Quote Of The Day

“Here is a fact that you might not have heard from the Occupy Wall Street crowd: The incomes at the top of the income distribution have fallen substantially over the past few years. According to the most recent IRS data, between 2007 and 2009, the 99th percentile income (AGI, not inflation-adjusted) fell from $410,096 to $343,927. The 99.9th percentile income fell from $2,155,365 to $1,432,890. During the same period, median income fell from $32,879 to $32,396. ” — Greg Mankiw, Professor of economics at Harvard University

10 Responses to “Quote Of The Day”

  1. Jon says:

    Let’s all have a moment of silence for the struggles of the 99.9th percentile. Such a tough world for them.

    This is like climate science denialists saying “From 1998 onward the temperature rise doesn’t look like a big deal.” Look at the last 40 years on income inequality (and on temperature). The trend is obvious.

  2. LaurenceB says:

    Amen, Jon.

    I’m practically in tears thinking about those poor, helpless millionaires whose income dropped along with everyone else’s.

  3. The key here is dropped MORE than everyone else’s. Bigger drops %wise…less income inequality.

  4. LaurenceB says:

    I beg to differ. I don’t think Mr. Mankiw is arguing that income inequality is lessening. In fact if he were, he would be laughed out of the economist’s guild and mocked at the annual potluck luncheon. I don’t believe any credible economist will argue that income inequality is not trending upward.

    What he’s saying is that income for wealthy individuals is more volatile. Which does not equate to less income inequality at all – it only means that in times of downturns there will be a temporary flattening relative to the overall trend.

    The overall trend towards more inequality, however, is undeniable. To see it, simple go to the IRS table that Mr. Mankiw refers to and lengthen the period to it’s maximum of 1987-2009. Then do the math. You will find that the top 1% increased by about 60%, while the median only increased by about 45%. And remember that if we were comparing the bottom 1% to the top 1% rather than to the median, that 15% increase would be much, much larger.

    Having said all this, I don’t fault you for missing Mr. Mankiw’s point. In fact my worser instincts lead me to believe his point was deliberately obtuse. My suspicions are that he meant to imply that 1) rich people are getting a bad rap, and 2) income inequality isn’t all that bad. But he couldn’t just say that, because neither of those things are true. So, he found some statistics that would cleverly send those messages, and spit them out, all the while decorating them with a (perfectly valid) dressing that most people would read past.

    But maybe I’m being too quick to condemn. Maybe Mr. Mankiw is just really, really interested in how wealthy individuals are affected by the general economy.

    But if that’s the case, why did he see it fit to even mention OWS?

  5. I agree – volatility is the overall point. But his point (and mine) is still valid: most of the OWS crowd probably think the income of the top 1% went UP because of the financial crisis. It didn’t.

  6. LaurenceB says:

    I guess I’ll just wrap up this conversation by saying:

    1. If Mankiw’s point (and yours) was that “most of the OWS crowd probably think the income of the top 1% went UP because of the financial crisis”, than it would have been a good idea for one of you to have stated that.

    2. I disagree. As someone who has at least some sympathy with the OWS crowd, it would never have occurred to me that the income of the top 1% would have risen during the last two years. So, at least in my case, you are demonstrably wrong. Obviously, I’m only one person, and I may not be representative of the movement as a whole, so feel free to change my mind with supporting evidence. I’m assuming Mankiw has provided some. Right?

    3. I’m sorry, but I still can’t shake the feeling that Mankiw was simply throwing out some numbers that were meant to make us believe that 1) the rich people are having a tough time of it, and 2) income inequality is an overblown issue. Both of which are false. I don’t think he had any real point beyond that.

  7. He did allude to point #1, it’s the first sentence.

    I’ve seen videos and interviews of some of the protestors. They seem to imply the belief that the financial crisis made the 0.01% better off at the expense of others.

  8. LaurenceB says:

    I’m sorry, but it’s been bugging me…

    You know, if you want to make a point and you have evidence to support it, it’s really not that hard. You really don’t have to do any “alluding” and “implying”. Here’s a simple template to follow:

    A) Members of Group G are fools because they believe X, which is false. B) Here’s some evidence that they believe X. C) And here’s some evidence that X is false.

    See it’s not that hard.

    For example:

    Low income Republican voters are fools because they actually believe that Republican politicians will lower their taxes, which is false. Here’s evidence that Republican voters actually believe that. And here’s evidence that Republican politicians really have no interest in lowering taxes for anyone but the wealthy.

    See how easy that was! It’s really not that complicated.

    And, I know I’ve been very critical lately, so I hesitate to say this, because you probably think I’m being a bit of a jerk – but if either you or Mankiw had followed this simple template we wouldn’t have wasted our time on this long conversation. First because we wouldn’t have had to fumble around trying to discern precisely what A was. And second, because it would have been immediately obvious that there was no B! Thus, we would have dismissed his entire argument quickly, and moved on to more interesting stuff. Instead, we just wasted a whole bunch of time.

  9. I like critical LB. Your points are certainly valid and well taken – I keep them in mind in future posts.

  10. Karlo says:

    My heart bleeds for those poor billionaires who must now feed the poodles substandard caviar.

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