Is "the rich getting richer" a problem?

[Kasz216]

richardhutnik said:

Kasz216 said:

The main focus of the original post had to do with the concept of the rich getting richer (compounding effect) and was asking if it is a problem.  Even this most recent NY Times article was connected with that to some degree.

As far as B, goes in connection with this, it goes back to the original point, that those who are better off, due to the compounding effect in gains, end up weathering down times a LOT better.  They have more to pull on, and use their wealth to increase connections, and so on.  The trip downward isn't nearly as rough as it is for everyone else.  It isn't they who suffer when there is down time as it is with those who are far less well off.  They don't live paycheck to paycheck the way the Middle Class increasingly is.  And individuals who have 3 jobs, ALL of which are needed to survive, get hurt big time if there is a loss of any of them.

This connects back to the original point asking about whether the rich getting richer is a problem.

It connects.  It just doesn't make any sense whatsoever.

Like I showed earlier, there really hasn't been much of a compounding effect if any over the last 20 years or so.   Personal Gini coefficent remained fairly unchanged.

If we're talking income that is.

That the rich have more money is common sense... in that they are rich.   If things ever get bad for a rich person they can start living like a middle class person.

The Gini coeeficient did get worse earlier last decade, right before the bubble hit.  During the years of Clinton, where taxes went up on the upper end some, it got softened.  Now, it is still a bit early to say what is going on, but apparently the wealth are doing better.

I'm not sure where your getting that information from.

The Dot Com bubble burst in 2000.  Individual Gini Coefficent dropped off WELL before then.  In 1997.

While Family and Household Gini coefficents rose in 2000.

Chart again....

http://3.bp.blogspot.com/-1Y25WlUbsXM/TqdJJKE5YHI/AAAAAAAAEgc/mEfoQs_f7xs/s1600/US-Gini-Coefficient-for-Individuals-Families-Households-1994-2010.png

 

Individual Gini Coefficent is what you'd use to measure the Matthew Effect and well... it just doesn't seem to be happening lately.

Well, unless you consider the fact that rich people are more and more likely to marry other rich people part of the "Matthew Effect"

 

Although, to be 100% honest with you... I'm sick of using the term Matthew Effect... because this isn't the Matthew Effect.  The Matthew Effect refers to the fact that famous researchers will get credit for observations and discoveries by less favorite ones.

It wasn't meant to have economic implications.

Wealth Condensation would be a better phrase.

 

Either way, for a long time now, the individually wealthy have been getting less wealthy, this has been masked by the rise in "group sorting" in marriage and a few Super rich dudes being super freaking rich making people jealous.

 

So I know what your thinking   "So where did all that extra money created go?"

If I had to take a guess?   I'd say the expansion of the Labor Force.   Keep in mind Labor Force Participation Rates are a LOT higher now then they used to be.

 

The Median income is the same despite a HUGE addition in workers, mostly lower end workers.  Normally when you add a bunch of numbers to the lower half mathmatically you'd expect that to drag the Median down, wouldn't you?