Better graph with more recent data

In comments, a complaint was lodged that I used a graph with a linear y-axis for demonstrating change in income over the past 40 years.  The problem with such a graph is that if everyone has the same percentage income growth, the slope for high income earners will still look higher.

So here is a graph where the y-axis is logarithmic.  It also contains more recent data:

The point doesn't change: from 1969 until 2010, income at the top of the bottom quintile essentially hasn't moved (it changed from 26,289 to 26,685).  Income at the bottom of the top five percent has moved quite a lot (from 121,516 to 200,354) .
  

A modest proposal for tax reform

Let's just start by designing a code that requires that as adjusted gross income rises, the effective tax rate may not fall.  That way taxpayers would be able to look at their own effective rate, and know that everyone with higher incomes would pay at least as high a rate.

The banal moderateness of Thomas Friedman.

In his paean to conventional wisdom this morning, the ever so serious Mr Friedman writes:

Second, I want to vote for a candidate who is committed to reforming taxes, and cutting spending, in a fair way. The rich must pay more, but everyone has to pay something. We are all in this together.

But how over the past decades have we all been in this together?   In 2007, those in the bottom quintile had the same income they had in 1998, and a bump of little more than 11 percent since 1969; those in the top five percent had seen incomes rise by 74 percent since 1969.

  Source: Alan De Smet plot of  US Census, Historical Income Tables - Families, Table F-1.


Sure, if everyone had benefitted from the policies of the past 40 years, then everyone should sacrifice now. 


But for the time being, lets begin by asking for sacrifice from those with the means to do so.

FWIW

I refinanced for the second time in the last year--the process was a little less painful.  So if one wishes to infer a trajectory, there is a fixed effect, but with no degrees of freedom. 

Immigration laws provide no benefits - Forum - The Daily Northwestern - Northwestern University#.TxXEh65feMV

Hannah Green: Immigration laws provide no benefits - Forum - The Daily Northwestern - Northwestern University#.TxXEh65feMV

Two brief thoughts that MLK day inspires about income inequality

(1) Income inequality is still very much a legacy of differences in how government defended the property rights of people from different races.  The US government has been pretty good at defending the property rights of white people for a long time; in the case of other races, not so much.  Even if the government now defended all property rights equally, it would take many generations before differences in wealth across races would disappear.

(2) I have heard business people, to the extent they complain about income inequality, complain about the outrageous incomes earned by athletes and entertainers.  Yet I venture to guess that Lebron James and Beyonce have much higher marginal products than the vast majority business people, including CEOS and investment bankers.  

Hannah Green sends me to Nadeem ul Haque on development in Pakistan

From Radio OpenSource:

Nadeem ul Haque introduced himself with a bit of bluster as Pakistan’s official “growth” strategist, then began blurting out his frustrations. There’s no growth to speak of in Pakistan, he said — less than inflation anyway, and nothing like India’s 8-percent boom. The government he came home to serve in Pakistan is going nowhere. And then the line that spun my head around: “This is the country that can kill the world,” he said. “And your country hasn’t the foggiest idea what you’re doing here. Find a way to educate youth in Pakistan — 90 million under 20 — or don’t sleep at night. You haven’t got enough bullets to kill them… We can do without the Beltway Bandits and even the billions of dollars in what they call aid. What America should be sending Pakistan is C-SPAN and National Public Radio, and then reopen the USIA libraries… What you send is Raymond Davis and Blackwater… Are you out of your …. minds?”

The conversation we recorded a few days later is a slightly tempered version of that first burst at a farewell party in Islamabad for an American aid official. We’re getting Nadeem ul Haque’s heartfelt version of the Post-Colonial Blues. First, fond memories of the British and American cultural centers and mentors in the 1950s and 60s who propelled him to the London School of Economics, the University of Chicago and a career at the World Bank. Second comes the the appalled realization that a new native elite had slipped into the palaces, polo grounds and clubs of the old colonialists with, if anything, less interest in the mass of the population. And third, a rough critique of a distant and disdainful American connection with Pakistan: bullet proof cars for aid workers when they get out of the office at all; “they don’t use our toilet paper,” he says; and nobody, but nobody, knows where the other-than-military money goes.

Maybe the reason Tim Tebow does option plays...

...is that he is high variance.

My colleague Dowell Myers says, “'Show me your papers' should be replaced with 'Welcome to English class.'”

He has a lovely op-ed in the New York Times:

  

How do we change course and begin treating immigrants as a vast, untapped human resource? The answer goes to the heart of shifting from an immigration policy to an immigrant policy.

For starters, the billions of dollars spent on border enforcement should be gradually redirected to replenishing and boosting the education budget, particularly the Pell grant program for low-income students. Some money could be channeled to nonprofits like ImmigrationWorks and Welcoming America, which are at the forefront of helping migrants assimilate.

Second, the Departments of Labor, Commerce and Education need to play a greater role in immigration policy. Yes, as long as there remains a terrorist threat from abroad, the Department of Homeland Security should have an immigration component. But immigration policy is all about cultivating needed workers. That means helping immigrants and their children graduate from high school and college. It means that no migrant should have to stand in line for an English class. It means assistance in developing migrants’ job skills to better compete in an increasingly information- and knowledge-based economy.

Thanks to our huge foreign-born population (12 percent of the total), America can remain the world’s richest and most powerful nation for decades. Shaping an immigrant policy that focuses on developing the talents of our migrants and their children is the surest way to realize this goal.

Chicago: if not back to the city there, then where?

The ASSA meetings were in Chicago this year.  Even though the meetings take place in January, I always look forward to their return there, because I enjoy visiting Chicago more than any other American city.  It helps that my daughter goes to school there, but I also find Chicago's urban landscape to be uniquely appealing.  It is somehow dense without feeling overcrowded, the art and restaurant scenes are remarkable, and the architecture is world renowned.  Few things for me are as life-affirming as a walk down Wacker Drive.

Chicago also has decent transit and, for a beautiful large city, is inexpensive.  The median price of a house in Chicago is around $200,000, and even at the peak, prices remained more or less sane. 

Yet between 2000 and 2010, Chicago shed seven percent of its population.  This was not just because the region in which it sits grew slowly; Cook County outside of Chicago gained slightly, and Lake and Kane Counties grew smartly.  Employment in Cook County has fallen more than 10 percent over the past ten years.

I like cities and I root for them.  Yet even in an era when sprawl has become a pejorative, more people leave some of our most appealing cities than move into them.  I suspect a lot of the problem is school quality, and I give Congress for New Urbanism president John Norquist a lot of credit for recognizing this fact.  But many people like living in detached houses on spacious lots.  In the absence of policy interventions such as higher gasoline prices, I don't see this changing anytime soon.