Great Article, from Victor Niederhoffer

September 12, 2010 |

This article on income mobility will put in perspective the malaise affecting our economy. It's the 40 % from each of the lower 2 quintiles who moves to the top 2 quintile that has made us beautiful and created the jobs and responded to the past incentives, and dolorously "prefers not to" create jobs and value now.

Australian Nick White comments:

This is a great country. Being back here the last few weeks just reinforces to me how lucky America is– even if you're in a perceived funk right now. This is the country where anything can get done…that's not the case in any other western nation. You have freedoms that you take for granted every day (even post legislative amendments that may have eroded them more than trivially). You have every type of geography and lifestyle. You have 36 different choices of one brand of orange juice fer crissakes! (which you can drink while watching one of thousands of tv channels).

I don't know much, but I know that if America continues to focus on the the things that got them to here– without trying to reinvent the wheel– you will all be just fine. The only danger I see is increasing reliance on form rather than substance– but this is a malaise of the world in general, not just the US.

Rudolf Hauser writes:

This data on income mobility does not give us a complete picture. Large gains or losses from realized capital gains/losses, special bonuses payments, decisions to take long breaks from work, etc. can all influence results for any one year. One would also expect income from most careers to advance with experience and age. What would be interesting to see but probably very difficult data to obtain would be an average of five years of data say at age 50 with those relative income positions of those households income compared with that in the same period in the lives of their parents. I suspect that there would be a good deal of upward income mobility demonstrated by such an analysis, but it would nonetheless be most interesting to have that evidence.

Russ Sears writes:

Isn't this the premise of the sitcom "The Big Bang Theory"?

A group of nerdy physicists meet their neighbor, a beautiful blond girl waiting tables at the cheesecake shop… but even she is hoping to become an actress.

But you miss the point– from the Will Smiths to the nerds in physics to the marathon runners to the Saints QB, they are all incredibly talented, even the WS geeks, not just the WS geeks.

And as someone seen how letting a small business owners put the money back into a sport can revitalize: it can change how everybody developed talent. In 1992 The US marathon trials were a joke, but these guys changed it.

The world will never know the talents that were not developed for lack of a few dollars, but I have seen first hand how thin the pie can be sliced at the top, and how a few centimeters thicker can change everything.

Jordan Neuman comments:

It is interesting that you mention the varieties of orange juice. I just read The Paradox of Choice which argues that our lives would be better if we did not have so many choices. The varieties of grocery items was the author's starting point.

It would not matter unless such ideas had support in this Administration. The references to health insurance in the book are illustrative. And I found the interview with the author in the afterword absolutely chilling. This professor was sure he and his "expert" friends knew better.

Larry Williams writes:

Living in the US Virgin Islands means giving up many choices in foods, clothes, cars, etc. I have found that a wonderful thing; it causes one to focus on what is really desired (that can be ordered from off island). It makes for a simpler life style and turns ones attention from man made consumables to the ocean, the trade winds, local markets and such.

Sam Marx comments:

I remember one of the escaped English spies then living in Moscow, when asked what he missed most about England, he replied Lea & Perrins Steak Sauce.

Comments

5 Comments so far

steve on September 12, 2010 8:39 pm
this is a great quote from Bartleby the Scrivener. Melville wrote it as a novella. I learned this in high school. Remarkable what you are capable of remembering.

Carpe Diem.
Gregory Rehmke on September 12, 2010 8:51 pm
Income Mobility: Alive and Well, Freeman article pdf:
http://fee.org/pdf/the-freeman/1005Henderson.pdf

Excerpt: “The study, by Bhashkar Mazunder, an economist at the Fed- eral Reserve Bank of Chicago, shows that for men whose fathers were in the bottom 25 percent of earners, 32 percent were in the top half. For men whose fathers were in the top 25 percent, 34 percent were in the bot- tom half. Mazunder also found that 14 percent of men whose fathers were in the bottom 10 percent of the wage scale made it to the top 30 percent, and 17 percent of men whose fathers were in the top 10 percent dropped down to the bottom 30 percent.Wessel made sure to put the word “only” in front of these percent- ages, presumably to persuade the reader that this is not much mobility, but it seems like pretty high mobility to me.”
yoyo on September 12, 2010 11:07 pm
Well, I am in China now and regret every day I spent in the US after my PhD.
The future for the US? Look at this chart
http://www.prosperityagenda.us/pictures/DEBT1.jpg
and think Japan.

Thanx, but I pass. The land of opportunity is China now.
douglas roberts dimick on September 16, 2010 12:14 pm
Yoyo,

You in Shanghai?

I have been in China since March 2006.

Email me to meet, so we can compare notes.

I am advising PhD students at SHU this term.

dr
douglas roberts dimick on September 16, 2010 12:43 pm
Steve,

Me too. I have always believed the story to represent our internal inconsistencies when not hypocrisy.

I am not sure on what YoYo is basing his conclusion, but Gregory’s summation seems consistent with the data…

“These data demonstrate that the U.S. economy, not without problems over this period, still remains dynamic, open, and productive enough to permit most Americans in the bottom three-fifths to work their way up the economic ladder. What is needed are policies to ensure that this flexibility and opportunity are extended as widely as possible, especially to those who actually fall below the bottom fifth of taxpayers.”

There is daily discussion here in China how the gap between rich and poor is becoming unjustly expansive. I maintain that, as long as the one party system (as with any dictatorship) remains static here, a majority of the people will increasingly suffer due to top-down nihilism, to wit: “as a condition of tension, as a disproportion between what we want to value (or need) and how the world appears to operate.” See…

http://en.wikipedia.org/wiki/Nihilism

This regressive aspect may be contrasted with the development of a middle class a la the nouveau riche exclusive to the party and bureaucrat apparatus.

Perhaps YoYo can provide a more advanced analysis for comparison?

dr

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