Who is Rich?

Arnold,
I have always thought the style and type of economic organization was dependent on the largesse of the economy and its level of technological development. Under this scenario: At basic level is fuedalism or Warlordism, with banditry between functional fiefdoms. Then come the development of Market towns and the Caravan traders, who continue to pay the Warlords for safe passage (tariffs). The comes Freebooter capitalism--based on aristocracy concepts held over from the prior development. The needs of the Economy brings a defined Labor class--starting with the Guilds, and finishing with Labor unions. Socialism is a response to the rape of Freebooter capitalism. Socialism, though, is found restrictive with continued development; it brings on a neo-conservative movement. The neo-conservatives will themsleves lose to a neo-socialist movement, because of their search for only Profits and support of Corporatism at an extreme cost to individual liberty and Consumer satisfaction. Neo-socialism has its own limitations, though, and will be an actual impediment to mass Individual aggregation of economic assets.

I have always believed every Economy must pass through these shelfs, and personal beliefs and/or Government policies has little to do with the final outcome. lgl

Economic sociologists have convincingly shown that once a minimum level of prosperity is reached (i.e. nutritious diet, basic housing, access to education and health care), subsequent increases in material wealth contribute very little to people's self-reported happiness. Of course "standard of living" is an ideologically freighted term in that it implies that quality of life can be assessed in terms of material possessions.

In affluent societies like the U.S., income is largely a "positional good". A high income is valued less for what it buys, than for the fact that it makes you "better". Note also Americans' preference for expenditures that have a high signaling quotient -- overconsumption of goods like autos and housing, underconsumption of leisure and travel.

“John Rawls made a splash by arguing that we should imagine ourselves being born as the worst-off person in society.”

The well meaning John Rawls did enormous damage. Determinism underpinned his essential philosophy. Rawls had a difficult time dealing with the harsh fact that sometimes a person is responsible for their own troubles. We are often not merely victims of circumstances. Sometimes an individual is unexpectedly run over by a vehicle that jumped the sidewalk. Alas, there are also times when people get drunk and walk in front of a fast moving truck. Should we treat the virtuous and the non-virtuous alike? The late Harvard professor had no real answer for this dilemma.

First problem is in using income to define who is rich.

Take the following three scenarios:

Married Couple 1
One earner
$100,000 / year salary
Hours worked per week: 40

Married Couple 2
Both work and each earns $50,000 / year
$100,000 / year salary
Hours worked per week: 40 each (80 combined)

Married Couple 3
Both work and each earns $125,000 / year
$250,000 / year salary
Hours worked per week: 60 each (120 combined)

No matter how you slice these income situations are very different. For exapmle, Married couple 3 have a high (Kerry definition of rich) income, but the least amount of free time.

Let's look at one more example of a small business owner who makes widgets. He is self employed and for the past 20 years has earned $50,000 per year. In year 21 the he has a great year from a big widget purchaser, and earns $300,000. After that year he goes back to earning $50,000 per year. Is this guy really rich?

This disingenous argument receives a full fisking at the link above.

I must say, when I first read the excerpt, I initially suspected these authors had suffered some kind of a blunt force trauma to the head . . . In their dementia, their lack of mental accuity led to make rather pedantic and foolish arguments.

Then I went to read the full piece -- it is at TechCentral Station, where the full glory of the author's intents are revealed: Its a diatribe against presidential candidate John Kerry's plan to rollback the tax cuts for the top 1%.

So in addition to being a poor piece of tortured logistical reasoning, it is also a bunch of partisan hackery.

Arnold Kling: you can do much better than citing intellectual deitrus such as this . . .