Saturday, July 18, 2015

Median Incomes and Inequality

Median incomes have risen (slightly) under stephen harper. This can happen regardless (and, obviously, in spite of) harper's policies. It might also be the case that they haven't really risen. That it's a bit of statistical jiggery-pokery. Inequality has risen under harper. It also rose under the Liberals. This is the intended consequence of capitalist-driven, neo-liberal "reforms." To give more to the rich with the lie that they will invest it in job-creating enterprises.

The lie at the beginning of this era of neo-liberal counter-attack was called "trickle-down." At the start (1980) it was argued that excessive government regulation was hampering the ability of capitalism to produce growth. The crises of inflation and economic stagnation in the 1970s was the product of the dead hand of "big government." Government wasn't the solution. It was the problem. It had to get out of the way and let the wealth creators get to work.

The problems (little mentioned by hack writers like the Globe & Mail's Jeffrey Simpson) is that the results of the "reforms" have been economic numbers far worse, overall, than what we saw in the 1970s.

All that aside though, what are some of the ways that you can have rising median incomes and rising inequality at the same time? (Greater inequality will produce skewed higher "average incomes" that the median income indicator is supposed to overcome.)

1. You can have more people outside of the labour market. Unemployed, they don't count. But then they'd have income from government transfers, so they would count.

2. You can have more people with higher incomes but that income is temporary and contract income. It's uncertain.

3. You can have more jobs open-up in higher-paying sectors, plus a few people making huge incomes as a result of deregulation and etc.,  but lots more people in moderate-income sectors, and have some of the latter making less money than they did before (say in manufacturing or the public service) which, after the dust settles, shows a slightly rising median income.

4. You can "adjust for inflation" wrong. Which is probably one of the simpler ways to do it.

Sorry for such a weak post but I really need the money.


Purple library guy said...

The inflation thing definitely seems to be happening. There's a lot more documentation of it in the US, but it could well be happening here too. Cunning statistical dodges, like the "chained CPI" one where if people can't afford, say, steak but they substitute hamburger for the same price as steak used to cost, there's somehow no inflation there.

One thing I wonder about is user fees and stuff. Not to mention simple withdrawal of government services. If the government used to give the public service X for free, and then they start charging for it (or they privatize it and the bloodsuckers that bought it charge for it), is that counted in inflation?

And then there's the relevance of income in the first place. If the government used to stop the refinery upstream/upwind from poisoning me, with regulations and inspections, but then relaxed the regulations and stopped bothering to inspect, and I get emphysema or cancer or have a two-headed baby, but my income stayed the same, am I just as well off as I used to be?

thwap said...


Yeah, this post was just an "off the top of me head" kind of thing. Because I think a lot of people are hurting in this country and that's what's bringing about a reconsideration of the NDP (Mulcair's efforts to move the party rightward not having much influence at all.) Plus, it's a given that inequality is increasing. For that to happen, the middle has to be hollowed out. If the middle is being hollowed out, then how does the median income actually rise.

In the end, I think it's improper adjusting for inflation as you say. I hadn't even thought of such blatant fluffery as the "chained CPI" wherein people are felt to be just as well off because the cat-food they're eating is just as good as the hamburger helper they used to eat.