Hi John,
At the time of writing my server is not allowing me to get online to go to
the Web sites you've referenced, so I'll reply to your text only. (I
presume from the reference to the G8 summit that you refer to the
ridiculous proposal that we can best help the third world by showing them
them how to use computers and the Internet.)
At 14:11 23/07/00 -0400, you wrote:
>Hello Keith,
>
>I've taken the liberty of changing the subject, so I include the
>previous header.
>
>Date sent: Fri, 21 Jul 2000 10:25:00 +0100
>To: [EMAIL PROTECTED]
>From: Keith Hudson <[EMAIL PROTECTED]>
>Subject: Re: FW Genetically Modified Humans
>Copies to: [EMAIL PROTECTED]
(KH)
>> The so-called underclass within a culture is a snapshot, a
>> statistical artifact. In actuality, (young) people are generally
>> moving out of poverty as they get older and people are descending
>> into poverty in old age. I'm not at all suggesting that we should
>> be complacent about this, of course. All I am saying is that it is
>> not a static phenomenon with a fixed population. Of course, there
>> are many pockets of poverty and ... these pockets may persist for
>> generations, but this is not the same as saying that there is a
>> permanent underclass over the whole of the larger society.*
(JMcL)
>I hope I have not distorted your meaning by cutting out a bit of
>what you say. Let me say straightaway that I am no statistician.
That's all right, but let me interpolate now by saying that I was making
the point within the context of an "ideal" (economic) society experiencing
steady economic growth -- that is, that income classes don't consist of
permanent populations. (I'll explain what I mean by "ideal" a little
later.) In this, people are moving in and out of income categories within
the course of a lifetime according to their health and activities, usually
only between adjacent ones (though this depends on the width of the income
category that we select), but that their children can and do move bodily
into distinctly higher (or lower) income brackets -- depending generally on
their intelligence (and, of course, opportunity which is often sheer luck).
All this is in the name of the regression to the mean -- that over a period
of two or three generations there are "convection currents" sweeping the
offspring of the highly (or lowly) intelligent into the middle, and that
most of the small number at the extremeties spring out of the very large
mass of the averagely endowed.
I still haven't explained what I mean by an "ideal" economic society but
I'll leave that awhile and merely say that the above picture seems to be
the one given by a rather panoramic view of history. By this I mean when
considering those periods of history in which innovative development took
place and when peaceful trade was active and unemcumbered by war or by high
taxation. For the most part of mankind's history and looking at the
innovative phases very broadly, I would suggest that there is a great deal
of income fluidity within a population. Or, should I say, there has always
been enough fluidity to overcome the friction that, in fact, always tries
to stop this process. I refer to restrictive practices, either by
particular trades or professions, or of social rigidities held in place by
higher classes with weaponry, or of an overwhelmingly bureaucratic civil
service (an ever-present danger during any successful growth period).
If you can accept this rather large generalisation on my part, then let me
turn to you what you've written.
>What you say is a point of perennial concern to me, and I regret
>that no one has yet responded to it. I fear that the reasons are
>simple. Everyone knows that, as far as it goes, what you say is true
>-- just as many (not excluding you, yourself, I'm sure) know that the
>migration of individuals in large numbers between income classes
>does nothing to rule out the existence of unacceptable disparity of
>income, as between the partitions of that statistical abstract to
>which you refer.
>
>What I mean by that can be illustrated by a couple of charts I
>produced several years ago from 1996 data in Canada. One of the
>charts shows that, if you divide the income population by 5ths, the
>richest 5th / quintile -- in which the income average for the top 10%
>is considerably depressed -- earns almost 2x the income of the
>fourth 5th, easily 3x the income of the third 5th, more than 5x the
>income of the fourth fifth, and fully 15x the income of the bottom
>fifth.
>
>According to my figures, the threshold income for the 4th fifth was
>just over $25,000 in 1996, (which means that 60% of Canadians had
>to make do with less). Believe it not, to qualify for entry to the
>richest fifth you had to earn exactly $40,000 or more.
>
>Not surprisingly, therefore, the other chart -- which I call Social Pie
>-- converts that data into income percentages and shows that the
>annual income of the richest 5th was 47% of the whole, compared
>to 3% for the poorest 5th. The three statistical artifactual fifths in
>between earned just enough to take home 50% of total income.
>That is to say, the top 20% earned close to 50% of all market
>income in 1996, as they did every year for the preceding 15 years or
>more.
>
> http://www.ott.igs.net/~jmclaren/issues/income/
>
>If memory serves, these are market income figures (after tax but
>before transfers), which is sufficient for my point, whatever the
>effect of transfers. My point is that the market system of
>distributing economic wealth is rotten to the root.
Whoops! After all the above careful analysis you really let rip in the
last sentence! But where you are wrong is that we do not live in a "market
system of distributing economic wealth" (such as the generalised state I
described myself a bit earlier). We live in a market economy that is
significantly modified by two other factos -- one is taxation, and the
other is protective practices of all sorts.
Taxation
We assume that it's "only fair" that those with big incomes should pay the
highest taxes. And so they do -- or, rather, they do on paper in order to
satisfy the mass of the electorate. This high taxation of the highest
income groups has a doubly unfortunate effect. Firstly, arithmetical
differentials between different skill levels have to become geometrical
differentials so that employers can compensate for progressively higher
taxation bands and thus compete for the rarer skills. Secondly, at the
higher income bands there are increasing numbers of ways of avoiding
taxation or getting subsidies from the state.
Protective practices
There are protective practices at every level and in many sectors of but
they become increasingly more protective at higher income levels.
>I looked back more than 15 years, as I said, plugged in the numbers
>for each year, and discovered that the average annual income in
>each fifth did not fluctuate more than a single point in all that
>time. Of course, when you earn not much more than 0.5% of total
>market income (as I think does the bottom 10%) a fluctation of even
>a fraction of a point can render individual class members absolutely
>destitute, as can the slightest reduction in benefits or qualification
>criteria.
>
>In other words, annual income disparity in this country appears to
>me to be a structural characteristic of the economy and not a
>statistical abstract, despite the truth of what you say.
So I suggest that the income distribution which you describe and deplore
(and I deplore it no less than you do, I'd like to suggest) is nothing
whatsoever to do "a structural characteristic of the economy" but with the
structure of government taxation, the state of protective practice and
other rigidities that emanate from government.
I'd better stop now or my better half will be telling me to stop sitting at
the keyboard and to start paying some attention to her.
I'm hoping now that my server has recovered from its hiccups.
Keith
>with And that's
>my concern. The movement of individuals in significant numbers up
>the ladder and down is an undeniable fact. So, too is the movement
>of people across any of the income borders (deciles and quintiles)
>that are convenient to monitor. But this normal migration has been
>used, I think, to hoodwink Joe six-pack into believing that income
>disparity is not a permanent feature of everyday life for a very
>large number of people and that, as you argue, there is no
>permanent underclass. The conclusion rests simply upon the
>obvious fact that a good many of the faces in any one segment of
>the income spectrum change over time. It does not meet the
>obvious rejoinder that the division between income segments is
>outrageously inequitable.
>
>More important, the natural migration of individuals is used to
>reassure the not-so-rich (who are indeed complacent) that poverty
>and discrimination by financial class is not a sizable permanent
>feature of our economy but, rather, a normal phenomenon caused
>by the progression of some through merit and the failure of others
>on account of their own personal shortcomings, or because they
>have been victimised by social assistance and enervated in the
>process.
>
>The facts are not so comforting. At any one time, 60% of those who
>earn any income whatever from the economic system in Canada,
>take home little more than 1/4 of annual measured income, which
>itself is probably a qualifier of no small importance. And each
>quintile in 1996 represented something close to 22 million people in
>this country -- assuming my spreadsheet doesn't lie to me.
>
>What troubles me, therefore, is the fundamental market
>distribution of income. Statistics Canada, so far as know, claims
>conveniently not to be able to measure wealh, as I believe the US
>does. But imagine, as I'm sure you can, the cumulative advantage
>over time -- over a lifetime, or some signficant part of it -- of
>annual incomes far above the median. Compare the situation of
>those relative few with perpetual discretionary income surpluses to
>that of those living year after year without adequate income, or as
>one of the working poor, or as a member of any one of the first 3
>income fifths who take in little more than 25% of all income, thanks
>to the extra earning capacity of the bottom quintile.
>
>I know that you know this, of course, just as we all know that most
>people don't.
>
>Income disparity in this country looks permanent to me. It makes
>the system that generates it look grossly inequitable. The faces of
>the poor and the working poor may change, but the dispairity, as I
>like to spell it, persists -- as between income classes -- and it
>multiplies year after year, for the lifetime of all who never achieve
>or cannot maintain a level of earnings that provides them with an
>adequate living, let alone a discretionary income. We need wealth
>statistics to prove this, of course, but where are they? I hope that
>your government does better by its citizens than ours does by
>Canadians in this critically important respect.
>
>At one time, I thought that anyone with a light in the windows
>would simply look at what I call the Social Pie and realise that
>something is radically wrong. I was badly mistaken.
>
>Is it therefore accurate to denominate the financially
>disadvantaged as a "statistical abstract" ? Maybe. But it cannot be
>true that this measure of wealth and power, around which nearly
>all our social relations are built, is the consequence of a few wealth
>laws, as I think you may have suggested earlier. Quite the contrary.
>This is surely the result -- the calculated outcome -- of the
>protection of privilege by an entire economic system supported by
>political institutions of our own creation -- not to exclude tax law --
>which is designed to ensure a consistent pattern of wealth
>distribution ad perpetuam. Change the faces, if you will.
>
>Nibbling around the edges of such a system will do little to change
>the look of the pie, a criticism I think one can fairly make of all
>those -- bless them -- who are trying to squeeze such a relatively
>little more from a fiscal system in need of radical reform.
>
>I frankly don't see you as someone who would disagree with any of
>that. But I leave it to those with the requisite knowledge in this
>group -- there are more than a few -- to set the record straight and
>bring us all up to date.
>
>In closing, I found some ominous support for my personal conviction
>in Jeremy Rifkin's latest: The Age of Access, pp. 230-1. So I'll
>append it with judicious excisions. I won't explain access.
>
>----
>
>The disparity in income and wealth between the top fifth of the
>world's population ... is increasing so rapidly that any talk of
>guaranteeing universal access is likely to be greeted with deep
>suspicion and cynicism by most observers.
>
>According to a study conducted by the United Nations Development
>Program, the world's 358 billionaires now have combined assets
>that exceed the total annual income of nearly half the people who
>live on earth. While Bill Gates is now richer than half the American
>people put together, more than a third of the world's 3 billion
>workers find themselves without jobs or underemployed, according
>to a 1998 report of the International Labor Organization.
>
>The result is that while the wealthiest human beings on earth are
>increasingly preoccupied with entertainment and living creative and
>expressive lives, nearly 1 billion other human beings are living in
>poverty and several billion more are barely making ends meet. And
>the projections for the immediate future are even more grim.
>
>More than 100 countries, with a combined population of 1.6 billion
>people -- more than a quarter of the world's population -- continue
>to experience economic decline. 89 countries are worse off now in
>terms of income than 10 years ago, and 35 have experienced a
>greater fall in per capita income than occurred at the height of the
>Great Depresion in the 1930s. In Africa the average household
>consumes 20 percent less today than it did 25 years ago.
>
>Worldwide, more than 600 million people are homeless or living in
>unsafe and unhealthy housing, and the World Bank estimates that
>by the year 2010, more than 1.4 billion people will live without safe
>water and sanitation. Meanwhile, the top 20 per cent of high-
>income earners in the world now account for 86 per cent of all the
>private consumption, while the poorest 20 per cent consume only
>1.3 per cent of the global economic output.
>
>The reality is that Americans spend more on cosmetics -- $8 billion
>annually -- and Euorpeans on ice cream -- $11 billion (in US dollars) -
>- than it would cost to provide basic education, clean water, and
>sanitation for the 2 billion people in the world who currently go
>without schooling or even toilets.
>
>The growing disparity in income between rich and poor is affecting
>the developed nations as well as the developing countries. In
>Britain, for example, income inequality has risen faster in the past
>20 years than in any other industrialized nation.
>
>In the US the Census Bureau reports that income disparity between
>rich and poor is higher now than at any time since the end of World
>War II in 1945. Today, the top 20 per cent of Americans receive half
>the income in the country, while 50 per cent of American families
>have less than $1,000 in financial assets. Middle- and working-class
>families have been particularly hard hit. The median household
>income in 1996 was 4 per cent below where it was in 1989.
>
>----
>
>Newsflash. Problem solved. Rifkin's out of date already.
>
>http://cbc.ca/cgi-bin/templates/view.cgi?/news/2000/07/22/g8summit_000722
>
>
>John McLaren
>
>
>
>
>
>
>
>
>
>--
>John McLaren
>Free Anti-spam service: http://www.brightmail.com
>
>
________________________________________________________________________
Keith Hudson, General Editor, Handlo Music, http://www.handlo.com
6 Upper Camden Place, Bath BA1 5HX, England
Tel: +44 1225 312622; Fax: +44 1225 447727; mailto:[EMAIL PROTECTED]
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