As The "Prosperity" Tide Recedes, The Ugly Reality Of Wealth Inequality Is Exposed

Tyler Durden's picture

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

This chart of median household income illustrates why so many of us feel poorer-- we are poorer in terms of the purchasing power of our income.

A rising tide raises all boats, from rowboats to yachts--this is the narrative of "prosperity."

A rising tide is also the political cover for rising inequality: if the guy in the rowboat makes $100 more a month, he feels like he's participating in the prosperity.

Meanwhile, the guy in the speedboat is making $1,000 more a month and the guy in the yacht is making $1 million more a month.

But this doesn't bother the guy in the rowboat, for two reasons:

1. He thinks of himself as a guy who is currently in a rowboat on his way to buying a speedboat

2. Studies have found that our sense of wealth and "falling behind" is not defined by our actual increases in income or wealth, but by how we're doing relative to our peer group. If everyone else in rowboats is making $200 more a month in the rising tide of prosperity, the guy making only $100 more feels like he's falling behind--even if his absolute income and wealth is rising.

Conversely, if his peers are all suffering declines in income while his income is holding steady, he feels like he's doing pretty well for himself, even though his income is stagnant.

The fact that the wealthy are gaining far more in "prosperity" in both absolute and relative terms doesn't bother him as long as he's doing as well or better as his peers and feels he has a chance to eventually move up from a rowboat to a speedboat.

But when the tide of "prosperity" (i.e. the fake prosperity of financialization and phony statistics) recedes, the ugly realities of massive wealth/income inequality are exposed for all to see. The guy in the rowboat starts wondering if he can ever move up to a speedboat, and then he starts noticing the guy with the yacht just moved up to a much grander yacht while the paint is flaking off his rowboat.

Let's look at some charts for context.

Wealth/income inequality is significantly higher in the U.S. than in other developed nations.

This chart shows the number of people earning each bracket of income. Half of all households in the U.S. earn less than $53,000 annually, and 75% earn less than $85,000. (These numbers are from 2010; 2012/2013 numbers are slightly higher.)

You can identify your own relative status with this interactive link: What Percent Are You?

This chart of mean (average) household income shows the income of each segment to scale.

This chart of median household income illustrates why so many of us feel poorer-- we are poorer in terms of the purchasing power of our income.

The acceptance of the multitude in rowboats for the few buying new yachts wears thin when the many sense their declining mobility and purchasing power. The illusion that the tide of "prosperity" is lifting all boats is dissipating into a mist that no longer offers cover to obscenely wealthy politicos disclaiming the ugly reality of rising wealth/income inequality.

The question for the chattering classes is this: will the bread and circuses of sports, random shootings, Trump and the rest of the churn in the media arena be enough to distract those stuck in leaky rowboats from the political fund-raising parties on the grandiose yachts?

 

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. . . _ _ _ . . .'s picture

"A rising tide raises all boats"

Unless your anchor chain is too short.

tc06rtw's picture

 
    …  or your hull has holes.

Divided States of America's picture

What bothers me the most is that 98% of the people in the TOP 2%, are Jewish. Makes no fuckin sense

divingengineer's picture

Can you come up with a citation for that ridiculous claim?

Any legitimate source will do. 

. . . _ _ _ . . .'s picture

I think it's a quote by Goebbels, that famous German ...ummm philosopher, yeah that's the ticket.

l8apex's picture

Interesting statement and I know where you're coming from.  But I'd also like to see some stats on this topic.  It'd also be interesting to see which religions make up the our real decision makers, the 0.1%.   Can I get that split out into Ashekazi and Sephardic?

Money Counterfeiter's picture
Money Counterfeiter (not verified) l8apex Sep 18, 2015 10:28 AM

Printing money is a very good way to avoid working for a living.

Bemused Observer's picture

Are greedy jews really any worse than greedy goyim?

The "Tribe" today happens to be an equal-opportunity outfit. The majority of the world's jews have also been thrown under the bus by the new, improved Super-Tribe.

Divided States of America's picture

Good point Bemused on the Super Tribe..as every inner circle shrinks to the point where sacrifices have to be made for the greater good of the Tribe.

...however, Greedy Jews get away with things that Greedy Goyims dont....especially when the legal system is stacked full of these same Jews.

MSimon's picture

They outsmarted you. Again. Damn. I hate it when that happens.

 

The typical ZH rant. We are losers. Again. To the durn Jews.

two hoots's picture

Another implied redistribution article without any explaination as to why income or wealth is not equal.  Next will be the chart about the inequality of inmates not making as much as the those working.   Many seem to ping between free markets and, when things don't go right, socialism.    Most people find themselves right where they put themselves and until we have discussions on reasons, consequences for choices, education (useful ones tied with a proven worth ethics), bla, bla.  

 

Bemused Observer's picture

It isn't the "ism" you live under that causes the problem. All of the various "isms" have their positive and negative aspects.

It's the rule of law that makes it work, or not. If there is no rule of law, capitalism is no better than socialism. It's just tyranny, targeting a different demographic.

Replacing a lawless socialist society with a lawless capitalist one only results in a population-shift of the victim class.

divingengineer's picture

I'm not at all insensitive to wealth inequality, but talk to a poor person for about 2 minutes and you'll have a pretty good idea why poor people are poor. 

1) They make extremely poor descisions vis-a-vis money.

2) They are usually, though not always, on the low side of median intelligence.

3) They have not figured out that attitude is actually important to some people (managers, owners) still.

4) Lack of education, esp. formal education in a trade/profession. 

5) A belief that it is pointless to try or no idea how to begin to do things to 'make it happen' for themselves.

It's a sad fact of nature, but chronic lifelong poor in America, which is still one of the easier places to succeed, are poor for good reasons.  Low intelligence/genetics, bad attitude, low drive, lack of schoolin, drug/alcohol problems, you get the idea. 

When I was a kid I lived in a public housing project for several years after my mother divorced. Perhaps that's what gave me the drive to make sure my son never has to deal with that reality.  So I have seen my share of chronic poor and learned much from observing them. 

Stuck on Zero's picture

Agreed. And talk to one of the 0.001% and you'll see why they're rich:

1) They step on anyone who gets in their way,

2) They steal everything they can get using the power of attorneys,

3) They use means that are not available to the middle class,

4) They work very hard obtain your money,

5) They do not do hard work,

6) They believe that everyone has a price and is greedy, too.

divingengineer's picture

Agreed, with two additional observations:

7) They assume they are going to get what they want from the beginning.

8) They feel that they are entitled to a bigger slice of the pie, they richer they are, the bigger the slice they believe they are entitled to. Whatever they bring to the table, be it money, experience, charisma, etc, is worth more of the cut than what you bring to the table.  

Without exception, to the last one I have ever met. And I've met more than a few over the years. 

Ignatius's picture

Everyone is taking a hit except the 1% of the 1%.  See a pattern?

Temporalist's picture

Off topic but a couple of bits of news:

Bitcoin Is Officially a Commodity, According to U.S. Regulator

"Virtual money is officially a commodity, just like crude oil or wheat.

So says the Commodity Futures Trading Commission (CFTC), which on Thursday announced it had filed and settled charges against a Bitcoin exchange for facilitating the trading of option contracts on its platform. "

http://www.bloomberg.com/news/articles/2015-09-17/bitcoin-is-officially-...

 

China’s cement price heads for Hades

http://www.macrobusiness.com.au/2015/09/chinese-cement-price-headed-for-...

UnicornSkittles's picture

If they crank up exports of cement that will torpedo the recovering non-Chinese cement and construction materials companies.

CheapBastard's picture
It looks like banks might have rigged another huge market

 

http://finance.yahoo.com/news/looks-banks-might-rigged-another-151523040...

 

Ben Dover America!

NoDebt's picture

"will the bread and circuses of sports, random shootings, Trump and the rest of the churn in the media arena be enough to distract those stuck in leaky rowboats from the political fund-raising parties on the grandiose yachts?"

Has been so far.  And still seems to work in every tin-pot 3rd world dictatorship, too.  Can't see a reason it couldn't go on indefinitely.

arbwhore's picture

Yellen has "recent papers" that "prove" it wasn't her fault.

tc06rtw's picture

 
 …  they were stored on Hillary’s server --
         they’re her “Toilet Papers”.

SillySalesmanQuestion's picture

And we are to them, what is floating in their toilet bowl and needs to be flushed down...

all-priced-in's picture

Most people don't give a fuck about income inequality. Take a poll - what are your 5 top concerns - ask people in the $40-$150K income range. No one will say income inequality is my big concern. People have real issues to worry about.

 

If you think people will rise up and revolt because .1% of the people are making a few billion a month then you are an idiot. No one cares about these few billionaires.

 

The rest of the top 1% are mostly professionals and small business owners - unless you are an idiot you realize they are busting their ass to make $350K a year - and you may want that income - but you don't want to work that hard.

 

I am not saying that there is not income inequality - but trying to turn it into some problem that will cause social unrest is a made up MSM pile of shit designed to get poor people to vote for people that will promise them more free shit.

 

If you don't agree then explain the last 50 years -

 

flysofree's picture

The rest of the top 1% are mostly professionals and small business owners - unless you are an idiot you realize they are busting their ass to make $350K a year - and you may want that income - but you don't want to work that hard.

 

LOL. And who is supposed to think that?

all-priced-in's picture

I was a CPA - I met many people making this level of income and they all worked their asses off. 

 

There are many people out their in the real world working hard to make a few hundred thousand a year.

 

You think this level of income is all trust fund babies?

 

 

 

 

 

 

flysofree's picture

A person making $350,000 is not much better off than a  ghetto poor nigger. Ask Paris Hilton! 0 - $350,000 income that's within rounding error of ZERO.

Your definition of wealth is purposely understated. Hint start at 9 digits and stop lumping peons with the wealthy.

all-priced-in's picture

Over $308K is in the top 1% - if less than $350K is a poor ghetto nigger than you live in your own special place.

 

 

 

 

 

rex-lacrymarum's picture

There is zero reason for inequality as such to be regarded as a problem aside from envy. A simple example: if everyone earned $100 there would be equality. What if everybody earned $200, but there were also two guys making $500? There would no longer be "equality", and yet everybody would be better off. 

The problem that median household incomes are declining is however real - the reverse redistribution of wealth observed since the 1970s is a direct consequence of adopting a full-fledged fiat money system administered by a central bank with unlimited money creation powers. Solution to problem: adopt sound money, eschew central planning and institute an unhampered free market economy. Assorted cronies won't like that though. 

Dr. Engali's picture

So what's your solution Charles? Take the rich Guy's yacht and give it to the guy with the rowboat? Why continue to state the obvious without ever offering a solution?

arbwhore's picture

Stop giving the 0.1% free money and jail those who break the law. We are doing neither at the moment.

Dr. Engali's picture

My question want for any of you, it was for Charles. He always writes about problems, but never offers solutions.

Brokenarrow's picture

level the playing and bring back the rule of law--for starters. give a nice, short trial to those who oppose this and hang them. any other questions?

Bemused Observer's picture

Well, that depends. If that yacht was purchased through years of hard work and savings, then he should certainly keep it, and I'd help him defend it.

But if he bought it with stolen funds, funds stolen from that guy in the leaky rowboat, I'll help THAT guy sink the fucker, and chum the waters for sharks.

venturen's picture

close the massive loopholes in the tax code. Capital Gains should be paid yearly like income or at least index....explain why I make $50k...pay yearly. Warren waits 20 years to pay income on $5 Billion? 

Breakup the mega banks as they are now just a cartel...RIGGING everything. I don't beget bill gates or the founder of intel. 

Also you pay full tax on you world wide income PERIOD. No more offshoring. People can't offshore. Why do people that have mortgages get a deduction bu the poor renting don't?

The tax code and the banks are a big part. Wall Street, Silicon Valley and Washington arer basically a closed loop funneling dubious money back and forth. Wall Street Buys Washington, Washington makes Rule to Allow Wall Street and Silicon Valley to jump through massive loopholes not available to others. 

Then power flows back to the people. Oh and lower benfits so that it doesn't seem like a good idea. Only individuals can donate to politicans and the maximum is $10k. Looked at the list of PACS and it is a who's who of public unions donating to crooked democrats!

all-priced-in's picture

So if land prices go up -  the farmer would have to sell part of the farm every year to pay the fucking taxes?

What do you do when an investment loses money?

How do you value the assets of a small business, farm, real estate?

Do people with a growing business but limited cash flow (takes cash to grow a business) borrow the money to pay the taxes?

That would be great for job growth - let's punish the business owner.

So you buy an asset that value increases at about the same rate as inflation - you want to tax the gain?

 

You haven't really thought this through have you? Sounds more like big government making lawyers and accountants happy.

 

 

 

 

 

 

anonymike's picture

The slack-jawed, drooling, blank gaze of the immensely successful football circus season has returned. Few seem likely to notice the flames of Rome until the circus abruptly stops, along with all the lights. The collapse of the dollar will destroy all supply chains, with the most important probably being the juice for the boob tube. After that, the globalists will have the 80-90% extermination of the US population that they want.

Hopefully enough will be aware that all the societal pain will be because of what the parasites who call themselves central government did to consume the capital and resources of society, while fooling over half the population into some level of dependence upon stolen and counterfeit handouts that were unsustainable. The pain will NOT be because of the loss of the evil parasites who called themselves central government. The most important thing for as many to know as possible in the near future will be, that we can not allow the return of any form of central government to begin the cycle of parasitic evil again which always destroys the society it feeds upon.

Life, Liberty and the Pursuit of Happiness. To secure "these rights" governments are instituted among men, NOT over them. It requires no more than local government, if even that, to secure "these rights". Anything more will only violate "these rights" and should not be allowed to exist.

Turn off the boob tube and wake up folks. You are probably going to die because what the evil parasitic government is doing to this society.

Not if_ But When's picture

Qualcomm had established a $15 billion buyback plan.  In late May of 2015 it announced the acceleration of $5 billion of it.  On 7/22/15 they announce layoffs totalling 4700.  The 1300 you are referring to is only in San Diego.  Go America!

zaphod42's picture

Of course, the goal is to increase price of shares to benefit the few who have optiions (no risk, no investment, as a reward for laying off thousands).  Greedy bastards!

MSimon's picture

There are people in the world living on $1 a day. If you want more than that YOU are a greedy bastard.

 

Oh. Wait. I get it. Your greed is good but the greed of the guy doing much better than you is bad.

 

Envy and hate seem to be the main fuel for ZHers. Good!

RopeADope's picture

Thou shalt not commit logical fallacies.

zaphod42's picture

And it starts... again...

8 years ago I remember watching in the news as corporations were laying off tens of thousands at a time, in order to prop up their balance sheet.  And, as today, Wall Street rewarded them by increasing the price of their stock (not the value - which still dropped).  Until... 

And, then we, the silly taxpayers, were stuck with the tab.

Party on, dudes!

flysofree's picture

Who cares! When Google, Facebook and start-ups in San Francisco start laying off Asian and White elitist and privileged cons and crack-heads than you can begin to worry.

Not if_ But When's picture

Which candidate has railed against income inequality for many years as a Representative and Senator?  Which candidate recognized socialism for the .01-1% and main street misery for the rest of us years ago?  Which candidate has been most aggressive in grilling Greenspan/Bernanke/Yellen for being entirely out of touch and caring only for the very wealthy, Wall Street, and mega-corporations? Which candidate pressed Bernanke repeatedly to identify who got the $3 trillion or so in bailouts?  (so his constituents could also ask for some like they did).   Basically, which candidate realized what the f*ck is going on many years ago instead of pandering to the populace during an election cycle?

all-priced-in's picture

Is that the same guy that has 1% support in the latest poll?

 

 

Not if_ But When's picture

Where did you see that, might I ask?