Work Pays!

[VinceZeb]

source: http://www.townhall.com/columnists/t...20030502.shtml

Work pays!
Thomas Sowell

May 2, 2003

Those for whom indignation is a way of life often inform us of the fact that families or households in the top 10 or 20 percent in income make far more money than people in the bottom 10 or 20 percent in income. What they almost never inform us of are how much money they are talking about and how many people in these different brackets actually work.

These omissions are neither incidental nor accidental. If the full facts were brought out, those facts would completely undermine the picture presented by the envy zealots or, as they prefer to be called, advocates of "social justice."

Despite the looseness with which the term "rich" is thrown around -- as in "tax cuts for the rich" -- most people to whom that term is sweepingly applied are far from being rich. First of all, whether you are rich or not depends on your wealth, not your income, but the statistics used by the envy zealots are almost always income statistics.

These are also usually statistics about family income or household income, which can be very misleading, because families and households differ substantially in size -- and where there are more people making money, they usually make more money.

While there are more than 19 million people working in households with incomes in the top 20 percent, there are fewer than 8 million people working in households in the bottom 20 percent. How much of an injustice is it that people who work get more money than people who don't work?

If you are talking about working full-time, 50 or more weeks a year, then there are more people doing that in the top 5 percent of households than in the bottom 20 percent. As Casey Stengel used to say, you can look it up. These are Census data, available on-line from the Current Population Survey, Table HINC-06.

It may not be a breakthrough on the frontiers of economics to say that work pays, but it does. Among households in the bottom 20 percent in income, there are more than 13 million people who do not work at all and fewer than 8 million who do work, counting both full time and part time workers.

How do people live without working? Millions in the bottom 20 percent live on the money earned by other people who do work and whose income gets taxed to pay for the non-workers. In addition, more than 4 million families in the bottom fifth in income live on property income and nearly 6 million live on various forms of retirement income, including Social Security. (Table FINC-06, for those who demand proof only from those they disagree with.)

What about those "rich" people we hear so much about? Studies that follow the same individuals over time have found that those in the top 20 percent and those in the bottom 20 percent are mostly the same people at different stages of their lives. Not only does work pay, when you have worked a longer time, it usually pays more.

High-income people are typically people who have reached their peak earning years in middle age. What does it take to reach the top 20 percent in income? In 2001, it took a little less than $85,000 -- for a whole household! (This is a different Census publication: "Current Population Reports," P60-218.)

How many yachts these people are going to buy, even if they get those "tax cuts for the rich" we hear about, is another story.

To reach the top 5 percent, you need an income of about $150,000 -- again, for a whole household. A middle-aged couple who have worked their way up in middle-class jobs, over a period of decades, can reach this peak -- and have much of it taxed away.

These publicly available numbers may be surprising news to some because neither in the media nor in academia do the envy zealots like to talk about actual dollars and cents. Or about work -- one of the few four-letter words that remains taboo.

They prefer to talk about percentage shares going to some people versus others. But people do not live on percentages. They live on money and on the things that money can buy, which is to say, their real income.

Despite all the hand-wringing about the fact that the bottom 20 percent get a smaller share than in times past, the real income of the bottom 20 percent has gone up by thousands of dollars. Moreover, the people who were in that bottom 20 percent in the past have also gone up into higher brackets.

[mburbank]

Huh. After reading this I feel much better about people who work the same number of hours as I do and yet make more in a day than I will in a year. The fact that it takes almost all of my income to pay for adequate housing, food for my family and health care, and that to do the same for multi millionaires would take less than 1% of their total income IS meaningless. And the whole 'Wealth VS. Incom thing' blows me away! The rich really DON'T have much more money than I do, becuase after all, they HAVE to live in huge houses and have multiple cars and vacation homes and servants. Rich people are genetically different and would actually die if the liquidated some of their wealth.


Thanks, Vince. I'm a changed man.

Like lots of other people, you're pretty much certain you're going to end up rich, aren't you? What is it your studying now that you've given up on the preisthood? Cause I hear it's tough job market out there these days and last I heard private school salaries don't exactly make you rich.

[CaptainBubba]

Wait wait wait. Are you a socialist Max? I'm confused.

[mburbank]

I guess I'm more of a socialist than I am any other strict political philosiphy, but socilaism isn't really descriptive of my stance.

I guess I'm for representative democracy, but of the truly 'one persoon, one vote' school of thought as opposed to the 'one dollar, one vote' school.

I think society's band together and form governments to protect themselves from our individual and collective worst instincts. I think we should be compelled to take care of each other as best we can because I think we all may need caring for at one time or another and individually it's just too easy to think someone who's hurting has it coming. I think there should be regulation of business because even with it you get Ken Lay and without it you get Bopal.

I also believe in a rigid, respected, reveared series of checks and balances and division of power amongst branches of government. I complain a great deal about America, but that's because as a citizen I feel it's not only my right but my duty to participate on our democracy. I critcize my own country more than other becuase I have a vote here. But... I think in our brief history we've done better at achieving balance between government and citzenship than most political entities in history. That doesn't mean we've done well, just less lousy. Civilization is hard.

Bottom line? I think it's wrong for some people to have so much more than anyone needs and some people have so very little. I don't care who they are or what they've done and I don't see how you can take pleasure in a huge mansion and fleet of cars when human beings are living on the street. I think government and the rule of law, flawed as they are, are humanities greatest creations. I think without them we'd be beating each other to death with the leg bones of those among us we'd already eaten.

[Vibecrewangel]

Wow this sucks.....

Between my S/O and I we are in that top 20%
And we still pretty much live paycheck to paycheck.

[CaptainBubba]

So how would you propose we decide who is able to get other's money and who will not? The current welfare system in our country has and is failing misserably and getting worse and worse for all of society by the day.

So how would you propose resolving it specifically? I don't see why you trust the government with peoples money more than the people. :/

[mburbank]

And here I thought we'd 'ended welfare as we know it'. Welfare is a drop in the bucket and while I'd applaud honest welfare reform, I'm not sure making certain poor women work enough hours to pay other poor women to take care of their kids makes a whoe hell of lot of sense, and it sure as hell beats suffering, hunger, and an angry underclass. Last time I looked there weren't enough jobs to go around without trying to get everyone on welfare to work. Was there corruption in the old sytem? Absolutely. There' corruption in every govrnment program. Try looking at the Pentagon if you'd actually like to save some significant green. If you totally abolished welfare the savings wouldn't begin to cover the upcoming tax cut.

A.) I don't trust 'government'. I trust a divided system of government loaded with check and balances and adevsarial parties.

B.) I like that the government takes away garbage and paves roads and hires police and fire departments, I like that they set air and water quality standards because I don't think a completely non-socialist market based economy would do any of those things for anyone except to ake a profit. You think keeping arcenic out of your drinking water would make anybody rich?

[CaptainBubba]

Capitalism works wonderfully for those purposes. Your performance is generally of a higher quality when it means your customers return depends on it.

"You think keeping arcenic out of your drinking water would make anybody rich?"

Yes. Two competing (there is no such thing when the gov. is in control) water providers offer me their services in providing my water supply. One has been found to have arsenic in their supply. My business is lost to that company and thusly, the company that does a superior job cleaning my water gets my business, and on the larger scale, tha majority of business, becoming rich and successful, not by coercion, but by excelent quality, service, and price.

[Protoclown]

Yeah, but once all the serious competition is eliminated, what's to stop this company from cutting a few corners on quality control to save a few bucks?

[Vibecrewangel]

See AT&T cable in the bay area for that answer

[CaptainBubba]

The threat of a new company that doesn't cut corners arrising. You can never completely eliminate the competition in a free market.

Besides, with government there is no deterent to cut corners in the first place.

[mburbank]

Bubba, your outlook is totally niave. Company's collude and price fix, selling grade A water at 50$ a gallon, having mini show price wars, occasionally dropping the price by a few dollars here, a few there. Meanwhile they sell grade z water to the masses at a much lower rate. Try comparing so called competeing gas stations prices sometime.

Moreover, our water companies produce large amounts of toxic chemicals in their sub standard filtration pants which they then dump behind them behind the factory, giving half the kids in the neighborhood luekemia. No government regulations to stop them. Eventually an angry mob of parents gathers and are about to torch the factory when the private security gards open fire. Where are the police? They've been privatized and are currently guarding the factory and firing on the mob. A grassroots boycott has some success punishing the evil polluting water company, but it's not like you can do without water.

meanwhile, air quality gets wporse and worse. Since it moves around you can't really commodify it, so there's no proft to be made cleaning it. Selling oxygen however becomes a booming business and as demand for respiratory therapy grows the price for that goes through the roof too. Sure, there's insurance, but it's now sold at whatever prie the market will bear and you get what you pay for. Affordable health insurance buys you a quick lung scrape in a back alley.

[CaptainBubba]

If you think I'm naive now, just wait till you read my next statement.

Firstly, whats to prevent them from suing if the water company did physical damage to them? And lsecondly no one said you had to live there. :/ If you're going to respond, "some people don't have the means to move", then be prepared for a response so naive and hopeless (from your perspective) that you may just shake your fist at the moniter.

Do you think that the government cares more about people thinking they care about their health, or the people's actual health? The FDA is responsible for killing almost as many Americans by denying them just the drug "pranolol" than by the use of all unsafe drugs used in America in the 20th century*. There are other countries that don't have this problem because they allow privatized companies to test their medications for them, which results in quicker, more accurate results.

My theories are primarily philosophical as I'm young, and have yet to truly see the ways of the world. I base my opinions on what I believe to be right and on the observations I make. I don't trust any corporation that operates by threats (gov.). I hold more trust in ones that operate by greed(capitalists). Until mankind ascends to a new state of ethical piety we must choose the lesser of two evils.

But yes. I am a very very naive 16 year old little boy, so don't get to worked up over me.

*Indirectly cited from a study reported in "Cost effectivness of Pharmaceuticals #7" conducted by Arthur D. Little