved to a lower quintile by 2007, and 5 percent of those households had moved all the way to the bottom quintile.</p>

<p>Or the bottom 20%:</p>

<p>For American households that were in the lowest earnings quintile (bottom 20 percent) in 2001, only 56% of those households remained in that quintile in 2007, and 44 percent had moved to a higher quintile by 2007. Five percent of low-income households in 2001 had moved to one of the top two quintiles in just six years.</p>

<p>This is from Professor Mark Perry’s blog, taken from a Federal Reserve Bank report.
<a href=“http://www.minneapolisfed.org/research/qr/qr3411.pdf[/url]”>http://www.minneapolisfed.org/research/qr/qr3411.pdf&lt;/a&gt;&lt;/p&gt;

3

<p>Nicest fixer-upper in Florida. The Siegels’ home just needs some TLC.</p>

4

<p>Jobs died with billions of wealth. He was top 1% then, but not when he started as an adopted son of a machinist. Larry Ellison fits that mold too…and also adopted, I think. Add Lloyd Blankfein of Goldman in there too. There are plenty of others. </p>

<p>If your fortune was invested in GM stock in this century, you were wiped out in the bailout. Same with Penn Central stock 40 years ago. </p>

<p>There is plenty of mobility and many cases which don’t fit the template.</p>

5

<p>Niether is the bottom quartile (which is a good thing).</p>

6

<p><a href=“http://www.economicmobility.org/assets/pdfs/EMP%20American%20Dream%20Report.pdf[/url]”>http://www.economicmobility.org/assets/pdfs/EMP%20American%20Dream%20Report.pdf&lt;/a&gt;&lt;/p&gt;

<p>We have less economic mobility than Canada, France, Germany, the Scandinavian countries…</p>

7

<p>Mini…:)</p>

<p>I am glad to see that dadx and bluebayou think social mobility is a good thing.</p>

<p>There is a nice opinion piece by Al Hunt in bloomberg.com…that is a little too political for here. I like how it differentiates the wealthy.</p>

8

<p>

</p>

<p>Which obviously means, that 60% of the lowest group successfully moves up (and out of the bottom quintile)! The question then, is how to address the bottom 8% of citizens (40% of 20%)…</p>

9

<p>How do other countries do it? The ones that have more social mobility than us.</p>

10

<p>good question dstark, but note that other economists have a different view than Corak (the Canadian author whose work is cited in the link provided by mini):</p>

<p>

</p>

<p>[Economic</a> Mobility in the United States](<a href=“http://www.urban.org/publications/406722.html]Economic”>http://www.urban.org/publications/406722.html)</p>

11

<p>Dare I say it? Much of our lack of social mobility has to do with racism? And lack of decent health care across generations?</p>

<p>I am willing to wager that, if one eliminates African-Americans and Hispanics and Native Americans from the equation, U.S. economic mobility (though not necessarily in and out of the top 1%) rises very substantially.</p>

<p>(As you know, I don’t particularly care very much about social mobility generally speaking. It is a secondary good, not a primary one. I’m back to Rawls’ theory of justice.)</p>

12

<p>

</p>

<p>The 1% are the so-called “job creators” that we hear so much about, right? Maybe if they, oh I don’t know, created some jobs, their fortunes would be a little more stable. :rolleyes:</p>

13

<p>People like Jobs and Gates deserve every penny they earned. On the other hand, many of these 1% folks don’t create a single job and haven’t for years. CEO Larry Lasser famously got a $13 million bonus (note - that’s BONUS, not salary) in a year in which his company lost billions in invested assets. Dozens of people got laid off, investors lost significant wealth, and the company took a reputational hit they still haven’t recovered from. Yet the CEO got a $13 million bonus.</p>

<p>We have long since lost a strong tie between performance and pay, both at the top and the middle. Put in a great day’s work, save a couple of lives, and do your job with excellence, and a firefighter or policeman can still get laid off. Do a lousy job, lead your firm to a loss of millions which causes hundreds to lose their jobs, and a CEO still gets paid millions of dollars.</p>

<p>This is just an explanation of how our economy works today. Just the facts, ma’am, nothing but the facts.</p>

14

<p>Those who actually want to change CEO pay and get it more closely tied to performance unfortunately frequently get sidetracked by media stories and not by the facts. The fact is that until congress changes the laws which control shareholder control over the board of directors of these multinationals, nothing will change.</p>

<p>They all sit on each other’s boards. Dodd Frank is so weak and so irrelevent and didn’t even regulate or make derivatives transparent. Still, the CEO’s know this, and yet they rail against it…it’s wagging the dog. “Please, please don’t throw me in the briarpatch” they act as if they have been meaningfully regulated when they managed to avoid anything that would really change anything. It’s a nice trick.</p>

<p>All of these guys sit on each other’s boards. If the shareholders aren’t given control of the boards? Nothing will change.</p>

15

<p>I’ll give you a perspective from having a foot in both the US and Canada that to me explains why the US suffers from a lack of mobility: similar access to education for everyone.</p>

<p>Education here, compared to the US, has much much less variability at all levels. </p>

<p>There simply is not the degree of ‘inner city’ vs. ‘rich suburb’ public school phenomenon. Everyone has the same curriculum, and the funding is the same at each school. Public school quality is on average better, and not based on how rich the neighborhood is and how high the property tax. </p>

<p>At the highschool level, there is basically one curriculum. The quality is more uniform and higher. There isn’t a need for AP this and that because the main curriculum works for everyone. You don’t just have say a science course, everyone has 3 years of HS science, then if they want more, they can take 2 years of chem, 2 of bio, 2 of physics after the first 3 years. This isn’t AP, its just public school curriculum and it prepares anyone who wants to go to university. </p>

<p>The universities are by and large of highly similar quality and what it takes to get into them isn’t advantaged by wealth. Kids go to school usually nearest their home. Our current prime minster when to U of Calgary…have you even heard of it? There is no culture that says you’ll be stunted if you don’t ‘go off to college’…perfectly normal to live at home and commute. </p>

<p>It’s more affordable and equitable because so many can live at home, there are govt registered educational savings plans, govt loans, and also because all the tuition ranges from about $2k to 6K a year (there is no in or out of province, all Canadians pay the same price, with the exception of quebec). </p>

<p>And absent from the cost of good education is the ‘marketing machine’. No one cares very much about ranking. Schools aren’t competing for students. Students aren’t shopping around for universities. And university is more just about plain old education, not about the moving away/finding yourself/finding the perfect fit. </p>

<p>Quite simply kids are just not as disadvantaged by the sheer bad luck of growing up in a poor school district, or parents not being able to afford tuition, or kids not getting into X over Y. And kids aren’t disadvantaged if their parents can’t afford counsellors, essay editing, SAT coaching, or costly ECs (since none of these factors are relevant for getting into university here).</p>

16

<p>

I think you’d lose that wager. Don’t you think that many AfAms and other minorities have clearly moved up the scale on their economic status? Compare the current generation to the previous one and that one to the one before that. Do you really think there’s been no upward mobility?</p>

<p>Racism? Exactly what racism do you think is holding them back today? Do you think that because of some institutional or other racism they have no access to an education, college, employment, ability to achieve a higher income? </p>

<p>Apparently I’m one of the few who are actually grateful for the top 1% and anyone who earns more money than me and pays more tax dollars than me that otherwise I might need to pay and of course most of those entitled wonders protesting the top 1% pay little or no actual income tax themselves.</p>

17

<p>

</p>

<p>Not sure who you think are the entitled wonders who pay little or no income tax and are protesting the situation. Speaking for myself, I feel perfectly entitled as a free American to protest anything. </p>

<p>However, speaking as a member of the 1%, I’ll accept your gratitude, and you’re welcome. But an unjust society is not sustainable over time. At what point do you think the fair break point is? If the top 1% pay 2% of their income and you pay 30%, is that okay, so long as you pay a dollar less in taxes as a result?</p>

18

<p>Thanks Hayden, I appreciate it.</p>

19

<p>“I think you’d lose that wager. Don’t you think that many AfAms and other minorities have clearly moved up the scale on their economic status? Compare the current generation to the previous one and that one to the one before that. Do you really think there’s been no upward mobility?”</p>

<p>Do you want me to be rhetorical, or do you want to look at the data?</p>

<p>[Amazon.com:</a> The Color of Wealth: The Story Behind the U.S. Racial Wealth Divide (9781595580047): Meizhu Lui, Barbara Robles, Betsy Leondar-Wright: Books](<a href=“http://www.amazon.com/Color-Wealth-Behind-Racial-Divide/dp/1595580042/ref=sr_1_10?ie=UTF8&qid=1319401859&sr=8-10]Amazon.com:”>http://www.amazon.com/Color-Wealth-Behind-Racial-Divide/dp/1595580042/ref=sr_1_10?ie=UTF8&qid=1319401859&sr=8-10)</p>

<p>The divide has gotten larger since the start of the recession, as minorities were MUCH more likely to lose their jobs, lose their homes, and to remain unemployed. I don’t want to be rhetorical; I want folks to look at the data, and then decide whether my hypothesis is reasonable.</p>

<p>But thanks from my mother the job creator. She is an example of just this mobility. She did NOTHING to end up in the top 1% - neither work, nor start a business, nor invest. She simply married a rich guy who died before she did. But she still brings her coupons to Subway.</p>

20

<p>^^ (Sorry - I should have referred to this quote rather than just the second statement since it’s what I was referring to)

</p>

<p>You need to look at more than data of employment figures when you conclude it’s ‘racism’ that’s the cause as you stated. So using whatever data sources you’d like to keep in mind, what current ‘racism’ do you think is causing the whatever divide you think there is or are you referring to the legacy of racism in days past? And back to my other point, do you or do you not think that as a group AfAms have experienced an upward mobility in terms of relative wealth between this generation and the previous one and then again from that one to the prior one?</p>

<p>Subsets of raw numbers don’t tell the whole story. I don’t mind if you want to be rhetorical.</p>