Monday, December 26, 2011

Income Disparity and Other Countries - OECD Data

Although the US continues to have one of the highest levels of income disparities in the developed world, the growth in income disparity has been about as great or greater in other countries, including those with substantially different economic and social systems, including Israel, New Zealand, Germany, France, Finland and Sweden.

So, to the extent this is a problem in the U.S., we are not alone in it getting worse.

The only country that showed a decline in income disparity was Greece, perhaps due to their financial system cratering which, I suppose, is one way to solve the problem.

The OECD chart below gives the relevant data - increases are shown by the distance between the top of the blue lines and the red diamonds.

See the OECD Report at,3746,en_21571361_44315115_49166760_1_1_1_1,00.html

Tuesday, December 20, 2011

Income Inequality, Public Perception and Actual Data

With the rise of the Occupy movement (relatively quiescent now, after many evictions from public spaces), income and/or wealth inequality has become the issue de jour in some circles, even resulting in mention in recent speech by the President.

Putting to one side the fact that there have been relatively few specific proposals by any pubic officials to address income differentials in America, a question remains:  How much are Americans actually concerned about this issue?

The answer, it appears, according to a recent Gallup Poll (, is: 

Not as much as some might expect.

When asked to rate the relative importance of government policies in various areas, here were the results regarding percentages rating such policies as extremely important:

Grow and expand the economy - 32%

Increase the opportunity for people to get ahead if they want to - 29%

Reduce the income and wealth gap between rich and poor - 17%.

Apparently, Americans remain strongly supportive of economic growth and equality of opportunity, but not of government steps to reduce the outcome of income or wealth disparities.

As the Gallup survey notes in its summary - "It is clear that while some Americans, disproportionately Democrats, consider it important that the federal government enact policies to reduce the income and wealth gap, many more Americans consider it important that the government grow the economy and increase the equality of opportunity."

A separate Gallup question found that "the fact that some people in the United States are rich and others are poor" is deemed "an acceptable part of the economic system" by 52% of those asked, a reversal from the last time the question was asked (in 1998) when 52% said that it was "a problem that needed to be fixed."

 So, while steps to reduce income/wealth differentials may or may not be good policy (some differentials being an inherent part of any free market system - George Clooney will always make more than Joe the Plumber), it seems clear that support for proposals to reduce such disparities are, relatively speaking, simply not a high priority for most Americans.

In that regard, it may be that the Occupy activist's priorities are shared by only a small proportion of most Americans.

Tuesday, December 13, 2011

Liberalism and Public Perception

Political discourse moves on a number of different levels.  

The short-term level is the one we most often see in the media, perhaps due to the media's self-imposed pressure to have something to talk about in between elections.  The reporting on a candidates recent troubles, or yesterday's Occupy demonstrations, probably fall into this category.

The mid-term focus is, understandably, on such things as active campaigns and elections:  Who won what and why, and what the prospects are for significant policy changes.

Often ignored are the longer-term forces in play, such as demographics, systemic changes in the economy and government's role, such as the growth of entitlement spending.  It's certainly arguable that these forces have at least as much impact on public policy and politics as any of the shorter term movements, even if they are not regularly highlighted in the media.

It's those longer-term forces that I find most interesting and a recent graph from the Gallup organization highlights some of the systemic problems which face those urging a greater role for government in our society.  See the graph below.

Looked at long-term, this dataset has a number of interesting lessons for us:

First, concern about a larger government role has grown with time.

Second, that concern has, throughout the period studied, been at a higher level than concerns over business or labor power.

Third, that concern is now at a level which is the second highest in the period studied, and is only one percentage point below the historical high.  What makes this remarkable is that this is true even in an era of a poorly performing economy, from the standpoint of job creation, and during a period of concern over income inequality.

What is perhaps more surprising is that concern over big government is the leading concern, not merely among Republicans (as one would expect) and independents, but even among self-identified Democrats!

What this means for the upcoming election is something I'm not competent to analyze, but it will be interesting to see how this impacts any possible effects of the Occupy Wall Street movement.  

As the Gallup report notes:

"The Occupy Wall Street movement, focused on 'fighting back against the corrosive power of major banks and multinational corporations,' has drawn much attention and a large following. Still, the majority of Americans do not view big business as the greatest threat to the country when asked to choose among big business, big government and big labor.  In fact, American's concerns about big business have declined significantly since 2009.

Similarly, these are daunting numbers for anyone advocating an increased government role, such as those favoring a single payer system in health care.

The full Gallup report is at

Friday, December 2, 2011

Unemployment and Reality - Three Graphs

Courtesy of Derek Thompson at the Atlantic, here are a few datasets to keep in mind when reading today's news that unemployment had fallen to 8.6%.  (See the full article at

1.  The job growth from the recent recession has been, and remains, historically low.  While we may at some time reach a point that shows that we've clearly turned the corner on job growth, this is not it.

Screen Shot 2011-12-02 at 9.29.08 AM.png

2.  The vital figure, the ratio of employment to population, remains very low and has not shown an upturn historically comparable to prior downturns.

3.  If job recovery improves at a rate reasonably comparable to past experience (average monthly job creation for the best year in the 2000s), we'll be back at full employment in about 15 - 20 years.

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