September 28, 2010

The missing piece of the inequality puzzle

Excerpts from my new VDARE.com column:
Economic inequality has been much in the press lately. ...

But, generally, the discussion about inequality has been missing half of the puzzle.

On the one hand, it’s safe to say that over recent decades, the very rich have gotten very much richer. ...

On the other hand, for most American and above all the poor, incomes have stagnated in inflation-adjusted terms—and for significant numbers, actually fallen. The influx of poor, unskilled immigrants from abroad has certainly swelled the number of people at the bottom of society and exacerbated competition for jobs and housing among them.

The rise of the rich is felt in their growing political power. It’s notable that the rich have learned how to use the poor as symbols to rationalize whatever they want to get away with.

An example well-worth savoring: the 2003 Harvard lecture, The American Dream of Homeownership, by Angelo Mozilo, CEO of Countrywide Financial, announcing that he would lend $600 billion to minority and lower income borrowers, in return for which he wanted mortgage regulators to lift those racially discriminatory demands for down payments and documents—thus helping precipitate the Minority Mortgage Meltdown.

Most public discussions of inequality have been of limited utility because the fundamental measure is not income or wealth, but long-term standard of living. And that has two halves: how much you can spend and how much whatever you spend it on costs.

Few commentators have thought systematically about the second half of the equation—the cost of living—even though we all obsess over it in our own lives. ...

In this article, I will focus on the impact of the growing inequality at the top and bottom of society on the cost of middle class life.

Let’s look at three major cost components of middle class life: medical care, housing, and education.

What is the impact of increasing economic inequality on the cost of medicine? Are the ultrarich rapaciously bidding up the price of, say, chemotherapy the same way they have bid up the price of  Gustav Klimt paintings?

Read the whole thing here.

42 comments:

sword said...

Errr...

According to wikipedia, Bill Gates is worth 54 billion. I strongly doubt that Angelo lent 600 billion to anything.

Anonymous said...

From Wikipedia:

-- "Angelo R. Mozilo (born 1938) was the chairman of the board and chief executive officer of Countrywide Financial until July 1, 2008.[1] Condé Nast Portfolio ranked Mozilo second on their list of 'Worst American CEOs of All Time'.

Perhaps more than any single individual, Mozilo has come to symbolize, and bear the blame for, the subprime mortgage crisis.

CNN named Mozilo as one of the "Ten Most Wanted: Culprits" of the 2008 financial collapse in the United States." --

Anonymous said...

Yeah, incomes have been falling...decades ago, my parents had dozens of cellphones and a big screen in every room. Now, only one of each.

Anne said...

Well, the cost of medical care has gone up, and not just because we have to pay more to subsidize the poor.

I suppose you could blame the rich for the rising cost of chemotherapy, in that they donate their surplus money to research hospitals who develop expensive tests and treatments that the middle class end up getting and paying for.

But there's so many forces acting on medical costs, I don't think it makes sense to try to try to tease out the effect of rising inequality.

Felix said...

Tsk tsk. You KNOW the real problem with the media, and it's not this elaborate class dynamic nonsense. I don't understand why you feel the need to come up with elaborately creative explanations for the media's insane propagandizing when the briefest of glances at the ethnic makeup of ownership tells all.

Seriously Steve, if you sacrificed your career to "tell it how it is" you should really consider broaching the topic without which the modern West cannot be explained. There in no need to cook up weird theories as to why 140+ IQ people in the media and other elite institutions say stuff that even a third grader would laugh at when the explanation is plain to see. Although I guess maybe you think KM already filled that niche.

Bostonian said...

Steve wrote, "The bulk of taxes are paid by the bulk of people i.e. the middle class."

Not according to stats I have seen. Are households earning less than $100K substantial net income tax payers?

Anonymous said...

Great article, Steve. The housing bubble was recently brought home thusly: the Valley cottage where Zappa and Captain Beefheart rehearsed Trout Mask Replica and other albums was just sold for $325,000. In 2006 it went for $625,000!! See the MLS listing here:
http://www.redfin.com/CA/Woodland-Hills/4295-Ensenada-Dr-91364/home/4311758

TH said...

Off-topic but I think Matt Ridley is ripping off your ideas, Steve.

Reg Cæsar said...

I remember the phrase "rich and poor vs. the middle" from the Nelson Rockefeller days in New York.

And didn't the "Wherever you go..." line originate with Steven Wright?

Anonymous said...

One problem with being saddled with a growing underclass are the crime / security issues that follow. No only are we spending a fortune on police and prisons (look at Japan) and what that money would do if invested elsewhere but all of the other "quality of life" issues that are directly impacted by crime. When I drive through the seedier parts of Oakland, CA on business, I see what where normal functioning white middle class neighborhoods in the 1940's and 1950's and even up through the 1960's but are now black and latino ghettos. What has changed are the people not the buildings. These where once nice places to live and now they are dangerous to drive through even during the daytime.

Steve Wood said...

You raise an interesting point regarding the disappearance of superficial differences between the rich and the upper middle class and its effect on American society. A few additional comments:

The UMC used to ape the rich, specifically the WASP elite. Country clubs, debutante cotillions, and the like thrived in affluent suburbs.

The rise of the so-called meritocracy has largely eliminated this pattern by, as you say, democratizing the manners of the rich, but also by making the rich seem less different in background. Inherited wealth is still very much with us, but it is no longer displayed as a class marker. Instead everyone has a "career," even if it's a career purchased with Daddy's money; and everyone is supposedly a hardworking, type-A workaholic ... just like the real workaholics who actually do rise from the middle to the upper middle class by hard work, among other things. In 21st century America, almost no one - and no one really respectable - lives a life primarily devoted to leisure until they reach retirement age.

Secondly, even more important, is the degree to which journalism itself has joined the ranks of upper-middle-class occupations. Those guys Ben Hecht wrote about really were on the margin of society. That changed after WWII so that journalism became a respectable occupation for the children of the elite. As soon as that happened, as soon as journos were given a seat at the table, genuine cynicism about conventional ideology and genuine iconoclasm about modern society went out the window.

headache said...

Great piece Steve!!

rich s. said...

Another squeeze:
This site alerted us to the Espenshade & Radford study about college admission preferences. From this we learned that wealthy whites were advantaged by a factor of three over poorer whites in chances for entry. But poorer non-whites had advantage factors of seven to ten times depending on the race.

Kylie said...

Steve Sailer writes..."In a Ben Hecht-scripted movie, a reporter would have whispered out of the side of his mouth to another reporter that, sure, Gates had to hire cheap labor from abroad to boost his net worth from $49 billion to $50 billion.

But, that kind of cold-eyed realism toward the rich on the part of the press has largely given way to warm, fuzzy feelings of class solidarity— the assumption that we elites are all working to help the poor, unlike those horrible bigots in the middle."

Yes, because in a Ben Hecht movie, the rich would have been right-wingers, not left-wingers, as they are today.

I think it's not the MSM but the rich who have changed. Reporters (unless of the "society" or "gossip" variety) have tended to be on the political left. Hecht himself was, as is Carl Bernstein, whose parents were members of the Communist party. The big difference in the MSM is not political orientation but a move from outsider to insider status.

And that move was possible because now a sizable, vocal and influential number of the rich are left-wingers. Back in the economically depressed 1930's and on through Hecht's heyday, the rich were portrayed in films as rotund caricatures, like the Eugene Pallete character, Alexander Bullock in My Man Godfrey. By the conformist 1950's, they were slimmer and less abrasive but still unmistakably conservative, like Angela Vickers's dad in A Place in the Sun or the characters Fredric March played in The Man in the Grey Flannel Suit and Executive Suite. Audiences knew without being told that these characters were members of the Grand Old Party.

But a few decades ago, the rich realized that to make left-wing choices did not mean they would have to live with left-wing consequences. What luck! They could support and even donate to the causes of the poor without actually having to brush up against them--and that would make them even richer. Only the middle-class would feel the dire consequences of the policies the rich so blithely promoted and who cares about them? The rich always despised the middle-class anyway for their pathetic and shameless efforts to better themselves. Now the rich could despise them even more for despising the poor; thus maintaining both the moral high ground and the profits all for themselves.

It's easy to see why and how the rich would conspire with the MSM. Before in the bad old days, they had to use fear, money and influence (e.g., W.R. Hearst) to keep the newshounds and gossip columnists in line. Now the MSM are already on the same side as the rich, who have only to reinforce this cozy alliance with some judicicious back-patting and schmoozing in the forms of fund-raisers, interviews and, oh yes, documentaries.

Nice work if you can get it.

Slightly OT: Not a big Hecht fan here. Besides being a lefty, he was very uneven artistically. Like John Ford, he was so very very good when he was good that people tend to overlook or forget that when he was bad, he was awful. Hecht was great at snappy repartee and incorporating catchy slang into his dialog. He was much less good at creating believable characters and storylines. For example, he really went overboard when allowed to write, direct and produce the unintentionally hilarious, supremely campy Specter of the Rose, which, among other risible incongruities, has Lionel Stander as a one-man Greek chorus intoning such profundities as "My heart danced a minuet in an ashcan".

Hecht was great in collaborative efforts, especially when he went uncredited. I suspect this was because that circumstance kept his monumental ego in check, which allowed him actually to write decent dialogue instead of grandstanding as some sort of cinematic "triple threat".

Bruce Banned said...

Great piece, Steve! Your best.

The American middle class continues to be forgotten

Forgotten? You might as well say: on the road to extinction.
The upper class (old money), the upper middle class (or managerial class) and the underclass are hell bent on destroying the Middle class. In 20 years there won't be a middle class anymore. Just as simple as that.
Today we call this arrangement "liberalism"; in the future historians will aptly describe what we're witnessing as a revolution led by the managerial class.

Once they get rid of the middle class, the Upper class is next. Remember you read it here first.
The unholy alliance between the underclass and the managerial class is unstoppable. And it all started in the 1960's. Damn hippies!

SFG said...

Nice column, but you're too easy on the rich. The decline of unions and the lousy labor market in general redistributes income from the poor and middle class to the rich by lowering wages.

Anonymous said...

Absolutely brilliant, Steve.

"Journalists today, though, tend to be sober, respectable, elite-educated, professional, conformist establishmentarians—more offended by uncouth opinions than by the self-interested hypocrisy of the upper class."

This is so true. I recently told an Ivy League educated friend that parts of city where I live in Texas is like a dusty and poor Mexican town, including the feral dogs. He was horrified by my comment. Why is this so bad? Many a "Little Italy" are much like Italy.

Why would we think that every Third World Person is going to be a Womyn's Study major at UC Santa Cruz?

No, they bring their culture with them. Or, is that not the point of multiculturalism?

Mercer said...

The press does not look warm toward the rich when it comes to reporting about how they are ramping up political spending since the Citizens United decision has loosened restrictions.

I think journalists can see how immigrants have widened their choice of eating establishments. The press don't make the connection that immigrants have increased housing prices especially in areas with "good" public schools.

For a good example of how most liberals can't think logically about immigration Matt Yglesias provides a good example today. In the first link he wants to boost immigration including low skilled Latinos and anyone who disagrees is xenophobic. In his very next post he complains about the bad state of the poorest Americans and that politicians don't take their interests seriously.


http://yglesias.thinkprogress.org/2010/09/zero-sum-thinking/

http://yglesias.thinkprogress.org/2010/09/poor-people-are-much-poorer-than-you-think/

Average Joe said...

I think it is important to remember the ethnic element here: many millionaires, billionaires and media people today have Jewish ancestry and are pursuing an Is-It-Good-For-The-Jews agenda. When we talk of the "middle class" we are really speaking of white gentiles who are being rapidly undermined by a hostile Jewish minority.

Anonymous said...

Excellent article! The American middle class truly is fighting a two front class war.

My only objection is that you minimize the role of the wealthy in health care costs. The rich don't drive up costs on the demand side, but they sure do on the supply side. Americans pay twice as much per capita as many countries with longer life expectancies, and the waste in the system is profit for many members of the top 1 percent: health insurance and pharmaceutical executives, hospital administrators, and medical specialists.

Anonymous said...

Great article! An unmade point is that academics and intellectuals are also joined with journalists in group B.

Anonymous said...

great column steve. and welcome to leftism. Again, i will say it--anti-immigration is leftist; anti racial integration is leftist; anti-political correctness is leftist; anti-multiculti is leftist.

All those ideas are factionalizing in their effect. Factionalization is a prime tool of the rich. Divide et impera etc.

If capital can divide labor, they win.

vdare et al wants to unite the majority bloc and that scares the rich.

-cryofan

Anonymous said...

"Yeah, incomes have been falling...decades ago, my parents had dozens of cellphones and a big screen in every room. Now, only one of each."

Wow, what a remarkably stupid comment. How old are you? 15? 18?

Once you get out on your own and have to pay your own way, tell me how easy it is for you to buy your own house and raise a family when mommy and daddy are no longer paying for your computer, cell phone, Playstation, TV, automobile insurance, etc.

Real wages have been declining since the 1970s. The middle class has only been staying afloat by working extra jobs, having the wife work, going into debt, etc. Cheaper cell phones and TVs from China does nothing to address this larger problem.

Anonymous said...

The upper class (old money), the upper middle class (or managerial class) and the underclass are hell bent on destroying the Middle class. In 20 years there won't be a middle class anymore. Just as simple as that.
Today we call this arrangement "liberalism"; in the future historians will aptly describe what we're witnessing as a revolution led by the managerial class.



They could call it The Revolt Of The Elites.

Severn said...

Again, i will say it--anti-immigration is leftist


Again I will say it - you are a babe in the woods, politically speaking. You know nothing of the meanings of the terms "leftist" or "rightist", nothing of what it means to be conservative, liberal, communist, fascist, monarchist, or even libertarian.


You are also too stupid and/or lazy to figure out how to post as anything other than Anonymous.

Dutch Boy said...

Manufacturing to China+massive immigration= poverty QED

l said...

Saturday night I went to a 'reading festival' in my burg. Dave Eggers was invited to speak about his 1996 book about Sudanese 'Lost Boys' "What is the What?" The Sudanese guy whose story was the inspiration for the book was on the stage with Eggers. The Sudanese guy spoke about how frustrating it has been for Sudanese immigrants to have to start on the bottom rung of the economic ladder -- as if illiterate, non-English speaking Dinka are too good to gut chickens. My thought: WTF?

Whiskey said...

Yes, its always "the Jews" regardless of the fact that glorious multiculturalism is pretty bad ... for Jews in America.

It really is the revolt of the managerial elite, colored of course by women's outsized cultural influence by perceptions they do about 85% of consumer purchase decisions. Women always aspire to upper-class-dom and have been part of the driving move towards leftism as well. Look at say, Jeff Zucker, recently fired NBC head.

He started in the Today Show (female/gay ghetto) reliably pushing "diversity" which plays to the "Nice White Lady" impulse and also disdain for White beta boring guys. No wonder he lists pushing diversity (aka no White leads) in the fall schedule of new shows as his proudest accomplishment.

The presence of subtle markers (designer jeans vs. Levis, designer frames vs. cheap ones for glasses) only serves to enhance "those in the know."

Electronic crap got cheaper from Chinese cheap labor. But that's it.

Whiskey said...

Let me add, how stupid are the "cognitive elite?" Quite stupid, about many things. As Michael Lewis pointed out in the Big Short and Liar's Poker, most of the Wall Street titans had not the faintest idea of what trades were going on at their trading desks. Which is why Bear Sterns, Lehman, and others went under, and AIG effectively did (bailed out, public ownership).

I've seen mind-bogglingly stupid comments by Les Moonves and Jeff Bewkes of Time-Warner that TV is approaching a "new golden age" because they can for now play Redbox off of Netflix. As if those guys can't just create their own content as HBO did. Heck Bewkes thinks that HBO makes money hand over fist (it is available in nearly 100% of households, only 30% get it) because its shows are hip and edgy. He's even said in the latest issue of the FT that cable spending is non-discretionary because consumers "must have it" even in a recession (when other CEOs are admitting, yes people are cutting the cable cord).

Most of the top guys are basically big salesmen -- to key customers, government, the media. That's all they do. They have their skill-sets, but skill is not equal to wide/deep knowledge about something.

The cognitive elite is skilled. Not wise. There is a difference. Wisdom comes often from screwing up, in spectacular fashion, being held accountable, but still able to learn something that is real but counter to dogma. The protective cocoon around the managerial cognitive elite prevents that from happening.

Anonymous said...

Ah, once again the infamous Scotch-Irish blind spot:

"Yes, its always "the Jews" regardless of the fact that glorious multiculturalism is pretty bad ... for Jews in America."

Jews seem to be doing pretty well out of multiculturalism, but that's rather beside the point; but whatever; let us take the long view and agree that in the long run multiculturalism is "bad for Jews" (even though most Jews disagree); but so what? Jews have to act rationally according to how Whiskey defines rationality? Really?

Whiskey obviously has not read and understood Kevin MacDonald's trilogy of books on the Jews, or even bothered to study the history of the Jews and their long and recurring habit of attacking their hosts in spite of the danger to themselves, Whiskey hasn't even learned and absorbed the lesson of the fable of the Scorpion and the Frog.

Thus spake Whiskey: "Nature? What's that? Acting according to one's nature and against one's self-interest? No, that could never happen. Does not compute! I'm sure there are no historical examples of that sort of thing happening, ever, in the history of the world."

It's sad really, watching Whiskey act as though he understands Jewish motivations and self-interests better than they understand it themselves. Talk about chutzpah!

Wilson said...

"But, that kind of cold-eyed realism toward the rich on the part of the press has largely given way to warm, fuzzy feelings of class solidarity— the assumption that we elites are all working to help the poor, unlike those horrible bigots in the middle."

So given their treatment of the "forgotten man" - a disproportionate number of whom are white, middle-class Republicans - why do so many Republicans still support extending the tax cuts for the wealthy, and completely eliminating the estate tax?

Honestly, it boggles the mind.

n/a said...

"From this we learned that wealthy whites were advantaged by a factor of three over poorer whites in chances for entry."

No. "Upper class" kids, according to Espenshade, were only a bit more likely to be admitted to private colleges in the sample than "working class" kids, holding other characteristics constant. "Middle class" and "upper middle class" kids had the best odds of admission.

Anonymous said...

Because, Wilson, top 3% is mostly not "the rich". Perhaps .1% is "the rich". The other 2.9% is middle-class.

ATBOTL said...

I heard a commentator of leftist political bent once say that it was after Watergate that journalism became what it is now -- glorified PR for the establishment -- because the role journalists played in the scandal made journalism seem a glamorous and important "career" for status conscious type A's. Supposedly before that journalists tended to be outsider types from humble backgrounds who worked their way up from paper sellers and such.

"Yes, its always "the Jews" regardless of the fact that glorious multiculturalism is pretty bad ... for Jews in America."

Whiskey, you know damn well that Jews are wildly in favor of multi-cultaralism and have been one of the main forces driving it. If it's bad for them, you need to spend more time convincing THEM that rather than making snarky comments to those who point out obvious truths.

BTW, I think white nationalists have paid too little attention to the role rich, non-Jewish whites are playing and have always played in the racial destruction of white societies. Even if there were no Jews in America, rich people would be trying to import third world immigrants to lower wages, although probably with less success than they are enjoying now.

ATBOTL said...

I've heard that some of the higher health care costs the US experiences are related to the high rates of obesity and lack of excercise that Americans suffer from compared to people in say Japan or Europe.

The weight situation of non-affluent Americans, especialy away from the coasts, is increasingly horrific.

Anonymous said...

Whiskey: Yes, its always "the Jews"... Jeff Zucker... Bear Sterns... Lehman... AIG... Les Moonves... Jeff Bewkes...

Jeff Zucker: "Zucker was born to Jewish-American parents in Homestead, Florida, near Miami."

Bear Sterns: "Bear Stearns was founded as an equity trading house on May Day 1923 by Joseph Bear, Robert Stearns and Harold Mayer with $500,000 in capital."

Lehman Brothers: "In 1844, 23-year-old Henry Lehman, the son of a Jewish cattle merchant, emigrated to the United States from Rimpar, Bavaria."

AIG: "Beginning late in the week of Nov. 3, the New York Fed, led by President Timothy Geithner, took over negotiations with the banks from AIG... The deal contributed to the more than $14 billion that over 18 months was handed to Goldman Sachs, whose former chairman, Stephen Friedman, was chairman of the board of directors of the New York Fed when the decision was made..."

Les Moonves: "Moonves is the great-nephew of David Ben-Gurion, the first Prime Minister of Israel."

Jeff Bewkes: "Bewkes is of Dutch ancestry."

Well I guess that one-out-of-six ain't all that bad.

Apparently Bewkes's wife is Margaret "Peggy" Lowry Brim McCabe Bewkes, the daughter of Mr. and Mrs. Orville Gilbert Brim Jr. of New York.

Curiously, Dr Orville Gilbert Brim's web page, at Harvard, states that "His most recent work was on the maintenance of ambition after success and failure."

Anonymous said...

Sorry - here's the link for Dr Orville Gilbert Brim's web page at Harvard.

Anonymous said...

The ultimate SWPL article?

http://www.3quarksdaily.com/3quarksdaily/2010/09/are-our-writers-as-lousy-as-our-bankers.html

Urban Intellectual Fodder! Ha.

Anonymous said...

Apparently Bewkes's wife is Margaret "Peggy" Lowry Brim McCabe Bewkes, the daughter of Mr. and Mrs. Orville Gilbert Brim Jr. of New York.

Ruh-roh: this genealogy page is making "Brim" look like a suspiciously Scots-Irish name.

Oh, the shame...

Chief Seattle said...

"Journalists today, though, tend to be sober, respectable, elite-educated, professional, conformist establishmentarians—more offended by uncouth opinions than by the self-interested hypocrisy of the upper class."

The mass media has not been around that long. 75 years ago there were dozens of papers in every major city. Not many made much money, but they all needed reporters. So lots of scrappy people got the opportunity to work hard for a bit of cash and a chance at the big time. Now that opportunity is gone in newspapers. But it's very much reborn over the last 10 years on the Internet. There's going to be some greats produced out of this era, and I don't mean Huffington's. 30 years from now we will look back and find the equivalents of Twain or London or Orwell who got their start blogging or making youtube videos. The era of the comfortable "journalist" is rapidly coming to a close.

Svigor said...

BTW, I think white nationalists have paid too little attention to the role rich, non-Jewish whites are playing and have always played in the racial destruction of white societies. Even if there were no Jews in America, rich people would be trying to import third world immigrants to lower wages, although probably with less success than they are enjoying now.

I agree, but personally I've always been perfectly willing to acknowledge this. The problem is, as you suggest, that Jews stand athwart any effort on the part of whites to get their own elites in line. The battle may or may not be winnable (I get tired of digging up the links to MR showing illustrating that it probably is, so ask and I'll oblige) sans Jews, but at this point it clearly is not if you include Jews.

This is not a new phenomenon. In the middle ages, the nobility used Jews to exploit the peasantry. Under Communism, same thing.

Anonymous said...

"The Sudanese guy spoke about how frustrating it has been for Sudanese immigrants to have to start on the bottom rung of the economic ladder -- as if illiterate, non-English speaking Dinka are too good to gut chickens. My thought: WTF?"

Give him my number. I'll buy him a one-way ticket and drive him to the airport.

"No wonder he lists pushing diversity (aka no White leads) in the fall schedule of new shows as his proudest accomplishment."

I'd gladly let minorities have every leading role on every single show, if it meant whites paid less attention to trash pop culture.