How come the rich are gaining a larger percent of the nation's income distribution each year?

Question

I know the argument that the poor get richer when the rich get richer as well. However, the relative richness or poorness of the rich and the poor does change. Inflation causes the illusion that the poor are getting richer, but to adjust for inflation, you have to look at which fifth of the economy is gaining the most money each year. The only fifth of the economic spectrum to gain a percentage America's total wealth from 1967 until now is the top fifth. Why is this?

http://www.census.gov/hhes/www/income/histinc/ie3.html

Answer 1

Ioeer's logic is completely off-balance.  There is no exploitation of the poor, it's just that the the majority of the poor are incredibly lazy, ambition-less, incompetent fools who cannot make money or work hard at all during the life.  They then have the nerve to complain about their position in society and that they are being taken advantage of by the rich; those in society who value hard work, competence, and know how to succeed in life.  

The rich do have many more advantages as they have earned them and thus have all right to use them to further their value.  If the poor do not like they're position they like, they can get an education, get a job, stop taking drugs, and work hard.  One will find that a simple remedy to poverty is work, believe it or not.

Answer 2

Because the Republicans have been redistributing the income from the middle class to the rich.

Answer 3

The rich have a lot of advantages that enable them to continually improve their position at the expense of the rest of society.  

And human beings have a nearly infinite capacity for rationalizations that justify, to themselves, any amount of exploitation of other people.

This is why the common people have to organize in defense of their interests.  And it is in the government's interest to support their cause as necessary.

Because unbounded exploitation of the lower classes tends to lead to widespread repression, unrest, rebellion, and revolution.

The social reforms of FDR for example, far from being communistic or even radically socialistic, in fact served to forestall the rise of those ideologies, as would likely have occurred without those reforms.

Answer 4

Capitalism is great, isn't it?

If there weren't an imbalance and everyone was equal why would one strive to get to the top? Some people work very hard to be successful and some people don't. The people that achieve usually make more than the people that aren't really trying.

Now, you're talking about the current state of income inequality than there's an explanation why inequality has risen over the past decades.

The amount of poverty and the middle-class "shrinking" is grossly overstated by the current measure of income inequality.

Income inequality has been rising since the 1970's, but there are problems with the way it's reported. Income inequality will always be overstated.

Here are some income distribution facts taken from the U.S. Census Bureau:

Household Income Group % of Total Income Income Range:

Lowest 20%-----3.4%------$0-18,500

Second 20%----8.7%------$18,500-34,738

Third 20%-------14.7%-----$34,738-55,331

Fourth 20%------23.2%----$55,331-88,030

Highest 20%----50.1%----$88,030 and up

The top 20% has roughly 14 times the total share of money than the bottom 20%. For a comparison, in 1971, the top 20% had only 11 times the share of total money than the bottom 20%.

But why is this? Here's why.

The steady increase in income inequality in recent decades is due largely to increased immigration. Between 1970 and 2000, foreign-born population in our great country increased from 9.6 million to 31.1 million. The percentage of the U.S. population that is foreign-born increased from 4.7% in 1970 to 11.1% in 2000.

Immigrants' median annual income is about 15% lower than native-born Americans. This is why the gap between the top and bottom groups has increased.

However, income is even more equally distributed after taking out taxes and in-kind (food stamps, medical assistance, etc.) transfer payments. The current measure of inequality is skewed by this lack of inclusion.

Higher incomes pay a higher percentage of their income in federal taxes, but in-kind transfers are received disproportionately by lower income households.

Another way that inequality is overstated is that the distribution of money income expressed above overstates the actual degree of income inequality by focusing on income distribution at one point in time.

A large chunk of the people in the lowest 20% of households are young people at the start of their careers. Most of these young people will move into higher income groups as their careers progress and they develop more human capital (developed ability that increases a person's productivity).

If career incomes were compared or if incomes were compared for households at the same career stage the gap between the highest and lowest would be much smaller.

Wealth distribution is also overstated. This is caused by the measure of wealth distribution comparing different people at different career stages. Comparing the wealth of a 60-year-old to the wealth of a 25-year-old overstates the inequality.

Wealth distribution is also overstated because human capital is NOT included in measuring wealth. For most people, their human capital is the most valuable asset owned. An example would be a 25-year-old recent Harvard Law School grad may have very little accumulated wealth in terms of physical assets, but the Harvard Law degree is very valuable human capital.

These are the causes of the continuing income inequality, which people might find interesting.

1. Natural ability: Some people are born with skills in math, music, or athletics. A person with a high level of marketable natural ability may earn a higher income than a person with a lower level of natural ability.

2. Human capital: Mean earning increase as education levels rise, but, again, a degree in chemical engineering and a degree in elementary education will have different earning potential in the marketplace.

3. Work and leisure choices: Contrary to popular belief rich people don't just sit back and make money off the backs of hardworking proletarians. Most people who've accumulated much wealth and have high earning potential have worked incredibly hard for it.

4. Risk taking: People differ in their willingness to take risks. An example would be that self-employed entrepreneurs make up a disproportionately large share of society's millionaires, but they also make up a disproportionately large share of those filling for bankruptcy.

5. Employment discrimination: This occurs when employees make hiring, promotion, and pay decisions based on factors unrelated to employee productivity.

6. Luck: A person can have good luck (winning the lottery) or bad luck (suffering a debilitating illness). Most people experience a mix of good and bad luck.

There will always be poverty, because honestly a lot of it has to do with how impoverished people think. They don't seek out wealth. Wealth doesn't just come up and bite you on the butt, contrary to popular belief it seems.

Wealthy people aren't born trust fund babies 100% of the time. In fact, 90% of all millionaires in the U.S. are first generation, which means they left the cave, killed it, and brought it home. Their thought processes are different from people living in poverty.

Poverty isn't the fault of government and it's certainly not the fault of rich people. The majority of the problem rests with the people. The government and the already-wealthy are just easy targets.

Hope this helps.

Answer 5

I'm thinking the people who are making the money are working hard for it and the poor are not.