- Using Census Bureau data available through 2014, he defines the upper middle class as any household earning $100,000 to $350,000 for a family of three: at least double the U.S. median household income and about five times the poverty level.
I tagged it. I agree it's a matter of perspective, but if there are more people who are able to care for and educate their children without too much (financial) stress, that's a probably a good thing. yeah spoiled rich kids and all that, but I suspect I would be substantially less mentally/emotionally screwy if my parents had been able to afford the amount of children they had.
To the extent that US wealth and prosperity is zero sum, it might have come from those in the middle class that went lower. To the extent that it is not zero sum, this could be seen as a good thing. IMO a clearer positive would be a decrease in those living below the poverty line, coincident with an increase in the median income.
If the poverty line were defined as "household income at the 20th percentile" this wish would be mathematically impossible. In the U.S. the poverty threshold is updated every year and measures well being relative to the increasingly prosperous population across the country. Such relative measures supply the endless demand for bad news, even if it is such obvious nonsense as "San Francisco is worse than Rwanda". If instead you would like a dose of good news, research any absolute measure of welfare that you can imagine: television ownership, herd immunity, distance to nearest coffee vendor, number of shoes owned, square feet of living space, quantity of soap used. I have not researched any of these but am certain that the long-term trend is excellent and short-term trends are probably good. It is so obvious and habitual that life is getting better in the long view (until the next catastrophe!) that it is easy to take for granted. You might also consider people who live outside the country. I see a lot of hand-wringing about the percentage of people who work in this country (as if "work" itself is always good -- usually maybe, but not always). I was just at the World Bank bookstore and picked up an annual report from the IFC. Those quasi-governmental multinationals creep me out, but they do put out pretty booklets. This one says "Since 1990, the number of people living in extreme poverty has been reduced by more than half, and the size of the working middle class in developing countries has nearly tripled."a decrease in those living below the poverty line
No doubt. I guess it is a good thing to continually increase our standards, but I fully agree that it matters a lot if the lives of our poor have materially improved from one generation to the next. I suppose the questions ought to be: 1) Is there such a thing as an optimal state of wealth distribution? 2) What do we consider to be an optimal state of wealth distribution?, and 3) Can this be engineered at all? and 4) If so, should it be and to what degree? I'm not as pessimistic as you might think. In most respects, I see us moving forward, not only as a nation, but globally. But of course, humanity has been sidetracked for centuries before. It's worth questioning the fundamentals. Where do you think the greatest risk to progress currently lies? For me, I would guess either resource scarcity due to global warming, or an era of techno-autocratic governance. Maybe both together.If the poverty line were defined as "household income at the 20th percentile" this wish would be mathematically impossible.
Certainly it exists, but what it is depends on what your values are. If you find inequality inherently objectionable, as seems fashionable, then you might support any measures that reduce the gap between rich and poor, even if it means destroying wealth without helping any poor. If instead you wish to improve the welfare of the poor (assuming, perhaps, that the rich can take care of themselves), then you might support policies that have a track record of relieving poverty. I suspect that a lot of people value associating themselves with the team that has the best cheers and the vilest enemies and announces the best-sounding intentions. I do think we have a lot of power to alter outcomes, but perhaps with less accuracy than we imagine. Centralized, top-down power structures can scatter benefits but give a lot of leverage for the existing wealthy to increase their bottom line. Decentralized, individually-directed behavior seems to promote the greatest improvement in individual welfare, but it doesn't guarantee success for everyone. Predicting the future is difficult. If our best guide is the past, then I would observe that incorrect predictions of looming disaster have been the norm for ages. What resources do you think would become more scarce (reversing almost every long-term trend) due to global warming? I don't think many crops would be affected by sea level change; there is plenty of land that is now too cold to farm; additional atmospheric carbon dioxide is not exactly bad news for plants. Some weird disastrous techno-singularity does not seem likely, but technology is going to be highly disruptive somehow. I don't believe mass unemployment due to robots is likely either; to date greater automation has led to more jobs. Natural disasters including pandemic make for good drama, but these are also fortunately rare. Probably the best way to identify the greatest risk to future progress is to look at the past. Maybe Venezuela is a warning sign; socialists are not exactly laughed off the stage.Is there such a thing as an optimal state of wealth distribution? What do we consider to be an optimal state of wealth distribution?
Can this be engineered at all?
In what sense? Do you know what the price of, say, a VCR was when they were new? Say it was $1400 in 1975 dollars (according to the gov't that over $6000 in 2016 dollars). Now you can buy a 70" LED monitor with internet capability plus a Blu-Ray player and a Bose sound system for a fraction of that. This is one trivial example. There are plenty of others. Cars, for example. It is difficult to make an apples-to-apples comparison, because the quality and efficiency or cars these days are light years beyond what they were 30-40 years ago, but it's easy to see that we're getting a better deal now.
This is one of my biggest externality talking points. That $1400 VCR was made in the USA, could be serviced in the USA, and was built to last a number of years. The $40 VCR that presided over the sunset of the video cassette recorder was made in Puna, couldn't be serviced by anyone, and was built to almost but not quite live out its 90 day warranty. Yeah - it's great that more Americans could buy more VCRs but they also have to buy more VCRs, which in the end benefits the shipping companies and the overseas manufacturers. 'cuz the inequality where the workers live is off the chain and the VCRs, while they're improving it a little, aren't causing as much global wealth increase as they're causing local wealth decrease. Cars reflect a super-accelerated increase in standards but they also reflect a massive globalization and dilution of local markets. We might be getting a better deal... but a Yaris right now is a Cadillac in 1967. Shit be spendy. Adjusted for inflation a '66 mustang convertible was like $14k.
Yeah and your '66 Mustang might have died on the way home from the lot! Quality in manufacturing (planned obsolescence aside) is so many light-years beyond what it was even 30 years ago that it's hard to compare. A Yaris may cost what a Cadillac did in '67, but the Yaris is going to last 200k miles without blinking, and with the most minimal care possible. Value is difficult to judge, because we all want different things, but I think cars are objectively better value now than then (subjectively speaking, of course).
To be fair, the Beetle is priced for those same hippies that now have more cash. Here are some cheap cars in 2016: Nissan Versa: $11,990; 66' adjusted: $1,617 Mitsubishi Mirage: $12,995; 66' adjusted: $1,752 At $1,352 the entry Beetle was indeed about $10k adjusted in 66'. But the car that bears the name is not targeting the same market now. Even so, if you got the squareback with a sunroof, your 66' Wolfsburg Beetle set you back the equivalent of $14,658. The price of cars is up some, but I don't think the affordability has changed too much. Especially when you consider that the quality of today's cars leads to a used car market with more cars that have life in them. Chevy Spark: $12,660; 66' adjusted: $1,707
Housing has pretty much tracked inflation since the beginning on time (housing is one of the largest costs that is calculated into inflation, so that's kind of a tautology). Some cities have experienced rapid growth in housing costs, but those are mainly cities where people get paid well. Taking loans for college is still a good deal for most students, but of course there are experts who come down on both sides of that one, e.g. Neil Irwin and David Leonhardt.
My point on the student debt thing is that 40 years ago 'student debt' was a laughable concept, now it's taking huge chunks of the economy down with it. Like, 'costs of college' was a summer of flipping burgers for a semester, right? or approximating that? Now a full time job isn't sufficient to pay for tuition in a lot of cases. I also don't really know enough about money or the past 30-40 years of economic history to comment in an intelligent manner.
I think the cost of college has more negative consequences than just debt overhang, which obviously sucks on its own. Namely, the quality of education declines every time the price goes up, which is an oddly counter-intuitive result. This happens because no one will accept failing at $600/credit for a state school or whatever. We're non-educating a lot of people, and I think that will have far more negative consequences for long term economic health than just a $300-500/mo debt payment. Maybe. Or maybe I'm just an old back-in-my-day type, just like my dad was when I was in college.
I think it's a bifurcation of the economy as the price of professional services has risen (education, healthcare), and the price of labor and manufacturing has fallen. This article about the cost of raising a kid these days seems to support that view.Mr. Rose adjusts these thresholds for inflation back to 1979 and finds the population earning this much money has never been so large. One could quibble with his exact thresholds or with the adjustment that he uses for inflation. But using different measures of inflation, or using higher income thresholds for the upper-middle class, produces the same result: substantial growth among this group since the 1970s.