New Census Data on Poverty, Income, and Health Insurance

Here's a round up or reactions to the Poverty, Income, and health Insurance Report released today by the Census Bureau:

Statement by Robert Greenstein on the New New Census Bureau Data on Poverty, Income, and Health Insurance, CBPP: ...[T]he new Census data are disquieting. Though 2007 was the sixth (and likely the final) year of an economic expansion, poverty was significantly higher, the median income of non-elderly households significantly lower, and the number and percentage of Americans who are uninsured substantially greater than in 2001 — even though the economy was in recession that year.

This is unprecedented. Never before on record has poverty been higher and median income for working-age households lower at the end of a multi-year economic expansion than at the beginning. The new data add to the mounting evidence that the gains from the 2001-2007 expansion were concentrated among high-income Americans. ...

In addition, the number of children living in poverty jumped by 500,000 to 13.3 million, and the child poverty rate climbed from 17.4 percent in 2006 to 18.0 percent in 2007. There was some welcome news on child health insurance – the number of children lacking health insurance declined in 2007, but it remained 400,000 above the number of children who lacked insurance three years earlier, in 2004.

The data also show that employer-based health coverage — and private health coverage in general — continued to erode in 2007, and that all of the improvement in health care coverage in 2007 was due to more Americans obtaining coverage through government health insurance programs, principally Medicare and Medicaid.

Data for 2008 Expected to Be Unfavorable The data for 2007 are of particular concern given that the economy is now in a slowdown, and poverty is almost certainly higher now — and incomes lower — than in 2007. ... This suggests that significant pain may lie ahead for many Americans. ...

Paul Krugman summarizes the significance of the implications of the Census data:

About that Bush Boom …, by Paul Krugman: The 2007 income, poverty and health insurance numbers are out. As far as I can tell on a first read, there’s nothing deeply surprising. Still, they represent a landmark — and not in a good way.

The key point is that 2007 was the end of an economic expansion — whether or not the NBER declares a recession, the employment situation, which is what matters to most people, has deteriorated sharply this year. So 2007 was as good as it got in this cycle. Yet median household income was lower than in 2000, while both the poverty rate and the percentage of Americans without health insurance were higher.

In short, the economic policies we’ve been following just aren’t working.

Is the bad economic news all Bush’s fault? No, of course not — but remember, the key argument of the right has always been that tax cuts and deregulation would produce good news, a rising tide that raised all boats. Boy, has that not happened.

But remember, we’re just a nation of whiners.

Michael Mandel notes the bad news for recent college graduates:

No Income Gain for Young College Grads, by Michael Mandel: The latest income distribution numbers are out from the Census Bureau. ...

For my part, I’m back to my regular business of being concerned with young college grads—the ones who don’t have advanced degrees. Basically, the last numbers show almost no change between 2006 and 2007 (as the chart below shows). Young college grads still have not made back their losses from the earlier part of the decade. ...

Jared Bernstein at the EPI echoes the above:

Income Picture, by Jared Bernstein: [See also..., Overall health insurance coverage rises, but masks decline in private coverage.] ...While last year’s overall income gains are good news, the longer-range view is quite different. The Census figures show that the economic cycle that began in 2000 and ended late last year was one of the weakest on record for working families, despite strong overall economic growth during the same period (see Table 1 and Figure 1). ...

Looking at the full cycle across economic peak years—a more useful measure in evaluating economic performance—reveals that household income was no higher in 2007 than in 2000, the previous peak. Given rising joblessness and declining real wages, next year’s numbers will certainly be worse. ...

... The economy of course expanded in the 2000s, but that growth clearly failed to reach most households, a dynamic that implicates growing income inequality. ...

Next, Brad DeLong

Barack Obama on the Income-Poverty-Health Release, by Brad DeLong: Statement From Senator Obama on the Census Income, Health Insurance and Poverty Numbers

Today’s news confirms what America’s struggling families already know – that over the past seven years our economy has moved backwards. We have now lived through first so-called economic ‘expansion’ on record where typical families saw their incomes fall, and working-age households lost more than $2,000 from their paychecks. Another 816,000 Americans fell into poverty in 2007 – including nearly 500,000 children – bringing the total increase in Americans in poverty under President Bush to 5.7 million. And on Bush’s watch, an additional 7.2 million Americans have fallen into the ranks of the uninsured. This is the failed record of George Bush’s economic policies that Senator McCain has called ‘great progress.’ While Senator McCain is promising four more years of the failed Bush economic policies, my economic plan will restore bottom up economic growth that benefits all Americans by cutting taxes for working Americans, providing affordable, accessible health care for all, and investing in new energy, education and infrastructure so we can create millions of good jobs here in America,” said Senator Barack Obama.

Highlights from the Census report:

• Between 2000 and 2007, median income for working age households fell by $2,176. When elderly households are included, median income declined by $324 over the same period. This is the first economic expansion on record where typical households have seen their incomes decline. Under the Clinton Administration, median household income increased by $6,200.
• African American household income fell by $1,804 between 2000 and 2007; Hispanic household income fell by $1,256 over the same period...
• An additional 816,000 Americans fell into poverty in 2007, bringing the total increase in Americans in poverty under President Bush to 5.7 million.
• 500,000 children fell into poverty in 2007. There are 1.7 million more children living in poverty than in 2000.
• Between 2000 and 2007, an additional 7.2 million Americans have fallen into the ranks of the uninsured. This is the largest increase in the number of people without health insurance of any Presidential Administration on record.
• The share of Americans with private health coverage fell from 67.9% in 2006 to 67.5% in 2007. This share has fallen every year that President Bush has been in office, declining a total of 5 percentage points since 2000.
• 940,000 African Americans have lost health insurance since 2000, along with 3 million Hispanics

Mathew Yglesias emphasized the importance of the public sector as a health insurance backstop:

Public Sector to the Rescue, by Mathew Yglesias: Today’s Census numbers show a slight downtick in the proportion of Americans who lack health insurance. This, Jonathan Cohn notes, despite a continued decline in the number of people with private sector health insurance. “The reason the overall numbers look good is rising enrollment in public insurance programs, particularly Medicaid.” He also notes that when you peer into the numbers, the state with the largest overall two-year increase in health insurance rates is Massachusetts, which has adopted the most aggressive health care reform agenda of any state and serves as a kinda sorta model for what progressive reform at the federal level — especially something authored by Ted Kennedy — might look like.

And, finally, one more from Brad DeLong

Income and Poverty Over the 2000-2007 Business Cycle, by Brad DeLong: 2000-2007: the first business cycle during which median household income in America falls from peak to peak. ...

http://www.census.gov/prod/2008pubs/p60-235.pdf

It's not all George W. Bush's fault, but I can think of a number of things he did to hurt and not a damned thing he did to help. ...

Comments

[save_the_rustbelt]

Brad Delong just posted Fallows on China and trade, sorta summarized why most Americans are falling behind.

[anne]

No; absolutely not.

China is building China and we should be learning and admiring. The problem is we have had an Administration and Congress intent on not building us. We are the problem, not China.

There is an astounding need in America to turn outward in blame for any and every possible problem. Not China, not India, not Brazil, not Venezuela, not South Africa.... Us.

[anne]

What we have for years needed to understand, and could have in looking to China, was the need for selective government investment and investment subsidies here. What was relatively lacking through this expansion was domestic investment as Joseph Stiglitz pointed to possibly as early as 2002. Even energy investment was lacking before subsidies. China has used selective subsidies with remarkable success, while we discouraged them here and in other developing countries.

[anne]

Even now, China has begun a significant direct stimulus program to avoid a limiting of growth and we should be paying close attention to where the spending is going and the effects. These last years were marked by low interest rates, low and lowered taxes, rising government spending on military matters, mildly falling spending on social matters, and fine productivity and finer corporate revenues. What we did not have was economic policy designed to directly and methodically stimulate growth.

[The party of finger pointing]

Republicans preach taking responsibility, then do anything but. It's China, it's illegal aliens, it's unfair free trade, it's anything that means they aren't to blame, and they don't have to change a damn thing in their lives (while saying just the opposite about those morally inferior poor people).

What a bunch of whiners. Just as with the Olympics, sometimes the US gets its ass whooped. Deal with it, make the changes that are needed, and get on with it. This whiny stuff isn't cutting the mustard. Americans are supposed to work harder, be more clever, have the attributes of winners, not losers that sit in the corner feeling sorry for themselves because some developing country is kicking their butt in some areas. Fight back - show the Ameircan spirit - and quit this whiny woe is me, why didn't the government protect us stuff. That's not how Americans react to difficult situations.

So stop blaming everyone else. It's unAmerican.

[im1dc]

Our Professor Krugman nails it perfectly, imo:

"In short, the economic policies we’ve been following just aren’t working."

If Obama is to win he must say this over and over beginning with his DNC acceptance speech.

He doesn't resonant otherwise.

[Julio]

Not having any training in economics, I'm probably over my head here, but:

Isn't the problem in our measurements?

We refer to economic "expansion" or "contraction" as if it were a linear thing, and focus first on that, usually meaning GDP. Then we measure as a "second-order" tier the things that really matter.

I.e. we end up saying "yes, it's true, the economy is growing, but..." instead of "something's wrong with the economy, and has been all along".

How do our measurements distinguish between buying a school bus and buying a Humvee, blowing it up in Iraq, and replacing it? Which is "better" according to these measurements?

Do they distinguish at all between a dollar spent on the succesful education of a youngster and one spent on dumping pesticides in the ocean?

A dollar spent to buy medicine for a child and one to buy fancy jewelry?

I know economists have proposed alternative measurements of economic progress, but I see precious little of them in most of our discourse.

Meanwhile, we have leadhead claiming that "the economy" is doing fine. Don't these misguided measurements give his position some undeserved credence?

[im1dc]

Julio says...

"Not having any training in economics, I'm probably over my head here, but:"

Julio, you give Economists entirely TOO MUCH CREDIT for knowing what they are talking about.

They don't know anymore than you. See:

'Consumers Can Predict Inflation As Well As Professional Economists"
'

"ScienceDaily (Aug. 26, 2008) — When it comes to predicting the rate of inflation, professional economists might tell consumers, "Your guess is as good as mine."

"Research by a Kansas State University professor shows that household surveys predict the inflation rate fairly accurately and as well as professional economists. The pros employ statistics like the unemployment rate, money supply growth and exchange rate changes. Consumers participating in surveys are more likely to think about how much they spent at the grocery store that week."

[Discount that heavily]

Did you notice what journal tht paper was published in?

There is plenty of evidence - in much more reputable places - to counter this. There's a reason it appears where it does.

Notice they only talk about inflation - a notoriously difficult series to predict where the results vary by how it is measured. Nothing new here, no surprises (there's actually something caled the price puzzle that relates to this - a huge literature).

Generalizing from these results, particularly outside of inflation, simply misleads. It's not true, and there's really no argument about that.

Please learn a little bit about the research before acting like you have a trump card when it's actually a card of pretty low value.

And on the is it our measurements question, no, it's not. The direction of change, even if not measured perfectly, is evident as it appears across so many different series. And th eGDP is not well-being is old hat - that is not an effective rebuttal to the measurements.

says...

Julio:

"How do our measurements distinguish between buying a school bus and buying a Humvee, blowing it up in Iraq, and replacing it? Which is 'better' according to these measurements?"

Social accounting has presented awfully difficult problems, with little resolution even in much a studied area as ecology. I have no especially compelling article to reference.

[anne]

Darn, I do not know how that happened, but that was me.

[anne]

The economics arguments over valuing approaches to lessening CO2 emissions echo back and forth, but do not strike me as interesting. Utilitarian thinking just may not do here, Kantian thinking will. Sort of like watching the Chinese clean Beijing, because cleaning was necessary.

[John V]

Interpreting stats is an interesting exercise.

The eternal skeptic/optimist in me perused the choice and selective stats and couldn't help but wonder why the stats were chosen the way they were.

Some stats chosen from 2006 to 2007, others from 2000 to 2007 and so on. Some stats shown as a raw number, others shown as a percentage of the population. No mention of demographic changes that influence numbers. Sub-groups are cited at opportune times, while generalities at other times.

Look, I'm not saying all is rosy. It isn't. These are evolving times. But one stat that I never see getting much attention when it comes to average household income and the like is one that considers the effect of baby boomers:

"the range most commonly accepted is 1946 to 1964. In the United States alone, approximately 76 million babies were born between those years. In 1946, live births in the U.S. surged from 222,721 in January to 339,499 in October. By the end of the 1940s, about 32 million babies had been born, compared with 24 million in the 1930s. In 1954, annual births first topped four million and did not drop below that figure until 1965, when four out of ten Americans were under the age of twenty."

People never seem to give this any weight or validity as a factor when looking at:

-high employment in the 1970s as many bombarded the work-force in a short amount of time.

-the beginning of an expansion in the mid 80s as the oldest boomers entered prime earning years

-the real explosion in the 1990s as the bulk entered prime earning years (consider the chosen stat above about the increase in median income of $6200 during the Clinton years...gee, I wonder why)

-The leveling off in the 2000s as many enter retirement.

These stats also have an effect on the number of privately insured as many switch to Medicare.

It also affects that stat of "working-age" groups.

There's many, many conclusions that can be drawn both positive and negative. But it's a huge 800lb Gorilla in the room.

Cato also had some findings to share from its POV. Again, a mixed bag but also don't mention the role of boomers.

One stat that has little Boomer effect is this one:

"Median household income is not falling: “Between 2006 and 2007, real median household income rose 1.3 percent, from $49,568 to $50,233—a level not statistically different from the 1999 prerecession income peak."

One stat that does have a Boomer effect is this one:

"The share of households earning a middle-class income of between $35,000 and $100,000 in real 2007 dollars has indeed shrunk slightly compared to a decade ago, but so too has the share earning less than $35,000 a year, while the share earning more than $100,000 continues to rise. The middle class is not shrinking; it is moving up."

Other notables include:

-the poverty rate of 12.5% is lower than the 13.3% mark in 1997.

-Gini Coefficient of .463 is slightly down from a few years ago and almost identical to a decade ago. Not bad considering that all the Boomers would be putting pressure on that number over the last ten years.

Overall, it's hard to truly argue that America is moving in an unmistakingly wrong direction economically. It's easy to parse stats and make a cheery or gloomy picture. I see a mixed bag influenced by many factors.

[Julio]

Anne,

So, I read something like:

"Though 2007 was the sixth (and likely the final) year of an economic expansion, poverty was significantly higher, the median income of non-elderly households significantly lower, and the number and percentage of Americans who are uninsured substantially greater than in 2001"

and I reread it, and soon the first part:
"2007 was the sixth ... year of an economic expansion" begins to fade into meaninglessness, Cheshire-cat-like (only this one leaves behind a frown).

"Economic expansion"? Huh? Isn't that supposed to be economese for "a good thing"?

Not sure what I'm saying really, except that something is topsy-turvy.

"Utilitarian thinking just may not do here" -- yes, you may have put your finger my problem. Or maybe not my problem, but my insight, eh?

[im1dc]

Discount that heavily ASKS

"Did you notice what journal tht paper was published in?"

According to the article at ScienceDaily.com it was published in "the June issue of The Economic Record".

However, the point to Julio is that that US President's and Average Joe's are still looking for the fabled "one armed" Economist.

Once Julio knows that Economists' predictions are no better than chance he can hold his own 'learned' opinions a little higher and those of Professional Economists a little lower.

Seems fair to me.

[That's because you don't get it]

That makes no sense. You are mixing up policy advice - what the quote was about - with point forecasts. You could have perfect forecasts and still get differing advice since that is normative and hence value weighted by individual.

And did you get the point? That's not what the research shows. Unless you focus specifically on certain ways of mesuring inflation, then at least until six months out, further with some variables and depending upon what questin is being answered with the forecasts, models win, and they beat the public, guesses, whatever. That's not in doubt (and that is an out-of-sample, not in-sample forecasting statement). This isn't an argument you'll win against the evidence (no matter what yuo've been led to beleive).

You can find cases where this isn't true, as the authors did, but that doesn't prove a general point.

If you want to discredit economists, you'll have to do it by referring to things that are true, not false or at best misleading, otherwise you just discredit yourelf (as you are doing).

You don't really have a clue what the econometric evidence says about all of this, yet you act like you do, and get it very wrong.

[Science Daily was just echoing a press release put out by the univesity where the research originated, it means nothing, it's just announces whatever the pr people in universities put out, you have to look at the quality of the research and ho wit fits into the larger body of evidence, perspective you don't seem to have.]

Many of you bash economists, but it's not based upon a foundation you understand. You parrot what you hear elsewhere, but don't really understand the political agenda behind those doing the talking in public forums, and you certainly don't have a deep understandng of the underlying theoretical issues. Economists are on your side, for the most part, they want to help labor, with the environment, to ge the budget fixed, health care working, and so on - and they know how to do it from a variety of perspectives (it's a menu of choices with costs and benefits attached to each, that there's a menu is good, not bad) and they have the influence in policy circles to help. Yet you people stupidly participate in the game of discrediting them to satisfy someone else's agenda thereby undermining people who are actually on your side. It's pretty dumb when you take a step back and look at it, but you persist in doing the bidding of others. Hope you make them happy, but it won't do your agenda much good.

[im1dc]

Discount that heavily ASKS

"Did you notice what journal tht paper was published in?"

According to the article at ScienceDaily.com it was published in "the June issue of The Economic Record".

However, the point to Julio is that that US President's and Average Joe's are still looking for the fabled "one armed" Economist.

Once Julio knows that Economists' predictions are no better than chance he can hold his own 'learned' opinions a little higher and those of Professional Economists a little lower.

Seems fair to me.

[Michael McKinlay]

It will only get worse ... no matter who is in office ...

America is at the end of a 30 year debt binge called Reaganomics. There is no plan currently being considered by either of the top two candidates that will address the current debt purge that will lead to deflation and a years long recession with negative real growth and massive unemployment.

[im1dc]

That's because you don't get it says...

"That makes no sense. You are mixing up policy advice - what the quote was about - with point forecasts"

I'm not "mixing up policy advice...with point forecasts" I deliberately USED the Economists output to define just how worthy their output is.

And it's no better than chance.

[Reinforcement]

Yes, you deliberately used it, but it was used wrong. It doesn't make the point you think it makes. That it was deliberate just reinforces that you don't get the comprehensive picture here, not do you get how that research fits in.

But keep squaking - that's what parrots do.

[typo]

should be "nor do you get how that research fits in."

[im1dc]

Reinforcement says...

"Yes, you deliberately used it, but it was used wrong. It doesn't make the point you think it makes. That it was deliberate just reinforces that you don't get the comprehensive picture here, not do you get how that research fits in."

"But keep squaking - that's what parrots do."

Resorting to an ad hominem attack means you have no facts to back up your argument and thus have chosen to attack me personally in place of a fact based response.

I'm sorry, but you don't interest me any longer. You are obviously a two handed economist or wannabe.

Personally I like facts, preferably verified or at least delimited.

[Makes me laugh]

Pretty funny. Is that supposed to stump me?

Start with Stock and Watson's work on index numbers and go from there [just Google those words since you probably don't know where to look for the paper]. It's tough reading, but you seem to think highly of yourself, so go to it.

You'll find all the evidence you need.

You never did interest me. I just didn't like to see you misleading people when you don't know what you are talking about.

[And furthermore]

And when you're done with that paper, I have four or five more in mind, so let me know...

I hope you are intimately familiar with principle components estimation - I'm assuming you are - if not, we'll have to step back and work you up to this evidence. It might be a bit much. It's in real journals.

Look, get off it, you don't have a clue about the evidence here. You are wrong, so quit being so bull-headed, accept it, and learn something.

[Good cop]

There is an important point here, but it's about our models of inflation. We've known for a long time that they are inadequate. We thought for awhile that Sim's use of a commodity price index could solve the problem (because it efficiently summarized expected future inflation through futures markets, a long story, but theory supports it), but that still looks a bit shaky.

Part of it could, in fact, be measurement but that actually doesn't look to be the best explanation and recently some important inroads on this problem have surfaced (this would have been after the paper you cited was published due to lags in the publication process).

The answer may come through the difference between the stickiness of individual and aggregate prices - and some recent detailed scanner data from grocery stores which is at a detail we haven't had before (yeah digital world), and some other detailed data sets (and simple disaggregations from the data used to construct the price indices) supports this notion. That then leads to better predictions about the aggregate. So the idea that households can predict better, even if true in the paper, is not a result that looks to stand up for very long. prelimary results at teh NBER and elsewhere are encouragin gin that regard.

And once you go outside of inflation, there's no such uncertainty - models win up until around the six-month horizon. After that, trend is the best guess (much as your best guess of the temperature on this day 1 year from now would be the average tempeature based upon historical records - plus perhaps a small global warming fudge factor, but that wouldn't matter much over such a short horizon).

[bakho]

Trickle down economics at work- Life under the urinal.

Bush aside, the Republicans in Congress have been blocking most progressive energy legislation. We really need a Democrat (any Democrat will do) in the White House so the GOP will not be able to block progress.

I am having a difficult time imagining what a White House run by John McCain might look like. Mostly it would be filled with the same incompetent apparatchiks that have run our government into the ground.

[piglet]

John V, you must be joking, right? Never trust a Cato statistic!

"Median household income is not falling". You know, don't you, that while median household income has increased slightly since 2004, it decreased every year of Bush's first term and is currently still below the 2000 level, after 7 years of "recovery" (cf. figure 1 . Also, census reports that "Real per capita income declined by 1.1 percent between 2006 and 2007".

Cato writes: "The share without insurance in 2007, 15.3 percent, is actually lower than it was a decade ago.". When you look at figure 6, you see that there is a break in the data in 1999 due to a methodological change. The comparison with "a decade ago" is therefore deliberately misleading. The data are clear that the uninsured share steadily increased between 2000-2006.

[Better cop]

It's a miracle! Piglet and I agree!

[save_the_rustbelt]

Question for my Democrat friends.

Why is Hillary speaking at 10:30 eastern? Which probably means 10:45 or 11:00.

I have to get up at 5:15am, lots of people have to get up early, including many blue collar voters, and I ain't up to staying awake that long.

Is this the best time to capture all four times zones?

Just wondering.......

[Bruce Wilder]

". . . the failed Bush economic policies . . . "

"In short, the economic policies we’ve been following just aren’t working."

"It's not all George W. Bush's fault, but . . . "

"Republicans preach taking responsibility, then do anything but. It's China, it's illegal aliens, it's unfair free trade, it's anything that means they aren't to blame, and they don't have to change a damn thing in their lives (while saying just the opposite about those morally inferior poor people)."

I think we ought to, at least, consider the possibility that Republican economic policy has hit the target, they were aiming at.

John V makes the important point that point of view matters to how one interprets the data. Maybe the problem is not that anyone is being tendentious; maybe the problem is that we simply disagree about what is desirable, with regard to economic growth and development.

[Francois]

"maybe the problem is that we simply disagree about what is desirable, with regard to economic growth and development."

If fostering policies that make the middle and low income Americans poorer, with miserable or no health care is a desirable result, Al-Qeada can retire with the full knowledge that their job shall be done without them having to take any risk going onward.

BTW, there is a substantial difference between growth and prosperity.

[Francois]

"We are the problem, not China.

There is an astounding need in America to turn outward in blame for any and every possible problem. Not China, not India, not Brazil, not Venezuela, not South Africa.... Us."

Amen to that sister!

[BJ Feng]

We know the reasons for what we're seeing. Globalization prevented lower income wages from rising, and it should be no surprise that as the boomers age, they'll move on to Medicare.

Nothing I've seen here can and could have stopped the effects of globalization or aging. Yes you can tax the rich more and instigate more social spending, but that will not increase the wages of the less educated poor! Nor will it provide more jobs for those poor.

I believe that demographics are far more influential than most people realize. Indeed many of the long wave cycles of boom and bust can be linked to demographic changes. As the boomers retire, we will not be able to enjoy the same kind of prosperity the boom itself created. We're in for a tougher time, I don't see what we can do realistically to change that. Health care spending will only rise as the population ages, the working youth will be asked to shoulder the burden of Medicare and Social Security in the future. You can increase government spending and tax the rich into poverty, but that will not change the underlying reasons for what we're going through and what we face in the future.

Bitching and whining come easily and naturally to many. Simple thinking and simpler platitudes are all too common, but actual solutions are hard to come by, and reality harsh. Just pretending that a government who will "champion the poor" can change all the things I've mentioned above is silly. Yet so many of you seem to be content with just that. If only we had a government that would go after the corporations and the rich. But in what manner and what would that do? Giving up on Iraq won't raise the wages of the poor or end terrorism. In fact, most of the proposals are downright stupid or harmful. Stop trading with China and the world? China is a country with good demographic trends and one of the few places our corporations are expanding rapidly into thanks to rising wealth. The richer they get, the more money they'll have to spend. More government spending and programs? What kind of programs and how effective can they be? What kind of retraining program will get a high school graduate a high paying job? Can you think of such a program or propose one that would work? Reducing illegal immigration would work since that would eliminate a large number of competitors, but of course that kind of real solution isn't acceptable. Better to hope for the magic government training program that will give a high school dropout a seat on the board of Citigroup or make him a manager at a software development firm.

[Cost]

The main problem with US health care is the price. The US can't support a system that costs twice as much per capita as other nations. It is just too much. We could cover every single US citizen for the public money we are spending now, if our system cost the same as other nations did. Imagine that, every single citizen covered, no tax increases needed, and employers/citizens would never again have to worry about trying to afford the insurance payments.

What are we waiting for? Just hire France to overhaul our system if needed.

[anne]

"It is just too much."
No, it is not too much....

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.27.5.w399v1

August 25, 2008

Covering The Uninsured In 2008: Current Costs, Sources Of Payment, And Incremental Costs
By Jack Hadley, John Holahan, Teresa Coughlin, and Dawn Miller

Abstract

People uninsured for any part of 2008 spend about $30 billion out of pocket and receive approximately $56 billion in uncompensated care while uninsured. Government programs finance about 75 percent of uncompensated care. If all uninsured people were fully covered, their medical spending would increase by $122.6 billion. The increase represents 5 percent of current national health spending and 0.8 percent of gross domestic product.... *

* http://content.healthaffairs.org/cgi/content/full/hlthaff.27.5.w399/DC1

[anne]

"Just hire France to overhaul our system if needed."
Right....

http://www.cbpp.org/8-26-08pov.htm

August 26, 2008

Poverty and Share of Americans Without Health Insurance Were Higher in 2007
By Arloc Sherman, Robert Greenstein, and Sharon Parrott

Percentage and Number of Uninsured Remain High

In 2007, some 45.7 million Americans — 15.3 percent of the population — were uninsured. These figures represent an improvement over the figures for 2006, but marked deterioration since 2001, when nearly 6 million fewer Americans lacked insurance.

The main reason for the increase in the uninsured population over this period is that the percentage of people with employer-sponsored health insurance decreased significantly from 2001 — when 63.2 percent of Americans had employer-sponsored coverage — to 2007, when 59.3 percent did. Employer-sponsored coverage rates are likely to decline further in 2008, in part due to the economic downturn.

Employer-based coverage declined once again between 2006 and 2007, from 59.7 percent to 59.3 percent. The reason that the percentage and number of uninsured people fell in 2007 is that more Americans were able to obtain government-funded health insurance. The percentage of Americans with insurance through a public program increased from 27.0 percent in 2006 to 27.8 percentage in 2007, primarily as a result of gains in coverage through Medicare and Medicaid.

The ability of public programs like Medicaid to offset erosion in employer-sponsored health insurance could disappear in 2008 or 2009. Medicaid programs face a risk of cuts in numerous states, because a growing majority of the states face budget deficits due to the economic slowdown. Since nearly every state is required to balance its budget each year, an increasing number of states may consider scaling back Medicaid benefits and eligibility in the year ahead. Congress could help states to avert or minimize such cuts by temporarily increasing the federal share of Medicaid costs, as it did in response to the last economic downturn.

The data for 2007 show some improvement in children's health coverage. The percentage of children without coverage dropped from 11.7 percent in 2006 to 11.0 percent, and the number without coverage dropped by 500,000, from 8.66 million to 8.15 million. This erased about half of the increase in the number of uninsured children that occurred between 2004 and 2006, but still left children's coverage well short of its level in 2004, when the number of uninsured children stood at 7.7 million.

Policy choices have played a strong role in trends in children's health insurance over the past decade. The number and percentage of children who are uninsured fell consistently from 1998, when the State Children's Health Insurance Program (SCHIP) started, to 2004, as increasing enrollment of low-income children in SCHIP and Medicaid more than offset declines in employer-based coverage. Between 2004 and 2006, however, progress in covering children largely ceased as SCHIP and Medicaid enrollment slowed while employer-based coverage continued to erode.

States were again able to make some progress in enrolling more children in SCHIP and Medicaid in 2007. However, last year Congress failed to override a presidential veto of SCHIP legislation that the Congressional Budget Office estimated would have led by 2012 to coverage for nearly 4 million children who otherwise will be uninsured; this means many states likely will be unable to sustain or build upon this progress in 2008....

[It's Demographics Stupid]

The median household reached their peak earning years during the last few years of the 90's / first few years of this decade.

http://politicalcalculations.blogspot.com/2007/05/peak-earning-years-for-us-individuals.html

Maybe you donkeys will pull your heads out of each others asses and realize the biggest determinant of median income and its growth is the median age of the labor force and its change year over year.

[hari]

America is a very, very sick country entering 21st century.

Blame mainland China for all your domestic ills and whatnot...and it won't relief the pain one bit.

Elect Obama and see how you can revitalize the energy of a nation once again...for the good of the majority.

You don't need France to teach you good healthcare...
Just appoint HRC and make her do it!

[anne]

"Maybe you donkeys will pull your heads out of each others -----"

Lie on, lie on, lie on.

[It's Demographics Stupid]

Anne is dense, so lets use an example. First take a good look at the chart on the website in the above post. Group A is 10,000 households all with a working mother and father and each are 35 years old. Group B is 10,000 households all with a working mother and father and each are 40 years old. all samples are of 2005 data. Which group has a higher median household income?

[anne]

"Maybe you donkeys will pull your heads out of each others ----- and realize the biggest determinant of median income and its growth is the median age of the labor force and its change year over year."

The language answers perfectly to the rubbish of the thinking, or of the pretending to think, but do carry on as we grow older and so necessarily poorer.

[anne]

What we have is something exceptional, an economy growing nicely, productivity growing nicely, corporate revenues and savings continually at or near record levels, low interest rates and low and repeatedly lowered taxes, war-time defense spending and only slightly falling social spending. Through this period however ordinary households gained neither in wages nor benefits, but actually lost in both.

Economic policy has been harmful for ordinary households through an expansion for what to my understanding is the only time in our history.

[anne]

The contrast of the Bush years with the Clinton years is striking, but too often even Democrats have masked the gains made during the Clinton years. Barack Obama has never made clear the gains made in the 1990s and lost these last years. Failing to make clear the contrast, policy designed to change the trends of the last years becomes so much harder to legislate and implement.

To have gone from 96 months of gains of 225,000 jobs a months during Clinton, to gains of a mere 160,000 jobs a month taking the finest 52 months during Bush is striking, but little emphasized so that even a Democratic Presidency may find implementing Clinton-like job creation policy difficult.

[It's Demographics Stupid]

Anne: "The contrast of the Bush years with the Clinton years is striking, but too often even Democrats have masked the gains made during the Clinton years."

Easily debunked as being as neanderthal as casting lots here...

http://en.wikipedia.org/wiki/Post_hoc_ergo_propter_hoc

"What we have is something exceptional, an economy growing nicely, productivity growing nicely,"

Lets rerun the last example. I only changed one word and it completely changes the correct answer.

First take a good look at the chart on the website in the above post. Group A is 10,000 households all with a working mother and father and each are 35 years old. Group B is 10,000 households all with a working mother and father and each are 40 years old. all samples are of 2005 data. Which group has a higher AVERAGE household income?

[anne]

"Maybe you donkeys will pull your heads out of each others ----- and realize the biggest determinant of median income and its growth is the median age of the labor force and its change year over year."

Lie on, lie on, lie on; because there is a need to lie. I so understand.

[anne]

What is even more interesting is that in addition to the economic expansion from November 2001 to December 2007, in which ordinary Americans did not share, the period marked the fastest international growth I can find record of. A fine domestic expansion and startling international expansion, in which ordinary Americans did not share.

I suppose though had there been more tax cuts for the wealthiest and more war-time spending, all would have been ever so much better. Well, there's always Afghanistan and Pakistan.

[anne]

Looking to the finest 52 months of job creation during the Bush years and an average 52 months during the Clinton years, we find 225,000 - 160,000 x 52 = 3,380,000 fewer jobs created.

Likely all because of women wishing to stay home to care for the kiddies.

[It's Demographics Stupid]

Anne: You are taking complex systems, using subjective/qualitative terms to make opinionated statements and then applying a single variable analysis (atleast where it supports your religious beliefs) to make some post hoc ergo propter hoc claims.

All sane economist that begins to model and forecast an economy start with demographics. Its not the entire story, but to not make it part of your model is laughable.

[anne]

http://www.cbpp.org/8-26-08pov.htm

August 26, 2008

Median Income for Working-Age Households Lower in 2007 than in 2001

The economic expansion produced no gain in median income for the group normally most helped by economic growth — non-elderly households. As noted, median income for these households in 2007 was $1,107 below its level in the 2001 recession year. [2]

Median income for elderly households, in contrast, rose between 2001 and 2007. One reason that the elderly fared better than others during the expansion appears to be the continued strength of Social Security retirement benefits, which are designed to keep pace with earlier increases in average wages. (Retirees' initial Social Security benefits are set by a formula that depends in part on the level of average wages in the economy in the year a retiree turns 60. The population of seniors increasingly consists of workers who turned 60 after the rapid wage growth of the 1990s lifted average wages. For seniors as a group, Social Security benefits are rising now due in part to the wage growth of the 1990s, although these gains have been somewhat offset by the benefit reductions resulting from the gradual increase, starting in 2000, in Social Security's full retirement age.)

A second reason elderly incomes have increased since 2001 is that more retirees are working. The percentage of people age 65 and older who worked during the year rose from 12.6 percent in 2001 to 15.5 percent in 2007....

[It's Demographics Stupid]

Anne: During the Clinton years we created a net of 1.9 million healthcare jobs. Under Bush we created 2.3 million healthcare jobs. Should we chalk up the better performance as a Bush is better for healthcare than Clinton?

[anne]

http://www.cbpp.org/8-26-08pov.htm

August 26, 2008

This marks the first time on record that poverty and the incomes of typical working-age households have worsened despite six consecutive years of economic growth.[1] The new data show that in terms of poverty and median income, the economic expansion that started at the end of 2001 was the worst on record. The data provide fresh evidence that the gains from the expansion were quite uneven and flowed primarily to high-income households....

[Remember the demo, demo, demographics kiddies. We are growing ever so much older, ever so much faster. OMG!]

[It's Demographics Stupid]

"The economic expansion produced no gain in median income for the group normally most helped by economic growth — non-elderly households. As noted, median income for these households in 2007 was $1,107 below its level in the 2001 recession year."

Once again the aggregate tells you nothing. Is the median household (by income) in 2001 the same as in 2007? If not you are comparing the Jone's to the Smith's. There are thousands of variables that impact median household income and you want to look at one of them (who is president) and hold all other 999+ variables equal over time.

[anne]

As to my religious beliefs, let me be perfectly clear, I believe in the Holy Ghost (whooooo) from whom all economics are descended however incomprehensibly trinitarian.

We believe in the Holy Spirit, the Lord,
and the giver of life,
who proceeds from the Father and the Son,
who with the Father and the Son
is worshiped and glorified,
who has spoken through the prophets.
We believe in the one holy catholic
(Christian) and apostolic church.

[anne]

http://www.mp3lyrics.org/b/beatles/when-im-64/

When I'm 64

When I get older losing my hair
Many years from now
Will you still be sending me a valentine
Birthday greetings, bottle of wine?
If I'd been out till quarter to three
Would you
When I get older losing my hair
Many years from now
Will you When I get older losing my hair
Many When I get older losing my hair
Many years from now
Will you still be sending me a valentine
Birthday greetings, bottle of wine?
If I'd been out till quarter to three
Would you lock the door?
Will you still need me, will you still feed me
When I'm sixty-four?

-- Lennon McCartney

[anne]

Now, that's not right....

http://www.mp3lyrics.org/b/beatles/when-im-64/

When I'm 64

When I get older losing my hair
Many years from now
Will you still be sending me a valentine
Birthday greetings, bottle of wine?

If I'd been out till quarter to three
Would you lock the door?
Will you still need me, will you still feed me
When I'm sixty-four?

I could be handy, mending a fuse
When your lights have gone
You can knit a sweater by the fireside
Sunday mornings go for a ride
Doing the garden, digging the weeds
Who could ask for more?
Will you still need me, will you still feed me
When I'm sixty-four?

Every summer we can rent a cottage in the Isle of Wight
If it's not too dear
We shall scrimp and save
Grandchildren on your knee
Vera, Chuck & Dave

Send me a postcard, drop me a line
Stating point of view
Indicate precisely what you mean to say
Yours sincerely, wasting away
Give me your answer, fill in a form
Mine for evermore
Will you still need me, will you still feed me
When I'm sixty-four?

-- Lennon McCartney

[Lafayette]

anne: As to my religious beliefs, let me be perfectly clear, I believe in the Holy Ghost

Me too.

And the last time I talked to Him, I realized he knows nothing about economics. Then again, I couldn't make a miracle happen if my life depended upon it.

The point is this: Economists are not miracle makers. For that, contact the Holy Ghost. He's open on Thursday afternoons.

[anne]

http://www.epi.org/printer.cfm?id=3093&content_type=1&nice_name=webfeatures_snapshots_20080827

August 27, 2008

Compared to 1990s, Middle-Class Working Families Lose Ground in the 2000s
By Jared Bernstein

The economy expanded over the 2000s, and working families were highly productive, as output per hour rose 18% from 2000 to 2007. But despite their contributions to the economy's growth, middle-income, working-age households—those headed by someone less than 65—lost ground over these years. Their median income, after adjusting for inflation, fell $2,000 between 2000 and 2007, from about $58,500 to $56,500 (2007 dollars).

The trend was very different in the 1990s. After declining in the recession (and the jobless recovery that followed), the median income of working-age households reversed course and rose consistently up through 2000. In fact, over the 1990s (1989-2000) median income was up almost 10%, or about $5,200. Had this 10% growth rate prevailed in the 2000s, the median income of working-age households would have gone up $3,600 instead of falling $2,000.

[The comparison is instructive not for the politics, but to understand that what has been lacking these last years is focus on job creation. Not a general stimulus, but economic policy that is more focused than might have been necessary from the 1950s to 1980s. There was no such determined focused move by Congress or the Administration through this expansion, though I wonder why.]

[piglet]

Troll: "the biggest determinant of median income and its growth is the median age of the labor force and its change year over year."

Now that is a hypothesis that can be tested. Why don't you show us your data? What happened to the median age of the labor force during the 2000s that caused median income to drop or stagnate, while it increased during the 1990s? I'm curious.

[It's Demographics Stupid]

"And the last time I talked to Him, I realized he knows nothing about economics. Then again, I couldn't make a miracle happen if my life depended upon it."

I talked to mother Earth yesterday. She said the CO2 we are admitting is giving her a headache. If we don't cut back she is going to raise ocean levels and flood us all.

[kthomas]

"...Maybe you donkeys will pull your heads out of each others asses and realize the biggest determinant of median income and its growth is the median age of the labor force and its change year over year."

Demo, what? I'm not anywhere near as intelligent or as educated as many of my betters on this Blog (God Bless, Prof. Thoma), but that statement does not make much sense to me. Donkeys? So as median age rises, median income lowers? Why?

[It's Demographics Stupid]

"So as median age rises, median income lowers? Why?"

There is this thing called the earnings life cycle (which goes by various other names). You start out your working career with low real incomes, largely because of lack of experience. As you gain experience your productivity rises. Then this funny thing happens, you age. The value of your education diminishes because half of what you learned to be true in school gets proven to be false. Also your physical abilities wear away gradually. So you reach your peak of productivity at either about 35 (if you are looking at the median) and 45 (if you are looking at the average). As productivity falls so do your real earnings.

See study below.
http://www.mckinsey.com/mgi/publications/Impact_Aging_Baby_Boomers/index.asp

[It's Demographics Stupid]

"The economy expanded over the 2000s, and working families were highly productive, as output per hour rose 18% from 2000 to 2007. But despite their contributions to the economy's growth, middle-income, working-age households—those headed by someone less than 65—lost ground over these years. Their median income, after adjusting for inflation, fell $2,000 between 2000 and 2007, from about $58,500 to $56,500 (2007 dollars)."

Anne don't they teach the difference between median and means in France? Is the distribution of productivity really fixed over time?

[anne]

Again, I am not interested in the politics here but in what was evidently successful economic policy from 1993 and unsuccessful policy from 2001. What is not clear to me is whether either Presidential candidate finds a need to look beyond traditional general stimulus policy to the sort of New Deal stimulus that significant lasting employment change would seem to take.

As for the demographics, I really find no evidence that a portion of the population moving through a period of increasing wages and leveling off could make the sort of differences we experienced these 15 years. I would set down a demographic argument could I find a reasonable way.

[anne]

Demographics:

"So you reach your peak of productivity at either about 35 (if you are looking at the median) and 45 (if you are looking at the average). As productivity falls so do your real earnings."

Fine, but there is simply no evidence of a demographics-aging effect pronounced enough to make any difference in the expansion-income-benefits patterns.

[It's Demographics Stupid]

"Fine, but there is simply no evidence of a demographics-aging effect pronounced enough to make any difference in the expansion-income-benefits patterns."

Since 2000...

http://www.census.gov/popest/national/asrh/NC-EST2007/NC-EST2007-01.xls

and from 1990 to 2000

http://www.census.gov/popest/archives/1990s/nat-agesex.txt

[anne]

Demographics, I understand but you are showing no relation between the income growth patterns of the 1990s and 200s and aging. Really, I am taking this seriously but finding no relation.

[kthomas]

Demo, does this account for both White Collar and Blue Collar workers? Or do we have to disregard this?

Your outline makes a bit of sense, but I'm not sure that salary really goes down at 45. From what I've seen in my own professional career, salaries tend to peak at about 55.

[Julio]

Dear Mr. I.D. Stupid:

Somewhere in your string of vulgar and condescending posts there is some argument that people in this blog, to their credit, are still trying to extract.

Is it that using the median income as a measure is misleading and tendentious?

Sincerely,
Ms. Manners

[bob]

"Trickle-down economics died yesterday morning at 10AM. The cause of death was a data release from the US Census Bureau, but trickle-down had been ailing from lack of empirical support for decades. Also known as "supply-side economics," trickle-down was the love child of Ronald Reagan, Arthur Laffer, and Jude Wanniski. It is survived by Larry Kudlow and Co., and the editorial page of the Wall St. Journal." - Jared Bernstein

http://tpmcafe.talkingpointsmemo.com/2008/08/26/trickle_downrip/

via
http://www.motherjones.com/kevin-drum/2008/08/quote_of_the_day.html

[bob]

From Paul Krugman's bloag (Mr. ID Stupid maybe that graph will help you out)

"Some clarification about just why the latest income/poverty/insurance report was so bad.

There was a significant rise in income among Americans over 65 — those who get much of their income from Social Security. In fact, they’ve been seeing income gains all through the Bush years.

But working families haven’t.

The picture above shows the median real income of households with the head of household aged 35-44. I’m using that as a proxy for working-age households in general, which the Census unfortunately doesn’t give in an easy-to-use form in its historical tables.

As you can see, income has its ups and downs, but in the past each peak was higher than the last one. That was even true, barely, in the energy-crisis-ridden 1970s. But in this decade, incomes first fell in the recession, then basically flattened out at a level well below its previous peak.

That’s really a miserable performance. "

http://krugman.blogs.nytimes.com/

[anne]

http://krugman.blogs.nytimes.com/2008/08/27/stagnation-nation/

August 27, 2008

Stagnation Nation
By Paul Krugman

[The complete address.]

The problem still is in understanding just why the performance was so poor, but we are surely not dealing with a demographics issue nor a general stimulus issue.

[anne]

Remember as well, that what happened here in the failure of gains to ordinary households did not happen in any other developed country through these years. This was an expressly American problem. There may well be a period of recession in selected European economies, but ordinary Europeans gained significantly through the expansion.

Even if the matter here is income distribution, still even the general expansion was not what would have been expected given the stimulus through the period and comparing to the 1990s. Also, the selected loss of health care benefits that was occurring makes the problem more severe. We already have rather limited benefits beyond health care to begin with.

Notice how important Medicare and Social Security were however these last years.

[anne]

That households above 65 have fared relatively well through the 2000s, should show just much Medicare and Social Security need to be protected. There must be no erosion of benefits, not by raising the retirement age or in other subtle ways.

http://www.cbpp.org/8-26-08pov.htm

Median income for elderly households, in contrast, rose between 2001 and 2007. One reason that the elderly fared better than others during the expansion appears to be the continued strength of Social Security retirement benefits, which are designed to keep pace with earlier increases in average wages. (Retirees' initial Social Security benefits are set by a formula that depends in part on the level of average wages in the economy in the year a retiree turns 60. The population of seniors increasingly consists of workers who turned 60 after the rapid wage growth of the 1990s lifted average wages. For seniors as a group, Social Security benefits are rising now due in part to the wage growth of the 1990s, although these gains have been somewhat offset by the benefit reductions resulting from the gradual increase, starting in 2000, in Social Security's full retirement age.)

[Lafayette]

IDS: If we don't cut back she is going to raise ocean levels and flood us all.

Frankly, I am more inclined to believe her than the Holy Ghost.

So, I am selling my beach-front villa in St. Tropez. Any takers? ;^)

[Lafayette]

Cookie crumbling

Julio: Is it that using the median income as a measure is misleading and tendentious?

We all know that employing both average and median statistics covers a multitude of sins. Both simply gives a vague idea of a "normative value" and are otherwise fairly useless for analytical purposes.

Like saying that the chicken is the average fowl. That tells us what about either domesticated or wild fowl?

But, we (so-called) economists often use such numbers to jump to wholly unfounded conclusions. It's a shortcut to avoid well articulated analysis, which is often debatable / conjecturable. Which is also another reason economics is called the dismal science. It is never as exact as, for instance, Rocket Science -- or any physical science.

Which is too bad, but that's the way the cookie crumbles. If one wants to use numbers/statistics to prove a point, then one must still argue persuasively the conclusion desired.

[Real Person from the Real World]

Let's see: banks pay on average what interest on deposits? 2-4%? Meanwhile a student loan is any where from 7% up, home mortgages are 6+% upwards, credit cards charge 20%-30+%, and most jobs are commodity skills (low pay) or sales (commission based). Then there is age, race, religion, and sex based discrimination. Lack of health care is always there to kill off a few of the unlucky and uninsured. We have imported h1b visa labor, run by foreigners, selling IT staff to US businesses that cannot afford to train or hire beginners, while *illegals* take all the dirty, dangerous, low paid physical labor jobs. Technology is also making some people redundant.

SO, how hard is it to see WHY this country is going down the tubes?

[Icarus]

I see the repetition of a key statistic. The median, or mean family income in the US has decreased in the past 7-8 years. I would suspect that real income has been decreasing over the past 30 years (post 1973), for the "average" family.

The question is...why? Is it the consipiracy of Capital, hording profits? Is it simple class conflict, and labor has lost? Perhaps both of those have some explanitory power.

But, also...has the "value" of that labor...that "median" or "mean" or "average" family's labor DECREASED in value over the past 8, and past 30 years (despite some hiccups)?

Growth in trade in goods/services and the re-allocation of production to lower cost sites has changed the game. That $30-$40/hour job is no longer worth that amount, especially when there are competent laborers willing (eager) to do that job for a fraction of that price.

Labor arbitrage will continue to equalize compensation over time, especially for commodifyable labor. This is not surprising, and is actually a benefit to the rest of us, who can now afford goods/services because of lower input costs.

Labor in the US has no inherent right to a particular wage rate...they must negotiate for it, and the market will be the arbiter of possibilities. Of course, like the auto industry, they can negotiate a rate which is non-competitive and ultimately contributes to the demise of that industry.

[Icarus]

I see the repetition of a key statistic. The median, or mean family income in the US has decreased in the past 7-8 years. I would suspect that real income has been decreasing over the past 30 years (post 1973), for the "average" family.

The question is...why? Is it the consipiracy of Capital, hording profits? Is it simple class conflict, and labor has lost? Perhaps both of those have some explanitory power.

But, also...has the "value" of that labor...that "median" or "mean" or "average" family's labor DECREASED in value over the past 8, and past 30 years (despite some hiccups)?

Growth in trade in goods/services and the re-allocation of production to lower cost sites has changed the game. That $30-$40/hour job is no longer worth that amount, especially when there are competent laborers willing (eager) to do that job for a fraction of that price.

Labor arbitrage will continue to equalize compensation over time, especially for commodifyable labor. This is not surprising, and is actually a benefit to the rest of us, who can now afford goods/services because of lower input costs.

Labor in the US has no inherent right to a particular wage rate...they must negotiate for it, and the market will be the arbiter of possibilities. Of course, like the auto industry, they can negotiate a rate which is non-competitive and ultimately contributes to the demise of that industry.

[Real Person from tbe Real World]

You say a laborer has no inherent right to a livable salary.... So you are a proponent of the law of the jungle? Where the strong crush the weak? Also perpetuated as Social Darwinianism, where some people are better than others? The point of view that allowed despots like Idi Amin and Pol Pot to kill anyone, and kept jim crow laws on the books for decades? A point of view that justifies a soldier bayoneting a baby, or allows soldiers, when confronted for genocidal activities, to say their superiors told them to do it? So, a minority feels he has the right to condemn someone else who is not, for the slavery of his ancestors, even though they were born centuries after these things took place and he personally never suffered slavery? So, what are the limits to strength? Legal? Laws are changed by either the powerful, or by people who band together and are wise enough to make laws fair for the weaker, because they know the law of the jungle can turn on them too.

[Icarus]

No, Real Person...I don't believe in the rule of Violence.

I believe that each of us (all 6.5 billion) have a right to offer our labor services to any willing taker, and each of us has the right to hire anyone, freely, in order to use that labor for a hopeful profitable end.

It is voluntary, and free. But, it may have serious costs, as both labor and capital lives in competition. I would rather have the market be the arbiter of labor/capital, than some enlightened, or vile despot.

Real Person...you bring up Idi Amin, soldiers with bayonets, and all sorts of horrorific images, as if they were threats. Threats based on social darwinism, or the 'law of the jungle'.

I would suggest you look in the proverbial mirror, at your middle class you so tenaciously defend, and at the nation you belong to. There has never been a more evil, vile, and genocidal nation than the US of A. Not Germany in the 3rd Reich, not the British at the height of its empire, not even the Mongols who captured a big chunk of Asia.

It is the USA which is the evil we must protect the innocent of this globe from, and it is your middle class which has callously, and ignorantly allowed for the power of its central government to go unchecked. Look at even your recent past. Invading IndoChina, financing and supporting the colonization of Palestine, the terror it strikes through its military industrial complex, the illegal invasion of Iraq. There are so many other examples...
The US has been the fulcrum point of unchecked violence, and its middle class has benefited from it.

The Slavery I hate resides in your American South. The bayonets I hate reside in your army/marines, who now terrorize innocent Iraqis. The power we despise is located in Washington DC. The Social Darwinism we fear is fueled by the nations in the West, who are slowly destroying the capacity for plural forms of living and civilization to thrive.

Real Person...you are naive, and your expectation of protecting an American way of life, for Americans, is misguided.

Let Detroit die, Real Person...it's not needed anymore, and we should embrace change. The middle class you speak for are not good for the globe. We're all better off if they dissapear.

[Icarus]

And Real Person,

Please keep this in mind...

We may have 50-100 million US citizens suffer due to the peril of Globalization (and perhaps the same of those in Europe).

But, we will see hundreds of millions, perhaps a billion people benefit elsewhere.

To me, that's a great trade off.

[Lafayette]

A win-win situation

Icky: Labor arbitrage will continue to equalize compensation over time, especially for commodifyable labor. This is not surprising, and is actually a benefit to the rest of us, who can now afford goods/services because of lower input costs

Yes, we know all that. The question of the day is: “What do we do about it?”

Please, put on your thinking cap (if you have one) and give a cogent response.

It is voluntary, and free. But, it may have serious costs, as both labor and capital lives in competition. I would rather have the market be the arbiter of labor/capital, than some enlightened, or vile despot.

This argument is not pertinent. We are all “free” to sell our labor into a market at the highest price.

The problem is getting a decent wage from that market. More largely put, the argument is about the Return to Labor versus the Return to Capital. The latter takes precedent in the calculations of large corporations, and the former suffers because of that calculation.

Corporations have responsibility to earn profit for redistribution to its stockholders. No one disputes that -- they are doing what they are supposed to do. However, it is socially immoral that some Top Management profit VERY HANDSOMELY from lowering cost by exporting jobs. Any dumb-ass manager can make the decision to go for the "China-price".

But, should they get unjustified rewards, through stock options, for having done so? I don't think so. And, why doesn't labor participate in those rewards for "saving the company" by distributing low-cost products from abroad. Meaning this: Where is the fairness? Why should labor pay the consequences of off-shoring and not benefit from the advantages?

Which means, if taken to its logical end, this: How are American consumers supposed to earn a decent wage by working if all production off-loads to the Far East? Do we all rush off to a service industry job? Cutting lawns? Flipping hamburgers? Counselling clients on their financial investments? Open a Tourism Agency? Look after the aged with home-care services?

Do tell us how we go to Wal-Mart to benefit from all those low cost goodies pouring in from China ... if we are unemployed.

Service Industry jobs that are non-dislocatable won’t do to keep full employment. Not everybody is suitable for brain-power service jobs. We must find ways to invigorate the brawn-power dependent manufacturing sectors. And, the most obvious answer is in Infrastructure Development that puts people to work in Renewable Energy technologies or building New Schools, or Nuclear Generators, or Hi-speed inter-urban train systems, or Urban rail transportation, manufacturing fuel-cell driven or hybrid cars -- or whatever other option.

Also, in the above, before the brawn-power work is sub-contracted, a great deal of brain-power work must be undertaken. It's truly a win-win situation.

It is the USA which is the evil we must protect the innocent of this globe from … Look at even your recent past. Invading IndoChina, financing and supporting the colonization of Palestine, the terror it strikes through its military industrial complex, the illegal invasion of Iraq. There are so many other examples. The US has been the fulcrum point of unchecked violence, and its middle class has benefited from it.

Yes, and what does this have to do with the price of beer in China, or median income for that matter?

Off subject, Icky, way off subject … and unadulterated ranting. America has no reason to be proud of its foreign policy mistakes.

But, neither do we need to be reminded of it.

[Lafayette]

And finally, Icky

You are correct to blame “ordinary Americans” for the present plight. Had we laws that gave more oversight to labor representation on the Boards of American corporations, there would be far less hanky-panky going on. Better yet, at least labor would be part of the decision making and not solely part of the decisional consequences.

Furthermore, we must think of a way of devolving profit sharing down to the lowest ranks of a company – and something more ambitious than just allowing employees to buy stock-options at a discount. Companies should be obliged by law to distribute profits to blue-collar works in the same fashion, though perhaps not in the same proportion, as they do to white-collar workers. And there should be a link between the Total Value accorded white and blue collar workers – either in bonuses or stock-options.

That’s the sort of stuff of which “level playing fields” are made.

We got screwed ... but we let them screw us. Only Federal laws can rectify the situation.

But, it ain't gonna happin' ...

[Real Person from the Real World]

Icky, which is worse? being "naive" or being an embittered and hating others, because of some unstated but deep seated grudge?
That screwing the ones you hate, benefits people you don't even know only sates your resentment, and has nothing whatsoever to do with fairness.

[Icarus]

Real Person,

But I do know the people who are benefitting. I spend a chunk of my year in places like Bangalore and Hyderabad, and those cities are thriving. (of course, every city has its pathologies).

And, let's keep things in perspective. American has lived, and allowed its quasi-educated population to live an unsustainable life. That must change. Americans consume too much, and feel entitled to a standard of living which the value of their labor cant sustain. This is the reality they can't accept.

I'll post that again...

Americans consume too much, and feel entitled to a standard of living which the value of their labor can't sustain.

The choices are 2-fold. Either tax the rich, and watch them flee (or adapt)...or, reduce the amount of consumption. I vote for the later.

[Icarus]

Lafayette...

I think you frame your questions incorrectly, and I suspect this is the root of our differences on these topics.

I'll address.

You ask, after I state...

"Icky: Labor arbitrage will continue to equalize compensation over time, especially for commodifyable labor. This is not surprising, and is actually a benefit to the rest of us, who can now afford goods/services because of lower input costs
Yes, we know all that. The question of the day is: “What do we do about it?” "

What do we do about it? I say we embrace it. We embrace the automation and cost reduction of input costs, and enjoy the benefits. How's that for putting on a thinking cap?

Then you ask...

"However, it is socially immoral that some Top Management profit VERY HANDSOMELY from lowering cost by exporting jobs."

Why Lafayette? This their job...to manage their production by reducing costs, and improving customer service. This is a talent...and they should be payed handsomely.

Also, the key difference we may have is that I don't believe those jobs were the property of the US or European Labor force. Jobs are not owned...they are negotiated. When jobs are offshored, they are not the property of one nation, being given instead to another.
A corporation has the continuous obligation to source production efficiently. No nation or state has an inherent right to own those jobs...they are subject to the logic of the market.

And, Labor is getting the rewards, at least with Off-Shoring. India is seeing a middle class boom. This is a relatively new phenomenon. They are being payed handsomely, and are getting a piece of the reward. Isn't that what we want?

And, Lafayette...there is a way to battle Walmart. If you open a store next door, source it with American Products, and charge your costs plus a small percentage profit...you can compete. People don't have to buy the lowest priced product...they can pay a bit extra to save american jobs. The market can support such an attempt.
But, the people don't care. They vote with their dollars, and they want the lowest priced product. I suspect, they secretly admire that. They admire a business which can deliver the same product, for a bit less of price. The may hate Walmart conceptually, but they sustain it with their dollars. You are free to compete with it...let the market reign here.

And, why I bring up foreign policy issues? Well, first, we should not separate politics from economics. This separation is a horror, and that disconnect is part of the problem of massive de-politicization.

The US middle class has tolerated and sustained an Imperial government, which has afforded it a standard of living which is unsustainable. Dipshits expect a 'middle class' life with a washer/dryer in each home. Those days are over, and as US imperial statue wanes, the life of its middle class may, and should suffer.
Their median income should go down, as what they of offer the market isn't as valuble as it once was. New entrants have changed the dynamic.

What should we do about it? Embrace it, and write the western middle classes a nice eulogy.

[Icarus]

And Lafayette,

"Companies should be obliged by law to distribute profits to blue-collar works in the same fashion, though perhaps not in the same proportion, as they do to white-collar workers."

Why?

Do they deserve it, or, are you just hoping for Christmas gifts here?

Workers get compensated based on their market value. If your worth is $10/hour, why 'should' you get a piece of the profit? No one owes you anything more than the market rate of your labor.

[Julio]

Icarus,

You start with many reasonable analyses but then trip up on your unstated assumptions.

"Workers get compensated based on their market value. If your worth is $10/hour..."

You posit a "market" out there, like a force of nature, which decides what everything is worth.

Underlying that market is a web of social relations and laws. Underlying those is raw physical power ("the barrel of a gun").

On top those, market mechanisms and a capitalist order based on private property have proven a good way to increase the collective wealth. But they are just that -- a machine, a human collective construction.

With a number of failings. One of which is that concentration of wealth results in concentration of power. Which in turn affects and distorts the relations.

If some factory owner, and the whole class of capitalists that I have access to, chooses to offer me a job at a starving wage, that's a raw exercise of power. If I take their money at the point of a gun, that's a similar exercise of power.

The only difference is that we have, collectively, agreed to delegate the latter power to the state.

In exchange for what?

Say a minimum wage? That's a modest enough request. Health care for all? Well, it's a negotiation, an agreement we make as part of that negotiation, just like the wage negotiations in your examples. Enough money to party every night and never work? Well, I don't think that would work, but it's just an extreme negotiating position, just like, say, offering a $1/hr wage in the US.

Your talk about "the market" ignores that underlying, collective, negotiated infrastructure.

Interestingly, I see parallels between the above infrastructure and your view of power relations in the world (with a lot of which I agree). The US is in a long transition from negotiating at the point of a gun, to negotiating from a position of extremely unequal economic strength, to negotiating from an equal footing.

We'll see how we cope.

[Lafayette]

An Alternative Lifestyle

Icky: Americans consume too much, and feel entitled to a standard of living which the value of their labor can't sustain.

An economy NEVER consumes too much. Never. It may, however, consume badly. Consumption determines Demand, Demand provokes Supply, Supply determines Employment.

Our economy is run by Large Corporations which, through Media Giants who control access to information, manipulate by advertising the mind and mentality of the nation's consumers. They effectively tweak our patterns of Consumption. There's not much one can do about that, except fight fire with fire.

That is, get across the message of an "Alternative Lifestyle"; one that is not driven by Conspicuous Consumption that propels people to have what others have, right now, all in the glorious name of Big Profits. There's nothing wrong with profit making. What's wrong is the means taken to that end. (And, the way they are shared.)

Comment about the American Lifestyle, if you like, but the economics of our nation is driven by it. It is not in economic policy that we shall change Lifestyle propensities. Economic policy can only assure that more people are able to benefit from it.

Lifestyle is a matter of Cultural Values. The foremost of which is the Winner Take All mentality of our populace -- whether it is in Sports or Entertainment or, more pertinently, Business. We glorify the making of wealth. We adulate its accumulation. Those who succeed are our Role Models, pasted on the front pages of Forbes and BusinessWeek and Fortune magazines.

They are like the Roman Emperors of yore who, having won their battles, paraded their loot before the Roman citizens who applauded their victory. These emperors kept the loot and spent it upon aggrandizing Rome and the Roman Economy (principally upon the games that were gratis). That’s how they ruled Rome. Until replaced by another more victorious army general.

The Roman economy expanded with their territorial conquests, and died when that expansion finally burst its 500 year bubble.

Are we any different, really, today? I say we are not. The lines of economic expansion are not the same but they are analogous.

But, we should be different.

[Real Person from the Real World]

Icky, did you ever notice the DALITs in India? Their standard of living is going up, but they have been as oppressed as anyone in the US, for centuries. These same societies you see improving are just as problematic for some of their people as ours is for YOU.

[gpawelski]

Maggie Mahar did a very good (and very depressing) piece on the fallacy of declining uninsured.

http://www.healthbeatblog.org:80/2008/08/poverty-health.html

[Icarus]

Real Person,

Yes, the question of income inequality, and participation in the spoils of globalization afflict India as well. Dalits, tribals, shanty town dwellers...all have not seen an improvement in living standard which the 1st world could/would call acceptable.

But, 20 years ago, in India...there was no real "middle class". There were a small crust of aristocratic elites, and it then plunged to a strata of lower middle class.

Things have changed with the half-ass embrace of capitalist social property relations. I say "half ass" becaues India still doesn't have true property rights, or a predictable court system, or a non-corrupt bureaucracy. Such change doesn't come with mere trade legislation.

So, although over 1 billion people have not entered what we'd call a 'modern' lifestyle, perhaps 100-200 million people are, or have.

This is a vast improvement. We see Information Technology, Biological Science, Engineering, and even Financial jobs being created in India. Buildings are rising, and a salaried class of college grads now expect, and aspire towards a very western lifestyle (with an Indian twist).

These jobs reflect a shift in the location of production. This is the shift I applaud. Perhaps these jobs could have been created in the US, in your midwest, in the West. But, they're better suited for India right now. You get a better employee at most price points. That's the issue.

If you say..."I can employe someone for $50k/year"...in the US, you get a half-literate person. In India, you'd get a master's degree holder with 15 years of Fortune 500 experience.
It's simply a better product.

We, as consumers, benefit. The Ranbaxys will enable good solid reverse engineering of drugs, the Wipros allow for implementation costs of software to come down, the Call Centers allow for more cost efficient customer service. Of course, this is still a market...lower cost by itself doesn't mean a better product, but, it's a good start.

Dalits are a long way off from really seeing a change in living standard.. But, things are better than they were 25 years ago, before a modicum of neo-liberal theology was entrenched in India.

[Real Person from the Real World]

"Dalits are a long way off from really seeing a change in living standard.. But, things are better than they were 25 years ago, before a modicum of neo-liberal theology was entrenched in India."

Just as US African Americans are better off.

[Lafayette]

The New Nobility

Icky: But, 20 years ago, in India...there was no real "middle class".

There has always been a "middle class", everywhere. It was called the "bourgeoisie".

Any aristocracy had its nobility and serfdom. Between them, in terms of rank, were those who lived in villages/towns/cities and were the bourgeoisie. Hence the word "middle class".

The concept of human equality, born of the Renaissance, and finally made reality with a couple of revolutions, including our own, began in the 18th century.

It is still Work In Progress. The Haute Bourgeoisie (the upper middle class) gradually took the place of nobility. How did they do that?

Because in a market economy the state jiggers taxation rules in their favor. Just like during the days of autocratic rule in Europe, where unearned wealth drifted upward to nobility, mostly landed gentry (since agriculture generated most wealth).

Which is no longer the case. The Industrial Age of the 18th century began to generate more wealth than the land, agricultural mechanization replaced the need for serfs, who were attracted into cities to work on industrial production lines. But, this too has evolved.

Today, in the more developed economies, Financial Services spawn more wealth than industry. Up to forty percent of the profits accounted for in US GDP -- much of it going into the hands of a relative few people in the right places at the right time who earn spectacular amounts of money. They have become the New Nobility.

(Makes one wonder why we ever had an American revolution, doesn't it? ;^)