The McKinsey study Poorer than Their Parents? offers a new perspective on income inequality over the period 2005-2014.
Based on market income from wages and capital, the study shows 81% of US citizens are worse off now than a decade ago. In France the figure is 63%, Italy 97%, and Sweden 20%.
The numbers for the US and France differ radically once transfer mechanisms like food stamps and Obamacare subsidies are taken into consideration.
Extent of Flat or Falling Incomes
The first set of numbers is easily believable. But the second?
Who believes 98% of the US is better off after transfer payments are taken into consideration?
The study also shows that 90% of French are better off than in 2005 taking into account government giveaways.
I do not believe those numbers. We would not see so mach anger in France, the UK and the US if those numbers were true.
The numbers in Italy, however, are easily believable. The study has some points that I do agree with.
Points of Agreement
- The hardest hit are young, less-educated workers, raising the spectre of a generation growing up poorer than their parents.
- The economic and social impact is potentially corrosive.
- Nearly one-third of those who are not advancing said they think their children will also advance more slowly in the future, and they expressed negative opinions about free trade and immigration.
- If the low economic growth of the past decade continues, the proportion of households in income segments with flat or falling incomes could rise as high as 70 to 80 percent over the next decade.
- Even if economic growth accelerates, the issue will not go away: the proportion of households affected would decrease, to between about 10 and 20 percent—but that share could double if the growth is accompanied by a rapid uptake of workplace automation.
Points 2, 3, and 5 explain Brexit and the rise of Donald Trump in the US, Marine le Pen in France, and Beppe Grillo in Italy.
As is typically the case, the article failed to discuss why?
The answer is the monetary policies of central banks benefit the wealthy and those with first access to money at the expense of everyone else.
Discussion Points
- Reader Asks Me to Prove “Inflation Benefits the Wealthy” (At the Expense of Everyone Else)
- Top 1% Received 121% of Income Gains During the Recovery, Bottom 99% Lose .4%; How, Why, Solutions
- Reader Asks “Why are Zero Interest Rates Bad? What Should the Interest Rate Be?”
Mike “Mish” Shedlock
http://www.conservapedia.com/images/thumb/3/38/Canyouhearusnow.jpg/350px-Canyouhearusnow.jpg
This train was was already on a downhill run, O-No only stoked the trains furnace and took off the brake while at the same green-lighting violent thugs and elites by not prosecuting.
Is more tyranny and violence on the way if left to fester and grow as O-No has done?
Bet on it.
This is one step in the right direction.
“Donald Trump put reinstatement of Glass-Steagall into the Republican Platform:
“We support reinstating the Glass-Steagall Act of 1933 which prohibits commercial banks from engaging in high-risk investment,” said the platform released by the Republican National Committee.”
https://theconservativetreehouse.com/2016/08/07/two-divergent-platforms-donald-trumps-main-street-vs-hillary-clintons-wall-street/
Good reading
Two Divergent Platforms: Donald Trump’s Main Street -VS- Hillary Clinton’s Wall Street…
“CONTEXT – Beyond the larger context of Globalists VS Nationalists (Americanism), the internal opposition to Common Sense economic conservatism (Americanism) can be broken down into two categories:
♦ The first group are those who are fundamentally naive about large and historic economic issues; and how the economy was changed, forced to change through the past forty years, by financial interests who created a second, “false“, paper economy.
This first group is generally young, pseudo-intellectual, and their only reference is while formally educated within the last thirty years (they’re under 50). Most of the oppositional (conservative) punditry falls into this category. [Important to note, this group is also joined by the majority of politicians who are approximately the same age.]….
Exhibit “A” would be conservatives standing at CPAC to applaud Speaker Paul Ryan who passed a $2+ trillion Omnibus spending bill to ensure 8 straight years without a budget. See the disconnect?…
Glass Steagall? More regulation?
How about no regulation and no protection for profligate banksters, or their greedy no doc/subprime borrowers? Force them all to suffer the consequences of their actions.
More regulations will only be bent by those who create them, assorted loopholes aside.
Donald Trump Economic Policy Speech, Detroit Michigan – 11:30am Live Stream…
https://theconservativetreehouse.com/2016/08/08/donald-trump-economic-policy-speech-detroit-michigan-1130am-live-stream/#comments
When you reduce return on savings to zero to rescue the banks of course people will be worse off. It took the McKinsey brain trust to work this out!
Otherwise known as legalizing banks’ stealing.
Hi mish, check the years of which the info is presented. France’s data for instance is from 2012. i think.that might explain (part of) the discrepancy between the study’s results and your conclusion about current unrest.
The study ignores gubamint forward obligations that the tax cattle owe to creditors.
Overlay on the likelihood that these same tax cattle will able to pay as demographics and pension insolvencies conspire to further burden these young cattle entering this Ponzi scheme that id destined to collapse in the next few years.
Just sayin’.
There is NO incentive for the government to EVER pay down the debt – interest will just be further destroyed and the FED will become the holder of all “debt”. A huge shell game as long as the sheeple are happy.
Indeed but they will look for ways to spread they debt manure around – like Detroit did to their pensioners and Italy is proposing for their state pension to underwrite their bankrupt banks.
Oh but wait, we already do this for the SS Trust Fund. (Trust Fund run by da gubamint…there’s an oxymoron.)
Fear not – the Dems have tried for years to cram US debt into 401K’s and IRA by law and “O-No the magnificent” has his plan to con people into buying “safe and secure” paper from the Treasury (laundered through Wall Street for their skim first, I am sure.)
Not to worry…war will erase the creditors and all will be made safe until next debt bubble.
The sheeple* are not happy.
*those outside the top 20%
Some thoughts:
This article assumes gross income is what determines if people are better off. There are a lot of other factors that are often as, or more important, including:
A. Confidence in your employment and employability.
B. Prospects for your children and their future.
C. Prospects for your ability to retire at some point in the future.
Mish states that can we believe that people’s income is either keeping up, or growing when we include transfer payments. I’d absolutely believe that. However, most of that is going to be Medicare, Medicaid and ObamaCare. Health care expenses have grown enormously, but does that mean people are better off? I’d say no, with the exception of those who have pre-existing conditions who couldn’t get insurance before ObamaCare.
Per A, B, & C above, the vast majority have seen their corporate pensions removed in favor of the 401K lotto. They’ve seen unions devastated and the removal of all protections from predatory PE and hedge funds. And for many, the best hope their kids have is landing a minimum wage job at JC Penneys since all real production work has been off-shored. Most people are absolutely worse off.
Secondly, as an avowed Libertarian, why the heck should Mish care about the “social impact being corrosive”? Let us remember that all forms of altruism are to be avoided.
Thoughts?
All the anger around the world is due to cultures being forced to clash by governments. It has nothing to do with income.
“The economic and social impact is potentially corrosive.”
It is beyond potentially corrosive. Europe is on the verge of a civil war.
U.S. agencies are arming up. The government is expecting social unrest. War with Russia or China is being bandied about.
Those who believe the average american is better off today than in 2005 is not living in the real world or has swallowed Obama’s bait (hook, line and sinker) all the way down to the gut.
The welfare recipients in America lives like like kings and queens compared to the poor throughout most of the rest of the world. But someone else has to pay for it. After feeding, clothing, sheltering and providing free medical care to about a sixth of the US population – God forbid if Uncle Sugar ever has to withdraw the teat. It won’t be safe to walk out your front door.
“The study also shows that 90% of French are better off than in 2005 taking into account government giveaways.”
I forget the percentage, but there was a poll of French people done a while back, in which a large minority were expecting a future of living in or near poverty.
“and Sweden 20%.”
Maybe only 20% of Swedes are worse off, but what was their starting point, income wise?
There is a new book out called The Problem With Socialism. The author said in an interview with Dennis Praeger, that the per capita income of Sweden is lower than that of Mississippi. The author went on to say that under socialism, that not one net new job was created, between 1950 and 2005.
“A Study Shows”,,,,,,
http://www.economist.com/node/16994439
51% of statistics being false or misleading, mind you 🤓
…..Is progressive newspeak for “God said……”
And about to become oldspeak again, as the Muzzies are demonstrating quite clearly that a gaggle of self promoting progressive nitwits, in the long run is no match for a more proper God.
“Based on market income from wages and capital, the study shows 81% of US citizens are worse off now than a decade ago.”
Obviously, “free(er) trade” the remedy …
Like
Balanced Trade is equitable trade. A gold standard would enforce balanced trade. Fiat money cannot.
“A gold standard would enforce balanced trade. Fiat money cannot.”
Yes, but as Nixon found, when you have to choose between staying on a gold standard and reducing the standard of living of the population, or going fiat and keeping your job, you choose fiat.
Politics trumps all else.
Jon,
Brenton Woods fixed the price of gold while Johnson funded his Great Society and the VN War with debt. They could hold the price. We were being raped for our profligacy at the hands of our idiot politicians.
And never forget Nixon’s abandonment of the “gold standard” was only temporary. Then the US witnessed one of the longest deepest inflation periods of modern times AND the dollar was so discredited that Carter’s treasury was force to sell bonds in Swiss Francs.
The deal Kissinger cut would OPEC to price in dollar forced treasuries around the world to hold dollar in both cash and tradable debt. The Petroyuan is shaking that game and cause a “return to sender” event on trillions of those green pieces of paper.
The lack of foreign buying of US debt might foretell things to come as the Fed mops up what it can in the open market. This too will end.
Three reasons Hillary could lose
http://www.bbc.co.uk/news/election-us-2016-36911157
This is currently THE most watched video on the BBC’s website. Sadly I can’t get it to play (I wonder why), but I’m inclined to think ‘so much for Hillary’s universal appeal!’. I guess there maybe a lot of people willing her on …
… Maybe!!!
Butt maybe a lot more here in the uk are just like me and relish the possibility of her demise.
Printing is confiscation. Bankers confiscate goods from the majority, and redistribute the loot to bankers and their allies. The more bankers print, the greater the Gini coefficient. In addition, printing misallocates capital, thus slowly turning the economy into a banana republic. Thus not only do bankers get a larger percentage of the pie, but the pie is also smaller.
In the early Republic, bankers would create bank notes to loan folks “money” to buy and clear land. Then they’d loan them money for seed and equipment. All against the value of the land. Then when the first bad crop came in, they’d foreclose on the now cleared and useful land.
Then they’d bring over indentured servants to work what was now their land. Of course, they’d loan the indentured servants just a bit more money than they could ever pay off. So they became, in effect, slaves.
This is foundational to the United States.
“Foundational?” Much of of territory land was handed out. When the land was over worked, early settlers just moved on. SOme even burn their cabins to get the nails for the next cabin.
What story books are you reading from?
Absent a backstop for the banksters, that racket can only go on for as long as indentured servants are more productive than free people.
it was a similar problem Southern slavery faced: with emerging mechanization, it just wasn’t particularly productive anymore. Paying some dude to ride next to, and whip, some other dude to drive a mechanized harvester faster, simply doesn’t provide good return on investment.
All “indentured servants” ever do, is the absolute minimum they can get away with. While someone working his own land, busts his rear end, since it, and the fruits it brings, will also be his tomorrow.
So, if the banks foreclosed and took over, they would never get back as much value from their servants, as they lent the farmer in the first place.
This is also the reason it wouldn’t be a problem for most non banksters if the US just gave up on the dollar and switched to a proper sound money system tomorrow. “Everyone” would go bankrupt, the banks would take it all, and then have nothing better to do with it than firesell it. Which is, of course, why the banksters and their well indoctrinated in-thrall sycophants, keep speaking of bankruptcy as if it’s some sort of bad thing. Which it, for most people, is not at all, as long as it affects everyone at once,. in one big bang of a reshuffle.
Regardless of statistics, it is obvious that the potential benefits of incremental technological progress are not reaching a wheel-spinning, debt-trapped public. This is the result of having an economic system conceived to control people (through the monetary and employment systems) rather than to release them from financial concerns to live their lives in their own way.