Data to Virtue

"Wisdom is to know what to do next; virtue is doing it." -- David Starr Jordan, American Naturalist -- Observation collects data from which we build knowledge. Wisdom makes sense of that knowledge. However, it is not enough to merely develop wisdom, we must act on what we know. That is virtue--and the purpose of this blog--from data to virtue.

Friday, March 03, 2006

Supply Side Economics

In the figure below I have plotted how the lowest 20% (quintile) of incomes has changed as a fraction of the highest 20% of incomes (red line) and as a fraction of the congressional salary (dotted black line) over the last 25 years. (Click on the figure for a larger version.) THE TAKEAWAY:
Clearly the buying power of those within the lowest 20% of incomes has gone steadily down relative to those within the highest 20% of incomes, and relative to the rank and file congressional salary, over the last 25 years.

The fact that those at the bottom are making less relative to those at the top is consistent with my earlier post on the US Income that shows the adjusted income of the lowest 20% stayed almost perfectly unchanged while the income of the highest 20% went up by over 50%. Congress’ salary (alone) is about in the middle of the upper 20% of incomes, however they have not increased their own salaries as rapidly as that quintile has grown.

Those that believe in supply side economics (Reaganomics, trickle down economics, etc.) say it works by the rich reinvesting their money to create jobs for the poor. This post, as well as other posts, shows that the rich do indeed get richer, but it doesn’t trickle down to the poor. In fact, the gap between the rich and the poor has been widening by all measures. The adage, "The money gushes up and trickles down," couldn't be more true.

On a philosophical level, when someone tells me they care about the poor and the best way to help the poor is indirectly, by getting richer themselves, it's like me saying "I'm a vegetarian, a second order vegetarian, the cows eat the grass and I eat the cows." It might make me a smart aleck, but it doesn't make me a vegetarian. Similarly, a rich person telling me they are compassionate, and their way of helping the poor is to get richer themselves, doesn't make them compassionate. It confirms their greed. There is a reason why all the world’s major religions consider greed a vice, not a virtue. It justifies ignoring the poor and believing in myths like supply side economics being good for the poor.

There's a saying… "If the horse has better hay to eat, the birds will eat better too." The analogy being if the rich get richer, it's also good for the poor. The story at least correctly identifies what the poor get (manure) and clearly identifies whom the horses asses are.

While the situation is getting worse in the USA, even those in with incomes in the lowest 20% are better off than millions and millions around the world. Join the One campaign to make world poverty history…

Along the bottom, below the zero axis, shows the relative strength of a given political party (red = republican, blue = democrat). The first line is for the presidency, the second line shows the majority in the senate, and the third shows the majority in the house. A blue area (down) shows a democratic majority. A red area (up) shows a republican majority. Below the party strength lines are the periods of recessions and wars.

Tax Quintile data is from, starting in 1979. Congressional salary data are from


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