Posts Tagged ‘rich’

Home alone

Posted: 19 May 2016 in Uncategorized
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Rich Americans aren’t only getting richer, distancing themselves financially from everyone else. They’re becoming more socially isolated from their fellow Americans, too.

A recent analysis of survey data from more than 100,000 Americans by Emily C. Bianchi and Kathleen D. Vohs finds that the rich spend significantly less time socializing with others and more time alone than low-income Americans. On average, they spend 6.4 fewer evenings per year in social situations. Wealthy people also spend less time with family members and neighbors compared to households with lower incomes—but they spend more time with friends.

It’s possible, of course, that people who put little value on social relationships may spend more time on their careers and accordingly have higher earnings than others. It’s also possible that people choose to interact less with individuals who have a lot of money.

Here’s the authors’ response to those possible limitations of their study (citations omitted):

First, although we reasoned that access to money influences how and with whom people spend their time, we cannot rule out the possibility that how people choose to spend time affects their income. People who put little value on social relationships may invest more in their careers and accordingly earn higher wages than others. Yet, the results showed that income is linked to different types of social engagement, even after accounting for time spent working. This suggests that the findings are not an artifact of discretionary time but instead relate to how people choose to spend that time. In addition, while we reasoned that access to more money affects how and with whom people elect to spend their time, we cannot rule out the possibility that circumstantial differences across incomes may drive the effects. For instance, greater household resources may be negatively associated with proximity to neighbors, thereby creating a structural impediment to social contact. Even so, this possibility could be a manifestation of the desire for social distance rather than a driver of these effects.

Second, our reasoning suggests that people with more financial resources voluntarily configure social worlds that are more autonomous and, when electing to be social, more geared toward friendship than family or community. Yet given that income is negatively associated with compassion and decoding social cues, it is possible that people with more money are less desirable interaction partners. As such, people may be less drawn to more prosperous relationship partners. If so, then the rich may inhabit different social worlds than the poor but for different reasons than our theorizing would suggest. Contrary to this reasoning, we found that income was positively associated with time invested in friendships, the most voluntary of the relationship types we examined. This seems to suggest that people with greater resources are deliberate architects of their social worlds.

In other words, the authors conclude, rich people have chosen to isolate themselves from others, especially family members and neighbors.

The combination of economic and social distance means that, unlike other Americans, rich people find themselves home alone.

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As the New York Times [ht: sm] points out,

This year the Republican and Democratic nominating conventions in Cleveland and Philadelphia will be bankrolled entirely with money from corporations and wealthy individuals. Not since the Watergate era, when a $400,000 pledge to the 1972 Republican convention from ITT Corporation was linked to a favorable outcome for the company in a federal antitrust decision, has this happened. . .

The 2012 Republican convention in Tampa, Fla., cost about $74 million. That didn’t include millions more that corporate lobbyists spent on parties and concerts with top-name entertainment that took place outside the convention hall, and off-limits to TV cameras. The 2012 Democratic convention in Charlotte, N.C., cost about $66 million. Democrats tried to limit corporate sponsorship that year, but that didn’t lead to less spending. The convention instead went into debt, which Duke Energy, one of the nation’s largest electric power providers, paid off by forgiving a $10 million loan.

This year, the two political parties together will most likely spend upward of $150 million on their conventions, all of it paid by private entities.

This summer, two cities in the United States will thus be able to host the best parties money can buy.

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A new study by Barry Bosworth, Gary Burtless, and Kan Zhang (pdf, as discussed here) reveals that (looking at mid-career earnings) the life expectancy gap between those at the top and bottom of the distribution is growing.

For example (from the bottom half of the chart above), for 50-year old women in the top one-tenth of the income distribution, women born in 1940 could expect to live almost 6.4 years longer than women in the same position in the income distribution who were born in 1920. For 50-year old women in the bottom one-tenth of the income distribution, they found no improvement at all in life expectancy.

Longevity trends among low-income men were not much better: Men at the bottom saw only a small improvement in their life expectancy (of 1.7 years) compared to a much large increase for men at the top (8.7 years). So, the life-expectancy gap between low-income and high-income men increased just as fast as it did between low- and high-income women.

This growing gap in life expectancy has lots of different implications, such as the long-presumed progressivity of Social Security payouts (since low-wage contributors receive monthly checks that are a higher percentage of the monthly wages they earn during their careers than high-income participants). But, according to this and similar studies, we’re learning that the growing mortality differences between rich and poor are offsetting the redistributive tilt in Social Security’s benefit formula.

Perhaps even more important, the mortality gap is challenging our long-held expectation that successive generations live longer than the generations that preceded them. For the past three decades, however, improvements in average life spans at the bottom of the income distribution have been negligible while those at the top continue to grow.

What this finding suggests is that it’s not just income and wealth but life itself that has grown starkly more unequal in the United States.

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The folks at the Center on Budget and Policy Priorities have analyzed the distributional effects of the tax-cut plans proposed by Republican candidates Donald Trump and Ted Cruz.

Here’s what they found (for 2025, when their plans would be fully implemented):

  • Just 0.8 percent of the population would live in households with incomes exceeding $1 million, but such households would receive 38 percent of the Trump tax cuts. This would be greater than the share of the tax cuts (32 percent) that the bottom 80 percent of the population would receive.
  • Millionaires would receive 47 percent of the Cruz tax cuts, or more than double the share of the tax cuts (19 percent) the bottom 80 percent of the population would receive. In fact, under the Cruz plan, millionaires would receive a larger share of the tax cuts than the bottom 95 percent of the population.

Even more:

  • The richest 0.1 percent of the population (those with annual incomes exceeding $5.2 million in 2016 dollars) would receive tax cuts averaging $1.4 million under Trump and $1.8 million under Cruz. Under both plans, this segment of the population would receive significantly larger percentage increases in after-tax income (18 percent and 23 percent, respectively) than any other group.
  • These households would receive 18 percent of the tax cuts under the Trump plan—more than the plan’s combined tax cuts for the bottom 60 percent of the population. Under the Cruz plan, these multi-millionaires would receive 23 percent of the tax cuts, a larger share of the tax cuts than the bottom 80 percent of the population would receive.

 

segregation

The United States is characterized by increasing class segregation—as both a condition and consequence of growing inequality.

top 10 percent

We all know that the share of income going to the top 10 percent has steadily increased since the mid-1970s (from an already-high 33.41 percent in 1976 to an astounding 49.85 percent in 2014). That’s because a tiny group at the top has been appropriating a growing surplus and then distributing a large share of it to the other members of the top decile.

Now we know, thanks to recent research by Sean F. Reardon and Kendra Biscoff (pdf), that rising income inequality in the United States has been accompanied by increasing residential segregation by income:

Income segregation has increased over the last four decades, and has continued to increase in recent years. In large metropolitan areas (the 117 metropolitan areas with populations of 500,000 or more), the proportion of families living in neighborhoods with median incomes well above or below the median income of their metropolitan area has grown rapidly since 1970. . .In 1970, only 15% of all families lived in such neighborhoods, while 65% lived in middle‐income neighborhoods. By 2012, over one third (34%) of all families lived in either rich or poor neighborhoods, more than double the percentage in 1970. Over the same time period the proportion living in middle‐income neighborhoods declined from 65% to 40%.

And, they admit, this growing class segregation is not going to be easy to break:

In an era of very high income and wealth inequality, families have very different resources to spend on housing, and the housing market responds to this inequality in ways that exacerbate segregation. Given the importance of neighborhood contexts for children’s opportunities, and for shaping the experiences of the affluent, rising income segregation will likely only further exacerbate the economic inequality that has produced it. This self‐reinforcing cycle—where inequality begets segregation and segregation fosters inequality—will be hard to break.

Let’s call it the vicious cycle of class inequality and segregation.

As Thomas B. Edsall explains, that vicious cycle is both caused and reinforced by fundamental changes in the American social order and political system: from the fact that the increasingly segregated well-to-do have found ways of supporting and taking advantage of key services (health, education, job search and other opportunities) to aid themselves and their own children to the fact that (as Bernie Sanders recently reminded us) the top decile has been able to exercise much more influence over politics and policy (through voting and political donations) than its share of the electorate would suggest.

And, as we’ve seen in recent months, the combination of inequality and segregation has exacerbated tensions within the Democratic Party:

The “truly advantaged” wing of the Democratic Party. . .has provided the Democratic Party with crucial margins of victory where its candidates have prevailed. These upscale Democrats have helped fill the gap left by the departure of white working class voters to the Republican Party.

At the same time, the priorities of the truly advantaged wing — voters with annual incomes in the top quintile, who now make up an estimated 26 percent of the Democratic general election vote — are focused on social and environmental issues: the protection and advancement of women’s rights, reproductive rights, gay and transgender rights and climate change, and less on redistributive economic issues. . .

Sanders’s extraordinary performance to date. . .points to the vulnerability of a liberal alliance in which the economic interests of those on the top — often empowered to make policy — diverge ever more sharply from those in the middle and on the bottom.

As the influence of affluent Democratic voters and donors grows, the leverage of the poor declines.

Meanwhile, the vicious cycle of class inequality and segregation makes the rich richer, everyone else poorer—and the yawning gap between them continues to grow.

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