Complete video at: http://fora.tv/2008/02/21/Uncommon_Knowledge_Thomas_Sowell Hoover Institution Senior Fellow Thomas Sowell argues that reports of …
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Thomas Sowell – Is "Income Stagnation" an Economic Myth?
37 thoughts on “Thomas Sowell – Is "Income Stagnation" an Economic Myth?”
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I've seen it in my own life. Jobs I've worked in the early 90's pay practically the same today. But the price of everything else has skyrocketed. Owning a home is a far off & impossible dream for most Gen Xr's and Millennials.
"The question is not, why they accept this money, but why are other people offering it to them?" – haha, that's brilliant.
Thomas Sowell's assessment is either fallaciously concluded or misleading. Per-capita income is in reference to average. It's literally stating that if you divide the total income of Americans by the number of Americans you get a 51 % increase; this illustrates more importantly that average and median income (which is more representative of the majority of people) have diverged. The real median income per individual, as well as household has essentially stagnated.
i wonder what years sowell say the per capita increase was 50 percent? could it be after the unionization before 1970? wonder why sowell doesnt give specifics hmmm
"There are more people working in the the top 20% than the bottom 20%". This means rich people have more jobs than poor people. This does not mean that because you have a job you are more likely to become rich (you can't theorize or conclude anything on financial mobility based on statistic quoted above given by professor). However you can assume (without any assumptions or emotion) that if you are already rich, you have a better chance of landing a job. If you're poor, opposite chances. No assumptions on job availability to each class can made based on the professor's statistic he did not provide that information.
price of food has gone up.price of everything is going up.wages are not going up.
this is not just statistics,this is real life sowell
Lol they think uncritically and expect others to do the same. Colleges should have a required course called critical thinking freshman year. They should teach how to research claims to see if they are correct
Just being greedy in general isn't going to change your income if you're not in a position to do anything in the first place.
no one is giving these guys their executive pay, they are paying themselves.
its weird how these guys laugh so much but not suprising considering they both work with hoover inst.
Why not both?
"you can be the greediest person nd your income will not go up". BULLLSHIT bain capital is the prime example of greed when they drove KB toys into bankruptcy. they loaded the company with debt so on the books they were making NO MONEY therefore taxes didnt need to be paid, the company isnt profiting. meanwhile consulting feees and bonuses were handed out to bain employees "advising" kb how to get over on the system by fucking the employees at retail level. management consulting is a fucking joke
The main error with "income stagnation" is the quality of the data itself. In any honest scientific form, you CANNOT make the claim that "income inequality" is related to income tax policy – the evidence is contingent on INCOME REPORTING. If you honestly think that 90% brackets, or even 50% brackets are economically feasible, you have almost no data to back you up. If you did, there would be no VAT, no 1969 AMT act, and no Hauser's Law.
2:26
And therein lies the narrow mindedness of economists. That IS the question. Sowell doesn't have an answer because human nature is a blind spot for logic.
Logical types see, move, and act using a certain amount of reasoning, but because they fail to see the big picture, they often completely fail to comprehend everything except what they already understand. That is a severe detriment to seeing the world as it is.
The answer is "Because they are sociopaths. And they ruin everything"
I wish this was my economics professor.
Who is disliking these videos? Lets find them AND….leave them alone ( Sometimes it's hard to be a libertarian :P)
Unfortunately the middle class suffers by way of attrition. Unemployment is high because the rich can no longer afford to hire them. And unemployment is certainly the most common statistic being used to analyze our current economic health, so that would indirectly support this line of thinking. I know lots of people having a hard time finding a good job – but almost none (except older, wealthier folks who've invested in stocks) who actually lost money in the crash.
Every so often stocks crash and creditors pay the price for granting money that can't be repaid. Then we're in a recession because a lot of the "illusory" wealth disappeared.The very wealthy are those who own the largest portion of stocks and credit lines that periodically disappear – perhaps we could just think of it as if it was never there, and they're at fault, and should suffer the consequences for pretending it was.
I think the point on technology is a poignant focal point. Again, no data, but I think that one could probably show that a large portion of modern wealth, particularly that which belongs to the upper class, is "illusory" due to technology. Think of how much money people spend that they don't have and it floats around as credit debt – while others make money that doesn't tangibly exist on the stock market.
The problem you don't understand is that wealth has shot up so high for only the top 1% bracket while the middle bracket's haven't shot up at all, or extremely little (of course after inflation). Now that's not to argue that the middle brackets haven't enjoyed a better life. Technology has allowed every income bracket: poor, rich to enjoy a cheaper life. If the richest have shot up so high you have to ask why. And, if the middle has stayed when the rich went up you have to ask why again.
That doesn't necessarily demonstrate that it came from the middle class, or that the middle class has been stagnant. And I know you're not a fan of this argument, but it also doesn't show the stagnated income of any individual, group, or otherwise. Yes the wealth may have shifted overall, but within what you are saying, it is still quite possible for the majority of people to have had increased incomes over the course of their life, while falling into different brackets.
I see why it looks like I don't get stagnation. Think of my argument like this (it's not supposed to be euphemistic): if you remove the predators from an ecosystem, the prey will not necessarily thrive. If the prey overpopulate and eat all their food sources they threaten themselves with extinction. There is causality between the two, but not what one might have predicted. I apply the same concept to what you are saying. You've said that the total wealth has shifted to be possessed by the rich.
(2) "but that's different from stagnation. That's why I said it shows growth in an abstract way." Again to drive this home since you keep missing it, stagnation is argued ONLY for the middle class, not the rich. Meaning, when I say growth for the rich, that does not disprove stagnation of the middle. You seem to not understand that stagnation is being applied only to the middle class and not to the rich. You think stagnation has to be applied across all levels of the economy.
Okay, again the argument of income stagnation is important in this debate. However, to argue income stagnation is another huge argument to point out. You don't understand income stagnation from what you write. The idea of income stagnation is argued for the middle class and their wages not moving, not ALL wages freezing what you keep writing. You are wrong on that. The argument is that the top 1% wages went up while middle class basically froze.
I think it is natural that some level of inequality is there, and I agree that the level now is bad, and needs to be dealt with. Judging by this line of debate, we'd probably disagree on why the inequality exists, and how to fix it.
Rather, you've demonstrated that the top class hold more of the wealth – which is not income stagnation, growth – for the top class. Yes that is actually further evidence of income inequality, but that's different from stagnation. That's why I said it shows growth in an abstract way. You're not necessarily debunking Sowell or myself, (I guess I shouldn't speak for him) but I'm not standing against inequality.
I do understand. First, you've no data, I'm just believing you because its a healthy debate, and I am willing to admit I don't know about the 70s income vs. now. From what I do understand, the average American made way less in the 70's, mostly due to inflation – and I know that's probably not the whole picture. Again, I don't know what data shows that the top 1% hold more of the wealth than before, but I am still buying in to that too. Nevertheless, you haven't demonstrated income stagnation.
(3) Sowell is only responding to the argument of income inequality and the 1%. Part of the income inequality is showing the evidence. Sowell shows you today's top 1% and how 50% move in and out, however, that's only half the picture. The other half of the picture is showing that the top 1% has increased it's wealth. Given that the top 1% bracket is so small it doesn't matter if you have 90% people entering and leaving the bracket since it is so small. I have shown how drastic income has gone up
(2) "who still make that same exact amount now – there are probably very few." You miss understand what I am saying. What I am telling you is that the top 1% in the 70's made 277% less than today's top 1%. Meaning even if you had transient people in the top 1% today or the 70's the income disparity is great. To put simply flesh and blood is pointless in this comparison since it's the same bracket just different time periods.
You are wrong on income stagnation, and you are quite lost on it. The argument of income stagnation is that the middle class income hasn't changed much. What you are trying to say is that I am arguing income stagnation by the top 1%, which is rather backwards. Income for the top 1% has increased by over 200% since the 1970's. That has nothing to do with income stagnation in fact it is backwards of income stagnation.
Additionally, the time period cited is a decade, can you say that there were people in the top 1% 40yrs ago who are still there today?
I think what you are trying to say – correct if I'm wrong – is that in the 70's the top 1% held less than 42% of the wealth, and it has increased to that amount today. That I won't argue with because I don't know. But that statement doesn't prove income stagnation. Actually it debunks it…in an interestingly abstract way.
And you are still assuming income stagnation to prove income stagnation. Sure a salary of 300k in the 70s was probably top .01%, and probably only top 1% now, but you still haven't shown any examples of any real people who were making 300k in the 70s who still make that same exact amount now – there are probably very few.
Now you're arguing a different point altogether though. Sowell, nor I, said that we have income equality currently, or in comparison to any other time period. In fact you just, rather blatantly, said that income stagnation is indeed untrue.
Here you are correct, my argument about the 1% changing is not relevant. I was referring to the popular statement that 1% of the population holds 42%(or so) of the wealth, which is not quite the same thing we've been debating here.
Secondly, your post on population increase and 1% is wrong. The top 1% is of income not of population meaning it doesn't matter if you 1.5 billion people or 300 million. The only thing that changes in the top 1% is if income of 1.5 billion changes. So, you are confused on your whole argument. You are caught up in the words "flesh and blood" as if that counters the idea of income going up 277% of the richest bracket in america.
1970's income compared to todays top 1% doesn't have any assumptions on folks dropping out. Because what I am saying doesn't matter if people in the 70's are still in the top 1% today. The whole point that I am making is that the 70's top 1% people didn't make hardly anything compared to today's top 1%. Meaning, even if you have different people coming and going out of the top 1% the money has still transferred to the top 1% bracket. Given that most top 1% people fall to the 5% and 10% bracket
Actually, we know for a fact that the top 1% must be comparatively the same to our population, because that's what it is – 1% of our population. It must be larger than a decade ago due to population growth. You've revealed deep layers of data, but you are not looking it for what it says, you are looking for what you think it says and stopping there. The data pool is too large and loosely categorized to prove income stagnation. Perfect example – you dug deep, but forgot what the original stat is.