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Gaps between rich and poor
Mankiw quotes a report on the gap between rich and poor. The study comes from an op-ed in the New York Times by W. Michael Cox, the chief economist of the Dallas Federal Reserve. Mr. Cox came to USD earlier this year, giving an excellent presentation in Farber Hall.
Democrats, especially the USD Dems during the recent debate with the College Republicans, consistently harp on this statistic. It seems now that they've got no leg to stand on:
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"if we compare the incomes of the top and bottom fifths, we see a ratio of 15 to 1. If we turn to consumption, the gap declines to around 4 to 1....
Let’s take the adjustments one step further. Richer households are larger — an average of 3.1 people in the top fifth, compared with 2.5 people in the middle fifth and 1.7 in the bottom fifth. If we look at consumption per person, the difference between the richest and poorest households falls to just 2.1 to 1."
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You can find the original study from a New York Times op-ed HERE.
Here's one quote that the Democrats need to read:
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"Income statistics, however, don’t tell the whole story of Americans’ living standards. Looking at a far more direct measure of American families’ economic status — household consumption — indicates that the gap between rich and poor is far less than most assume, and that the abstract, income-based way in which we measure the so-called poverty rate no longer applies to our society."
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Here's another that tells us why free trade is good:
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"There are several reasons that the costs of goods have dropped so drastically, but perhaps the biggest is increased international trade. Imports lower prices directly. Cheaper inputs cut domestic companies’ costs. International competition forces producers everywhere to become more efficient and hold down prices. Nations do what they do best and trade for the rest."
Posted at 09:34PM Feb 10, 2008 by College Republicans in Economics | Comments[4]
http://blogs.usd.edu/usddems/entry/what_michael_cox_doesn_t
Posted by RCDEM on February 10, 2008 at 09:52 PM CST #
The post to which the above URL takes you has absolutely nothing to do with the original post here.
Posted by Matt Hittle on February 10, 2008 at 10:05 PM CST #
If inequality leads to faster growth, so everyone's better off long-term, then--arguably--it doesn't matter. Wealth has (by far) the highest inequality. So, does wealth inequality create economic prosperity? Over the long term, apparently not:
http://trueconservative.typepad.com/trueconservative/2008/02/wealth-equality.html
Posted by Steve Roth on February 17, 2008 at 10:38 AM CST #
Just because goods are cheaper for everyone because of international free trade agreements, this does not mean that these goods are well made, safe for the environment, or produced safely in the countries where they are produced. Looked at qualitatively, it is doubtful whether merely increasing the quantity, and decreasing cost of goods is, in the long run, better for everyone, as you claim. For example, if you have to buy fifteen of the same products in a lifetime, as opposed to two or three better made, possibly more expensive products, then merely making these inferior products cheaper does not increase one's standard of living, on the contrary. It does not take a rocket scientist to notice that the aesthetic and practical value of an average Wall-Mart product has decreased, while their prices are not commensurately cheaper than the previous products they replaced. In addition, the cost of these inferior products do not stop when they are purchased, nor do they necessarily begin on the production line; there are landfill costs, pollution of air and water by estrogen and lead; there are costs associated with lowered air quality standards before and during production, and finally, human costs associated with inhuman labor practices. Precisely because of global competition and the lowering of international standards for labor, safety and health concerns, these goods may be becoming increasingly toxic, their means of production divorced from global environmental issues, and lastly, these often exported jobs harm the very economies and standards of living that free-trade advocates claim are being helped.
Posted by Christopher Koller on April 13, 2008 at 06:44 AM CDT #