Hans Rosling has a knack for making statistics come alive. (via Pharyngula)

In The Road to Wigan Pier, George Orwell argues that it would actually not be a good idea for the poor to budget carefully to eat healthily because if they did and actually started to look healthy, the government would think they were getting too much aid and would reduce it. He writes:
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In The Road to Wigan Pier, George Orwell writes in chapter 6 about how government and social service agencies calculate carefully how much money should be given as public assistance to be sufficient, with careful budgeting, to purchase enough wholesome food to meet their nutritional needs. However, the actual choices of the poor, with its outlays on alcohol, tobacco and sweets, would appall social workers. These better-off people would scold the miners and their families for wasting their money on what should be considered luxuries, when their basic nutritional needs were not being taken care of first.
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Because people have such negative prejudices about the poor and unemployed as being lazy good-for-nothings who are trying to live off the fruits of other people’s hard work, they pay unusually close attention to prevent cheating and fraud by the poor. This explains why some people get more worked up by stories of petty fraud by poor people than by huge corporations and rich people carrying out massive swindles that have a far greater negative impact on almost all of us. People will rail about welfare cheats or workers in the cash economy not reporting all their incomes and thus paying less tax, while ignoring the tax sheltering schemes of the rich.
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My ideas about what being poor and unemployed must be like were shaped by two books by George Orwell that I read at an impressionable age in my late teens that eloquently recounted his own direct experiences of that condition. One is Down and Out in Paris and London (1933), a semi-autobiographical account of a period in his life when he was really poor and at times homeless. The other is The Road to Wigan Pier (1937), where he recounts his experiences after he was sent on assignment to the north of England for an extended period, and lived in the homes of coal mining families at a time when there was widespread unemployment.
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The current high levels of unemployment in the US, hovering around 10% officially and likely around 20% really, seems to be on its way to becoming perceived as ‘structural’, an euphemism among policymakers for ‘permanent’ or close to it. Along with it, the poverty rate has risen to the point where one in seven people are now below the poverty line.

Unemployed people are dangerous to the oligarchy since they are the ones who are most likely to demand changes in the way things are done. What governments try to do to pacify people is make the unemployed feel as if their situation is due to their own fault, that they have no one to blame for their predicament but themselves. One way is to cook the unemployment numbers so as to make the figures seem lower than they really are. Low unemployment rates makes the unemployed feel that they are alone and isolated, and thus make them less likely to organize and protest.
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Dan Ariely of Duke Business School is quite ingenious when it comes to devising experiments to determine how people think and what drives their decision making when it comes to economic matters. In his entertaining book Predictably Irrational, he challenged the traditional notion of economists that people are rational actors on the economic stage, making decisions in their own best interest. Instead he argues that people are irrational (i.e., not really thinking things through to get the best result for themselves) but irrational in a predictable way.
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I just returned from a talk by Dean Baker, co-director of the Center for Economic and Policy Research, and he said that there is no crisis in social security and the real crisis is the rapid rise in health care costs that, if unchecked, could raise the budget deficits from their current value of around 10% of GDP to disastrous levels of 30%, 40%, and even 50% in the next few decades. But our policy makers, instead of addressing this issue head-on, are instead deflecting attention to other things.

If our per capita health care costs could be made the same as Canada and the UK, the current budget deficits would become surpluses even if we did absolutely nothing else, such as raising taxes or cutting costs in other areas. It is that simple.

This is pretty much what I have been saying for some time, but Baker has studied this issue in great depth for many years and so has way more facts at his fingertips. He is one of the foremost authorities on social security, Medicare, and the budget. You can follow him on his blog.

This amazing blog post by a University of Chicago law professor complains how unfair it is to characterize people like him as rich and how his family will be badly hurt by letting the Bush tax cuts expire for those earning over $250,000. Michael O’Hare and Brad De Long deduce that the complaining professor earns around $450,000 and deliver much needed rebukes.

[Update: The law professor Todd Henderson has since deleted his post and given up blogging as a result of the response to his post, and also because he says his wife strongly disagreed with him and did not consent to him posting in the first place.]

As the effort to make the rich even richer gets under full swing this fall, we are going to hear a lot of whining like this as the December 31st expiry deadline draws near. A lot of smoke is going to be blown about what constitutes being rich and so it is good to bear in mind the facts of income distribution in the US.

20% of households earn less than $19,178
20% of households earn between $19,178 and $36,000
20% of households earn between $36,000 and $57,568
20% of households earn between $57,568 and $91,705
20% of households earn over $91,705

The median household income is around $50,000. (‘Median’ means that half earn below and half above that figure). If we break down even further the people in the very top brackets:

10% of households earn between $100,349 and $138.254
5% of households earn between $138,254 and $329,070
1% of households earn between $329,070 and $482,129
0.5% of households earn between $482,129 and $1,401,635
0.1% of households earn between $1,401,635 and $6,473,710
0.01% of households earn over $6,473,710

So the Chicago law professor’s family earns about nine times the median income, is in the top 1% or so of income earners in the country, and yet whines about how tough it is for him to get by. This curious combination of greed and entitlement of the rich seems to be getting worse. In a previous post, I showed how the income share of the top 10% has increased greatly since 1979, a period that is referred to as ‘The Great Divergence’. Kevin Drum provides a chart that breaks it down even more.

It is clear that the rich have been making out like bandits and they still want more. Anyone still doubt that we have an oligarchy? How bad must it get before people like the anti-tax zealots among the tea partiers realize that they are being played for suckers by the oligarchy?

Over at Slate Timothy Noah writes about the growing income inequality and the reduced social mobility that now characterize the United States.

In 1915, the richest 1% of the population obtained about 15% of the nation’s income. “This was the era in which the accumulated wealth of America’s richest families—the Rockefellers, the Vanderbilts, the Carnegies—helped prompt creation of the modern income tax, lest disparities in wealth turn the United States into a European-style aristocracy.”

But now the top 1% gets 24% of the income. The rising share of the oligarchy can be seen in this graph of the income share of the top 10% over the last 100 years.

As Noah says:

When it comes to real as opposed to imagined social mobility, surveys find less in the United States than in much of (what we consider) the class-bound Old World. France, Germany, Sweden, Denmark, Spain—not to mention some newer nations like Canada and Australia—are all places where your chances of rising from the bottom are better than they are in the land of Horatio Alger’s Ragged Dick…

According to the Central Intelligence Agency (whose patriotism I hesitate to question), income distribution in the United States is more unequal than in Guyana, Nicaragua, and Venezuela, and roughly on par with Uruguay, Argentina, and Ecuador. Income inequality is actually declining in Latin America even as it continues to increase in the United States.