Billionaire's reassurance about income inequality

[portlander23]

Barry Ritholtz: Billionaire's reassurance about income inequality

Dimon, a billionaire, was speaking at an event in Detroit recently when he noted the positive effect technology was having on inequality, even with wages stagnant for so many workers for so long. "It's not right to say we're worse off," he said. "If you go back 20 years ago, cars were worse, health was worse, you didn't live as long, the air was worse. People didn't have iPhones."

I like my iPhone, but I had no idea it had the power to make up for three decades of stagnant wages, especially for those workers on the lower half of the income scale.

Like all bad arguments, it has just enough facts to make it look plausible. It isn't, and can easily be debunked; indeed, it falls apart upon close examination.

Hedonic adjustments trace their recent history to the work of Michael Boskin, who served as chairman of the President's Council of Economic Advisers under President George H.W. Bush.

Adjusting for quality--hedonics--was one of the many ways that inflation measurements were reduced. It's complicated, but hedonics essentially says that quality improvements are the equivalent of price increases. Looked at another way, if something stays the same price but its quality goes up, you are essentially paying less than you previously were and thus inflation is slower. Adjusting for quality was one of the factors that reduced reported inflation by more than 1.1 percent in almost every year since 1997.

Noting that even though income inequality is a problem, Dimon said that slashing CEO pay wouldn't help: "It is true that income inequality has kind of gotten worse ... you can take the compensation of every CEO in America and make it zero and it wouldn't put a dent into it."

So if you confiscated the pay of the rich, that wouldn't reduce income inequality? Think about that. Of course it would, though obviously that isn't the way anyone should want to go about closing the gap. Far better is raising the pay of everyone further down the earnings ladder.

If you really want to understand wealth and income disparity, consider looking at the gap between rich and poor on things such as life expectancy, educational opportunities and career options. Even simple things like access to fresh food or quality medical care are wildly disparate and widening

.

[Erich Bloodaxe BSN]

1. It's not even a 'quality improvement', sadly.

I still get clearer and more reliable service with my 20th century landline than 21rst century iPhones. And since I don't need to be 'texting', 'websurfing', 'taking pictures' or anything else with my phone, the added bells and whistles are useless to me. I don't want a $600 iPhone. I want a 'quality' income.

[TM99]

2. Dimon also fails to mention

that most iPhones, new cars, computers, and other tech wonders are not paid for outright. Most of us are locked into long-term phone contracts or have bought these things on credit.

So this 'quality' comes at a higher price than it should at the same time that we are not seeing a 'quality' income.

[roguevalley]

8. fuck all of them. the only one who's quality is improved is theirs.

[exboyfil]

3. It seems like many things that are optional have gotten cheaper

but like the writer says you can't eat your IPhone.

Cell phones and the internet in general make an interesting point. We used to have readily accessible public pay phones. Those have gone away, and we are forced to carry a $20/mo. minimum phone to retain the security of the ability to quickly call someone. Yes its better to have your phone available for any emergency, but what about those who cannot afford the $20/mo.

The internet is also another example. Our school systems are beginning to assume the widely available access to quick internet to do assignments. That is another $50+ for families to bear every month. This assumption carries over in so many different areas eventually including access to "printed" news at home with the loss of newspapers.

Television is also another example. Without pay for cable would not the broadcast stations have increased the range of their broadcasts. For folks like me who like in a relatively rural area some stations are just not available like they would have been with a simple antenna. Also the presence of cable has changed the nature of the broadcast stations.

[mmonk]

4. He definitely has more power than we, the people do.

The 2014 Spending Bill

According to some accounts, the actual language of the measure was drawn up by a lobbyist for Citigroup. According to others, Jamie Dimon, the chairman of JPMorgan Chase, who is widely lauded as the king of Wall Street, personally called some legislators and asked them to vote for it. President Obama and the White House, scandalously enough, had already been squared away. Hours before the vote, Josh Earnest, Obama’s press secretary, said that the President had some reservations about the spending bill, but added that passing it would remove the threat of another government shutdown and provide “the kind of certainty that’s important to our economy.” It was left to Pelosi, Elizabeth Warren, and other congressional liberals to try to rally opposition. “It’s more billions of dollars in subsidies for Wall Street. It’s morally reprehensible,” Sherrod Brown, the Ohio Democrat, told reporters. “They’re saying government bailouts are back.”

http://www.newyorker.com/news/john-cassidy/spending-bill-vote-winner-jamie-dimon

[lonestarnot]

5. Fuck him. That dog doesn't even hunt.

[Rex]

6. Studies show

Dimon likes being part of the non-governing elite that write policy for Congress.

[Octafish]

7. Keep the iPhone, I'll take quality universal health care.

Like the kind billionaires enjoy.