jeffsoesbe (jeffsoesbe) wrote,

When internal liberalness and internal nerdy-ness collide

So, I was reading Robert Reich's (*) new column at Salon about income inequity and the need to raise taxes on the top earners to keep the country stable (and why no one in politics, not even Democrats, will dare to do it).

And Reich starts out with the classic statistic about what percentage of the national income different groups make.

I quote: "New data from the Internal Revenue Service show that income inequality continues to widen. The wealthiest 1 percent of Americans earn more than 21 percent of all income. That's a postwar record. The bottom 50 percent of all Americans, when all their wages are combined, earn just 12.8 percent of the nation's income."

My internal liberal reads this and say "Well, that's just terrible!". But then the internal nerd comes forth and says "Wait a minute here", as follows:

The wealthiest 1% make a freak of a lot of money. I believe the cut-off is around $400K/year. Is it any surprise that they make a large chunk of the nation's income? The bottom 50 percent make less than the median, which is somewhere around 40K/year. *Of course* they're going to have a smaller percentage of the overall income.

The question is (my nerd asks): What should the percentages be? If the graph of income distribution (x-axis = income, y-axis = number of households with that income) is a bell curve, or a triangle with the peak at the median, or even a triangle with the high point at the left, what would you expect the percentages to be?

I don't have the math chops anymore to answer this question but I'm always curious as to what people are expecting these numbers to be, because otherwise the statistic is useless. Reich does qualify his statement by saying "this is a postwar record" so maybe he's just considering the trend. But he doesn't lead with the trend, he leads with the numbers. And the numbers don't mean anything without context around them.

At this point, my internal liberal usually says "hey look, an iPhone ad" and my internal nerd says "ooo, where?" and forgets about his numerical ire. But the nerd's point is valid, and interesting.

(*) As a note, I respect Robert Reich tremendously. When I read articles by him, I often respond with "That's right, Robert, my man!" I enjoyed his book _Locked in the Cabinet_ and am regularly tempted by his other books including the new _Supercapitalism_. So this is definitely not a Robert Reich slam.
Tags: economics, nerd, society

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