OWS and Philip Rearden

I have been reading a lot of the data flying around of late about income inequality and mobility.  And it struck me that income mobility may be a large part of what is driving many OWS protesters.

Despite assumptions to the contrary on the Left, wealth is not a zero-sum game.  Steven Jobs got richer by making me better off.  But the one thing that is zero-sum is presence in the top 1%.  When someone joins the club, someone, by operation of basic math, drops out.

That does not mean that the other person who drops out is poorer, it just means that they are no longer as rich relative to their peers.  This same effect works int he top 10% and 20%, etc.

Looking at OWS protectors, they seem to be disproportionately children of the upper middle class or even of the rich.  They have expensive college educations, live in nice homes, and have gobs of stuff (OWS must be the most iPhoned event in history).  My guess is that they are of the upper two quintiles, or at least their parents were.

I am wondering if the problem is not income inequality but too much income mobility.  After all, a third of the top two quartiles in 2001 had dropped into the bottom three in 2007 (while an equal number moved up). Are these the angry proletariat, or are they children of the well-off who are upset their college degree in puppetteering did not automatically keep them up with the Joneses?   Are they, in other words, Philip Rearden?

 

  • Anon

    My gut says you are right, Warren, but Megan M. sees it otherwise:

    http://www.theatlantic.com/business/archive/2011/11/the-tyranny-of-meritocracy/248061/

  • Craig Loehle

    I believe you are exactly right. By education and family background, this group of people came to believe that they automatically would be entering the upper middle class. This is evident in the complaints about unfairness and forgiveness of student loans. I worked my butt off to avoid having any loans. Taking out $50,000 in loans (or $100,000) without worry means you are assuming that all mobility is upward. Teenagers generally think they will without effort attain to what their parents had, and parents constantly try to impress on them that this is not so. They did not necessarily study hard and avoided quantitative subjects (I challenge anyone to find an engineer, a chemist, a doctor, or an economist in the occupy streets). It has also been pointed out that this group distains skilled labor jobs like plumber. Every one of them could get a job in the new oil/gas boom at $70,000/yr+ in Pennsylvania or North Dakota, but they won't. Europe has taken the path of trying to freeze advantage, making it almost impossible to fire someone (and we are moving down that path) and making it hard to start a business. That is not where we want to go.

  • me

    I'd say it's quite a bit more simple than that: a lot of people benefit very little in a direct and visible manner from the work of the larger financial institutions in this country. Their perceived wealth took a large hit during the economic crisis and they do encounter problems in their everyday lives due to it. The last administrations chose to support those institutions financially in unprecedented terms, without those problems disappearing, but with well publicized payoffs for the upper echelons of the institutions despite their partial culpability and involvement in the crisis. The notion that this reflects a fundamentally biased system instead of a free market and that it is a blatant example of government by the rich for the rich shouldn't surprise.

  • Matt

    Poor people can't afford to "Occupy Wall Street". Take a look at the protesters' reactions to having their food eaten by the local homeless population...they're not poor, they're political.

    Which means that, frankly, they're not middle-class either. Considered on a hereditary basis, they belong to the upper elite of American society...those whose parents can and will continue to expansively support them financially well into legal adulthood.

    So yeah, I think your theory holds a lot of water. Because their one truly coherent and legitimate complaint is that they have been persistently and comprehensively lied to by their parents, their society, and their government about the utility of the education they've spent all that time getting.

  • Zeeb

    Those 1% income graphs don't appear to think about mobility at all. No thought in controlling for sustained oversized income.

    I have a hard time stereotyping them as any single group. My only definite takes are 1) they've got some disposable time; 2) they seem to have forgotten they can vote with elections and dollars; and 3) they seem to think the US middle class is in the worse shape ever.

    That last one is paramount -- I'm not happy with the state of things, but we do have the largest middle class and highest standard of living anywhere. And we take care of our poor better than ever by any measure. Does anyone really thing the 99 week unemployment benefits are going to end?

    I always hope with events like these that people will come out a little more educated, but I haven't seen signs of that. These same people who complain about outsized corporate profits, CEO pay and financial power will go home and continue to gamble with their 401ks and pensions in an attempt to make above average returns, ignore pension underfunding with realistic inflation expectations, continue financial subsidy of home & student loans, and believe unions need above average retirement while complaining about the jobs those same people (teachers, police) do.

    I would desperately not like it to be, but OWS ends up looking like a big tardy tantrum. The power to change it exists exactly in the people. Yet instead of throwing out their assumptions, most of those people, in another aspect of their lives, want the system as-is to pay out for them.

  • Mark 2

    A big part of the problem with college is that the costs are hidden. I would guarantee that many if not most kids would choose a different degree if Mamma and Pappa didn't pay have and the other half was hidden in student loans.

    If it seems like someone else is paying, may as well have four years of fun. If you realize you are spending 100K and it is gonna hurt, out goes the degree in Puppeteering, and in comes the degree in Finance, or Engineering - or a trip to trade school to learn the basics of auto mechanics.

    I mean to get yourselves into crazy situations because there was always a safety net and then complain when you didn't make great choices is silly.

    Personally, when I was older and wiser, I went back to college to get a degree that would earn me money - and yes I got loans, but was well aware that I had to pay them back, so puppeteering was not an option. Computer Science was.

  • Mark 2

    It does make the resume look odd though

    MS in Computer Science School B
    BA in Puppeteering School A

  • Mark 2

    And I have always wondered why the government structures student loans so that all degrees are viewed equally. In a private market, I would be much more willing to give an Engineering student a loan, than the sociology student.

    government gives the loan regardless of earning potential because it is unfair not to give loans to sociology students since they are just as valuable as anyone else. Well their 20K annual salaries vs 70K starting for Engineering proves different.

    These kids have been duped by the government they have been stumping for - I actually think the government might owe them the money for encouraging them to enter stupid degrees.

  • Sol

    I dunno, one thing that really caught my attention was some 99% supporter's screed my wife dug up. She was touring the world as a musician in some small genre (nothing wrong with that!) and lived in NYC; but she was hurt that many of her friends could afford nicer apartments, etc. (Wish I still had the link handy.) Anyway, it amounted to a big whine that focused on what she couldn't afford rather than recognizing that by any sane standard she was amazingly lucky.

    Though I guess if her parents were well-to-do, it might still fit with Warren's thesis.

    (BTW, I want more model railroading posts!)

  • morganovich

    a big part of the difference is this:

    globalization and productivity increases now allow for a given worker to have far more impact than every before. bigger markets, better tools it's a huge opportunity.

    however, these benefits accrue disproportionately to those later in their careers. it takes time to learn to use and take advantage of them. a 22 year old french lit BA from amherst is really no more productive today than he/she was 20 years ago.

    they get paid commensurately. starting salaries are not up much. salaries 15 years into a career are.

    these kids are just pissed because they expected to earn what their parents earn and have no idea that they do not know how to produce anything like what their parents can.

    they see this as unfair wealth hoarding, which is absurd. learn to do valuable things, and you will get paid a lot. it's really that simple.

    this is the entitled generation. they don't want to have to climb the ladder. they don't want to compete. they just want all the trappings of work without the work.

    the funny part, is that as soon as they get anything (food for the kitchens, funding for the movement) they hoard it and refuse to share.

    if they were consistent, at least i could respect their beliefs, but they are not. these are just entitled, avaricious would be kleptocrats. they want the fruits of my labor, but refuse to share even the donations they receive with others.

    "what's yours is mine and whats mine is mine too" is the philosophy of a 3 year old.

  • andre

    In any one instant of time (that's dt for you math-heads), yes, if someone comes into a lot of money, that person will knock someone out of the top 1%. But over the long haul, the top 1% grows in size due to population growth.

  • Daublin

    I find it hard to ascribe a philosophical explanation to a movement that has such a hard time coming up with anything more specific than "99%" as their unifying principle.

    Unemployment leads to idle mobs. The mobs then search around for some rationalization for what they are about, but really, they just don't have anything better to do with their time.

  • Roark

    Steve Jobs got rich making the Coyote better off. Chink slave labor not so much.

  • Mark 2

    @Roark - I shouldn't even respond, but the reason our manufacturing is going oversees is due to currency manipulation to keep the cost of resources such as oil low. This was all done by declaring the dollar the world currency. So the rest of the world can trade, we need to have a structural deficit so the rest of the world can get a hold of dollars to trade with. This causes our currency and therefore our labor service to be overvalued in the world market. And even worse, if we get more productive, our currency value goes up, because if the rest of the world continues to grow and trade, they still need to get more dollars.

  • Joe B.

    Refer back to your post re: Sarah Palin for the real reason OWS should be protesting http://www.coyoteblog.com/coyote_blog/2011/11/crony-capitalism.html