CBS reporter illustrates income inequality (easy as pie)

[LessAspin]

Democratic nominees take note...

Link to tweet

Even though people may know that wealth inequality in the United States is a serious issue, many really don’t realize what it actually means to say that the gap between rich and poor is the worst it’s been in more than a half century. So CBS News came up with an innovative way to explain it to random people in a mall. The result? People were dumbfounded when presented with an illustration of just how wealth is divided in the country.

CBS This Morning co-host Tony Dokoupil set up a table at a mall in West Nyack, New York with a pie that represented $98 trillion of household wealth in the United States. The pie was sliced into 10 pieces and Dokoupil asked people to divide up those pieces onto five plates representing the poorest, the lower middle class, middle class, upper middle class, and wealthiest Americans.

No one got it right. And, in fact, no one was even kind of close of estimating the real ratio, which involves giving nine pieces to the top 20pc of Americans while the upper middle class and the middle class share one piece between the two of them. The lower middle class would effectively get crumbs considering they only have 0.3 percent of the pie. What about the poorest Americans? They wouldn’t get any pie at all, and in fact would get a bill, considering they are, on average, around $6,000 in debt...

https://slate.com/news-and-politics/2020/02/watch-cbs-journalist-use-pie-illustrate-inequality.html

[BigmanPigman]

1. Visuals always help, no matter how old you are.

It drives the point home in a single image and doesn't take a rocket scientist to figure out. If my First Graders could comprehend a pie graph, or any graph actually, anyone can.

[OnDoutside]

8. Even Trump appreciates visuals !

[James48]

2. EAT THE RICH

Tastes great.

More filling.

[Kid Berwyn]

9. Tax them.

Lasts longer.

And it hurts more.

[cstanleytech]

12. Tax them sensibly though.

For example I think the best way to make things more fair would be by taxing large companies themselves far, far higher than now however give them an easy way to lower that tax by providing a carrot of linking it to what their employees are earning.
The more employees (which includes temp workers and franchises) a company has that earn 500% or more over the poverty level the lower their tax burden.
Of course companies that act like shell companies with few employees and companies that rely on automation will pay a higher tax if they earn say more than 40 million a year but that is their choice to eliminate human workers.

[Warpy]

3. That's certainly part of the story

The biggest part is what happens to those 9 pieces of pie. Since most of us could probably stop at one, the other 8 would go into the freezer, and since there's more pie coming in every day, more goes into the freezer. When the freezer is full, we'd get another freezer. Eventually, there would be enough pie in there to feed a small city, but hell, it's [our damned pie, and nobody's going to tell us what to do with it.

Meanwhile, there's less out there to feed the other 90%, who then find themselves without the wherewithal to keep on going.

Hoarded pie, like hoarded money, doesn't do anyone any good, it just sits there giving rich people bragging rights, "My whole basement's full of freezers!" and "I had to start filling up the garage!"

Fattening the rich like this is just never going to work. Money only works when it's moving and pie only nourishes people when it's distributed to the people who need it.

Now they need to do the rest of the education: what happens to money when it's recirculated at the bottom in the form of wages or even handouts. There is a multiplier effect as poor folks start adding their labor. It's why a dollar of minimum wage or food stamps translates into $1.70-$2.00 as it goes through the economy. The following story in a poorer part of the world, found a $2.75 multiplier:

Ross: Company proving that handouts could be solution to poverty

https://mynorthwest.com/1633005/ross-give-directly-poverty-solution/

Not only was there a large multiplier of this no strings money given to random people, they found that all households in the community started to do a lot better, just from a general influx of cash.

Poor people don't really want handouts, they want jobs and they want that honest day's work to pay an honest day's wage, something we haven't seen here since the late 70s. Trying to end inflation by depressing wages hasn't worked. Trying to shove money at the rich to spur investment into innovation hasn't worked. It's high time we get people educated in this stuff so we can try a better way.

[Igel]

10. Two points.

There's only one pie. If it gets bigger, it gets bigger.

The money isn't in a mattress under the bed. Some of it is in real assets like property and paintings, to be sure--but the assets are "getting bigger" and once money's put in they don't take any more money. Suddenly you "have" $1 million in assets where you paid only $500k, but you didn't pay additional money and the money pie isn't any bigger. At the same time, the money that is chucked into banks doesn't just sit there. Under the reforms from the early 2010s more *has* to just sit, nonetheless most of it gets turned around and put back into the economy. It's why we have loans. In fact, not only is the money put back in, with its own multiplier, but there's a kind of bank multiplier effect that increases the money supply.

The matter with asset appreciation is a vexed one for a lot of people. My parents had a house. They bought it for $160k. A decade later comparable houses were going for $260k. Then 2009 hit and the house was back to $160k. My mother wanted to know who stole her money--she was convinced somebody got $100k. Same with the AIG stock she had in her smallish portfolio. It virtually zeroed out, and it was nearly impossible to convince her that "her money" had gone to the person she'd bought the stock from months or years before, and that nobody sucked the money out of her stock value in a way that could be banked. (Didn't talk about short sales, but that's the same thing made more complicated).

On another point, the subject line for the OP is wrong. It talks income, but the OP talks wealth. They're far from the same thing, which is why the asset appreciation bit, which is the majority of the discussion, can be tucked in. But talking about how asset appreciation favors those with more assets seems like a silly, non-outrage kind of thing, and leads to asset depreciation (stock market crashes) disfavoring those with more assets.

[Warpy]

11. Pie keeps being made

Last edited Sun Feb 2, 2020, 07:54 PM - Edit history (1)

along with everything else. However, with everything else sitting there unused because people with no pie don't have the energy to use it, the economy is slowly grinding to a halt. See: growth in the money supply since 1980 and where it went and why.

And it's not just wealth being hoarded, the income picture is even more dire. Every single thing the fiscal conservatives have done has been top-down, which translates to top, only, since they control where the money goes. The supply side is choked with wealth, the demand side is what has been starved. The economy has been kept going by floating it on a sea of debt.

One thing those college courses fail to mention is that no rich man ever hired a poor man to make widgets for him to sell unless there were a lot of poor men with money in their pockets who wanted to buy them.

Debt works only so long, especially while wages keep being depressed year after year as prices for necessities rise. Eventually, people can no longer pay the minimum, much less the principal, and the whole thing collapses.

As an aside, I'm sorry your mom got hurt in 2009. I saw the writing on the wall (well, the number of For Sale signs) in 2006 when my dad died and I lowered the price of his house 10% under the comps and sold quickly. Fortunately, I'd learned at my mother's knee the difference between numbers on paper and actual monetary worth at time of sale. My father never did, he'd watch the numbers crawl at CNBC like he was playing the ponies, elated at a rise and devastated at a drop. If he hadn't died in 2006, the stress of 2008 would have done it.

[czarjak]

4. Hurting the right people is so appetizing?

[Warpy]

5. Explain. For instance, define "hurt" and "the right people."

Right now, I see real harm being done to the economy, to the government, starved of revenue usually paid by the middle class, and a stifling of innovation and entrepreneurship because seed money just isn't there and there is no way to save it out of depressed wages.

Do tell.

[czarjak]

6. Just talking about the portions, who has more, who has less...

As intended?

[Warpy]

7. Still clear as mud

You're going to need to develop your ideas better than that.