The Great Divergence: A visual guide to income inequality. | Hacker News Reader

The Great Divergence: A visual guide to income inequality.

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22 pointstimr22 comments

Shouldn't some of these charts show overall growth of the economy, too? One of the charts addresses this a little (14x growth vs. 4x growth). Shouldn't inflation be factored in, too? It seems like they are trying to make the divergence in incomes appear to be a win for the upper quintiles, at the expense of the lower, when in fact all quintiles have improved in real terms.

It's about income equality, which is unaffected by inflation and overall growth.

Whether everyone has improved in absolute terms is a different question, to which I've heard varying answers.

The numbers are expressed as a percent share of total income. Inflation is implicitly taken into account by the calculation.

Inflation and growth are implicitly taken out of the equation. This can lead to a misleading impression. A smaller relative slice of a much, much larger pie can still be a much larger piece of pie in absolute terms. The poor are not getting poorer, the rich are just getting richer faster.

Also, the choice of timeline is very suspicious. Pegging the start of the graphs at the end of the Great Depression / WWII skews the graph, as does omitting the context of the 19th and early 20th centuries.

This is more about chart-junk supporting a pre-conceived narrative than anything else.

"A smaller relative slice of a much, much larger pie can still be a much larger piece of pie in absolute terms. The poor are not getting poorer, the rich are just getting richer faster."

I don't see where the article claims otherwise.

That said, the point is pedantic: if the share of income in a group gets smaller over time, their purchasing power goes down correspondingly as well. The overall size of the pie matters only to economists.

"Also, the choice of timeline is very suspicious. Pegging the start of the graphs at the end of the Great Depression / WWII skews the graph, as does omitting the context of the 19th and early 20th centuries. This is more about chart-junk supporting a pre-conceived narrative than anything else."

And not including the civil war skews the graph as well. Or the depression of 1893. You can always find an argument like that to justify not believing something that you choose not to believe. Calling it "chart junk" is just exaggeration.

"If the share of income in a group gets smaller over time, their purchasing power goes down correspondingly as well."

What do you mean by that? I don't see that supported by any evidence whatsoever. If a particular quintile has a smaller share of total income and yet are able to buy exactly the same products, exactly the same services, and exactly the same housing with their income then how is their purchasing power diminished?

Indeed, in actuality people are able to buy better products and services for their money. The "poor" today have cable TV, computers, and cellphones.

"I don't see that supported by any evidence whatsoever. If a particular quintile has a smaller share of total income and yet are able to buy exactly the same products, exactly the same services, and exactly the same housing with their income then how is their purchasing power diminished?"

Except, they can't, on any objective basis. You're overlooking inflation when it's inconvenient to your argument, and using it as a bludgeon when it is. Price declines in consumer electronics are meaningless when the cost of energy and food and housing and education goes up steadily over time, often at rates higher than inflation.

Following your logic to it's end, it'll be fine and dandy if the richest 1% accumulates 99.99% of the wealth and the poor can't afford buy vegetables or homes, just as long as the last .01% of wealth lets them buy televisions (or whatever mass-produced gee-gaw is cheaply produced in 2050).

Some interesting ideas here, and in the parent comment. I'll admit to being fairly naive when it comes to economics. With that in mind, when I started this thread I was thinking about whether it mattered that the discretionary income of those in the upper quintiles was growing faster than those in the lower quintiles, as long as all quintiles have discretionary income. I agree that being able to buy a TV is not the same thing as being able to house/clothe/feed your family. In light of this discussion, I'm now thinking it would be helpful if the charts showed how poverty (which I will define to mean unable to house/clothe/feed your family) has increased/decreased during the same period.

Well, if standards of living are actually increasing across the board, like in the 60s, there's an argument to be made that the lower quintile is doing pretty well. 20% will be in the lowest quintile in all cases.

But, real wages for the lower 80% have actually been falling since the 1980s. So they're not doing so great, actually.

>The poor are not getting poorer, the rich are just getting richer faster.

It's also worth noting that "the rich," "the poor," "the uninsured," etc., are not constant groups over time.

"The poor are not getting poorer, the rich are just getting richer faster."

Guess what? That's still an increase in inequality.

What makes inequality bad? People aren't born identical in every aspect, is it bad that I was born smarter than much of the general population? Should I be dumbed down to make things more equal?

Let's stay away from talk of intelligence and genetic traits. This is about wealth inequality. And there is plenty bad when there is wealth inequality in a country, see examples of extremes of this in South America. An eroded middle class results in less democracy, more corruption, and social unrest. But I guess if you're rich enough, you can wall yourself off, hire an army, and ignore this. And in fact many extremely rich people in third world countries do exactly this.

all quintiles have improved in real terms.

Please, help me understand. What are the real terms?

The real terms are quality of living, effective purchasing power, etc. This graph encourages a fixed-pie-size mode of thought, in reality the pie is growing larger exponentially, that changes the nature of the discussion substantially.

I'd recommend informing the residents of, say, Flint MI or Nowhere PA that they're actually doing great in the average case. They may not know this.

The real terms are quality of living

We have more people either out of work or closer to poverty than ever in the history of the US. Vote me down if you don't appreciate me pointing out reality. The point of the chart is that the pie may have gotten bigger but the top percentile has swallowed up that growth. Yes, everyone has a TV now. But that doesn't make up for the fact that the average person these days has to constantly worry about losing everything he has.

I pine for the days of the Great Depression. Our grandparents were dirt poor but at least they collectively had a bigger pie of the GDP. Those were the good times.

In America's slave society I'm sure their standard of living increased greatly between 1600 - 1800.

Guess they just weren't very happy with that.

This graph sure could use a bunch more lines. Why are they hiding the top 20%, top 40%, top 60% etc lines in favour of having a big solid slab of grey?

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Wealth distribution is one of the longest-running political arguments there is. The current trend goes back to 1979. Not Hacker News.

Two points:

One; most of the people in the lower income brackets are just passing through, instead of being stuck there for life. (There are undoubtedly individuals who, for one reason or another, have not moved up over the years, but transforming these exceptions into the rule is rhetoric.)

Two; "What is ominous is the ease with which some people go from saying that they don't like something to saying that the government should forbid it. When you go down that road, don't expect freedom to survive very long." --Thomas Sowell

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