Posts Tagged ‘rich’

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Charlie Becker, “99 Problems (Bein’ Rich Ain’t One)”

Charlie Becker’s piece, “99 Problems (Bein’ Rich Ain’t One),” was part of a pop-up art exhibit organized during the Democratic National Convention by Rock the Vote as part of its Truth to Power series—to offer “a counterpoint to the narratives that dominated the DNC.”

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What drives consumer sentiment in the United States?

Apparently, the recent fall in consumer sentiment (as measured by the University of Michigan Index of Consumer Sentiment) was caused by rich people who lost a portion of their wealth after the British decision to exit the European Union.

The early July decline in consumer sentiment was due to increased concerns about prospects for the national economy that were mainly voiced by high income households. Prior to the Brexit vote, virtually no consumer thought the issue would have the slightest impact on the U.S. economy. Following the Brexit vote, it was mentioned by record numbers of consumers, especially high income consumers. Nearly one-in-four (24%) households with incomes in the top third mentioned Brexit when asked to identify any recent economic news that they had heard. For these households, the initial impact on domestic stock prices translated Brexit into personal wealth losses.

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The usual argument in the United States, one we’ve been hearing again (and again and again) in the current presidential campaign, is that a decrease in tax rates at the top will help everyone. Growth, inequality, basic fairness—all will be improved if only American politicians would agree to lower tax rates on large corporations and wealthy individuals.

Mark Thoma [ht: ja], as mainstream an economist as there is, takes up all the basic arguments in favor of decreasing taxes and demonstrates how wrong they are. Each and every one.

Here’s the list (readers can look at the column for the details):

>Increasing taxes on the wealthy will harm economic growth.

>Increasing taxes on the wealthy won’t solve the income inequality problem.

>Tax increases will blunt the incentive to invest in new businesses.

>The wealthy will move to other countries to avoid the tax increase.

>Increasing taxes on the wealthy won’t increase tax revenue.

>Less will be donated to private charities.

>The wealthy deserve what they earn.

>It’s a tax on small businesses.

No, no, no, no, no, no, no, and no.

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Not a single one of those arguments holds up. The only significant result of lowering the top Federal income tax rate is to increase inequality, which is exactly what we’ve seen in the United States for the past five decades.

As Thoma concludes,

Arguments about the size of government and the taxes needed to support the many things that government does are certainly fair game for politicians. But the argument that tax increases on the wealthy will cause substantial harm to the economy does not withstand a close look at the evidence.

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.