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So Trickle Down Economics Really Works Best?
So we have posts like those from Denny Shibby (who has never come back to prove any of his "I saw someone say it on Fox News" points) and Capitalizt, both suggesting how easy upward mobility is and that liberals actually want to hurt future poor generations by providing safety nets, because big business will make life so much better for them if only we wouldn't tax them (even though they don't pay their fair share as it is (and by fair share I'm refering to the fact that they pay less than even what people in lower tax brackets pay)). I thought I'd post a couple articles noting that the actual data & what's really happening show that this is untrue. I couldn't find the exact quote, but I remember very well an assertion made that more people in poverty probably are in the top tax bracket 10 years later than are still poor. Oh, really?:
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It's not so easy to move up in U.S., economists find
May 15, 2005
BY DAVID WESSEL
The notion that the United States is a special place where any child can grow up to be president, a meritocracy where smarts and ambition matter more than parenthood and class, dates to Benjamin Franklin. The 15th child of a candle-and-soap maker, Franklin started out as a penniless printer's apprentice and rose to wealth so great that he retired to a life of politics and diplomacy at 42.
The promise that a child born in poverty isn't trapped there remains a staple of America's self-portrait. President Bush, though a riches-to-riches story himself, revels in the humble origins of some in his Cabinet. He notes that his Cuban-born commerce secretary's first job for Kellogg Corp. was driving a truck; his last was chief executive.
Stuck at '70s pace
But the reality of mobility in America is more complicated than the myth. As the gap between rich and poor has widened since 1970, the odds that a child born in poverty will climb to wealth -- or a rich child will fall into the middle class -- remain stuck. Despite the spread of affirmative action, the expansion of community colleges and other social change designed to give people of all classes a shot at success, Americans are no more or less likely to rise above, or fall below, their parents' economic class than they were 35 years ago.
Although Americans still think of their land as a place of exceptional opportunity, evidence suggests otherwise. And scholars have, in the last decade, come to see America as a less-mobile society than they once thought.
Slower movement charted
As recently as the late 1980s, economists argued that not much advantage passed from parent to child, perhaps only 20 percent. By that measure, a rich man's grandchild would have barely any edge over a poor man's grandchild.
''Almost all the earnings advantages or disadvantages of ancestors are wiped out in three generations,'' wrote Gary Becker, the University of Chicago economist and Nobel laureate, in 1986. ''Poverty would not seem to be a 'culture' that persists for several generations.''
But in the last 10 years, better data and more number-crunching have led economists and sociologists to a new consensus: The escalators of mobility move much more slowly. A substantial body of research finds that at least 45 percent of parents' advantage in income is passed along to their children, and perhaps as much as 60 percent. With the higher estimate, it's not only how much money your parents have that matters -- even your great-great grandfather's wealth might give you a noticeable edge today.
U.S., Britain 'least mobile'
Economists and sociologists say that in recent decades, the typical child starting out in poverty in continental Europe has had a better chance at prosperity. Miles Corak, an economist for Canada's national statistical agency, tweaked dozens of studies of the United States, Canada and European countries to make them comparable.
''The U.S. and Britain appear to stand out as the least-mobile societies among the rich countries studied,'' he finds. France and Germany are somewhat more mobile than the U.S.; Canada and the Nordic countries are much more so.
Even the U. of C.'s Becker is changing his mind: ''I do believe that it's still true if you come from a modest background, it's easier to move ahead in the U.S. than elsewhere, but the more data we get that doesn't show that, the more we have to accept the conclusions.''
Wall Street Journal
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Egalitarian spirit vanishing in Israel
May 15, 2005
BY AMY TEIBEL
JERUSALEM -- The fissures in Israeli society have traditionally been defined by religion, ethnicity and how to make peace with the Arabs. Now economics are threatening to create an even wider divide.
New free-market policies have swollen the underclass, and for many who remember the egalitarian ethos on which the Jewish state was founded, the tonic of welfare cuts, mass layoffs and conspicuous consumption is hard to swallow.
The government's National Insurance Institute, which handles welfare payments, reported recently that shrinking social spending, coupled with tax cuts that have primarily benefitted the wealthy, are widening Israel's social gap. Between 2002 and 2004, social security payments sank 16 percent in inflation-adjusted terms, fueled mostly by a 40 percent drop in allowances paid to families with children and a 43 percent decline in unemployment benefits.
But Finance Minister Benjamin Netanyahu is sticking with his policies of the last two years, saying market economies are ''the greatest tool for social justice.''
''Things have gotten tougher since Bibi came to power,'' said one woman, using Netanyahu's nickname.
Marcel Seri-Levy, a divorced 33-year-old mother of three, says her family lives on $380 a month from alimony payments and $330 from welfare. The latter amount is nearly half of what the family had been receiving. Seri-Levy has also lost other benefits, including discounts at nursery schools and on medical co-payments.
Children in poverty
In 1998, 17.5 percent of all Israeli families were living below the poverty line -- defined as $400 a month for an individual and $1,000 for a family of four, according to National Insurance Institute statistics in November. Five years later -- the latest figures available -- the proportion was up to 19.3 percent.
In 2003, 30.8 percent of all children in Israel were living in poverty, up from 22.8 percent five years earlier.
Netanyahu looks at these bleak statistics against the backdrop of an economy whose state was dire when he inherited it two years ago.
Under Netanyahu, the economy has indeed rebounded, growing 4.3 percent in 2004. But although the business community is thrilled with his policies, ordinary Israelis are uneasy.
Netanyahu's approach caps a slow-moving revolution away from the egalitarian community the country's founders aspired to.
Today, fancy homes are no longer isolated to tiny enclaves. Israelis dine at fancy restaurants and drive expensive cars, and marinas burst with yachts. Bank presidents earn more than $1 million a year, and technology has produced a new economic aristocracy.
Elderly face difficulty
Under Netanyahu, even mass layoffs -- a notion that once couldn't even be broached because unions were so strong -- have become part of the Israeli experience. Most prominently, 4,500 teachers recently received dismissal notices.
Lines at soup kitchens have grown longer, and as the aged population grows, more and more elderly are forced to decide whether to spend small incomes on food or on medication.
Traditionally, poverty has tended to be associated with Israeli Arabs and immigrants from Middle Eastern and North African countries, said Barbara Epstein, director of the not-for-profit Community Advocacy program in Jerusalem. But as the population ages, the circle has widened.
A recent study by two researchers in Jerusalem showed 40 percent of all Holocaust survivors in Israel live below or just above the poverty line. Women who head nearly all single-parent families also figure heavily in the poverty figures.
According to Epstein, the statistics show that Netanyahu isn't on the right track.
''His theory of the way the market economy works is that if you give money to rich people, it'll trickle down to poor people. They'll make jobs, and that will make the economy move,'' she said. ''And that hasn't proven itself to be right.''
AP
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Donde esta Denny?
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Download My Spring '08 Mix Here
Thurs May 15: Influence @ Tini Martini w/ Kris B. vs. Nosmo, Rikler & Mike Palmeri
Thurs June 5: Under the Influence @ Tini Martini w/Mathias Matthew, Jack Kim & more TBA
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On the notion that I want to make the rich "suffer": The reality is that there are real expenditures that need to be paid through taxes, so if the money has to come from somewhere, I'd rather the rich "suffer" (who will continue to be rich) rather than your attempts to make the middle class suffer, because that's what will happen in reality if you install a flat tax or completely eliminate taxes on the most wealthy. (Also a few of my initial points were directed to Denny Shibby, not you, so I apologize they were lumped together to make it seem all were directed to the same person).
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