When Is the 99% Really the 5%?

 A reader comment from the website of a certain well-read newspaper:

However you may feel about the redistributionist sentiment expressed by Tom H., you have to think that his framing skills would be admired by Messrs. Tversky, Kahneman, and Thaler.

If you’re looking for a somewhat headier argument about redistribution, you could try here.

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  1. Josh says:

    I think Tom H is missing the point. I’m not sure the OWS protests are about redistribution as much as they’re about empowering the people to take back their democracy from the wealthy and corporations that seem to dictate it’s direction…..usually at the cost of or on the backs of the 99%.

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    • Tim says:

      I’m not sure either. That’s the problem. I really have no idea what they’re protesting.

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      • Kenny says:

        Why do you insist on yelling at people with an opinion different from your own. You’ve posted an OPINION, not fact. These guys aren’t demanding a wage with no work involved, they just happen to not be working at the moment. I take offense to anyone who says they OWS protesters are lazy buffoons who just want handouts. I support OWS and I work my tail off every day, I run a fledgling small business, have trouble finding work b/c I live in an area of the country that has very few economic resources besides coal. But I try. I have degrees, several in fact, but the only corporations in my area are Lowe’s, Wal-Mart and JC Penney, all of which prefer you stock shelves and sell cheap goods.

        Get off that soap box and start looking at the world through better spectacles. Those rose-tinted ones don’t frame your face quite right.

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  2. Marla Louise says:

    The problem with Tom’s question is that it is based on two false assumptions and perhaps even a false and insulting moral value.

    The first false assumption is the presumption is that members of the occupy movement are not aware of the poverty of the world. I think they very much are, but as long as the 99% have no say in our government, we are powerless to help the less fortunate.

    The second false assumption is that the purpose of the movement is wealth redistribution. While I am sure some in the movement look for this redistribution, many do not nor is it the driving ethic of the movement. Instead, the Occupy movement is looking for a level economic playing field (or at least a bit more level) and a government that is responsive to the 99%, not just the 1%.

    Finally, there is the possible false and even insulting moral value that is implied in the question. The moral value that Tom implied is that every individual is only motivated by financial self interest. Therefore if one knew their financial self interest was in the negative, they would not take the action.

    And while this moral value is quite prevalent with some Americans, including many in the 1%, I would suggest that many in the Occupy movement reject that narrow money only self interest. I certainly do.

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    • Marla Louise says:

      (I wish we could edit these post after they are written, found too many English errors after the fact in my previous post. To my defense I’m still on my first cup of coffee.)

      I would like to point out another false assumption in Tom’s initial post that I see argued way too often. It’s the assumption that wealth is a zero sum game. It’s the assumption that the only way to help those that are poor is to take from the rich. I reject that assumption as well. It’s easily provable that wealth is not a zero sum game, at least in an Adam Smith Free Market. That’s one reason I strongly support change and the Occupy movement. We need to return to a Free Market (as opposed to our current mercantile market and a complicit government that perpetuates the mercantile market) such that we can solve this problem.

      Marla

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      • EP says:

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      • pawnman says:

        Isn’t the “zero-sum” fallacy also being made by the OWS protesters? “These Wall St guys have taken all the money, and left none for us!”

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    • Jeff says:

      “but as long as the 99% have no say in our government, we are powerless to help the less fortunate.”

      Explain this please.

      “Instead, the Occupy movement is looking for a level economic playing field (or at least a bit more level) and a government that is responsive to the 99%, not just the 1%.”

      So why aren’t they occupying DC? Why aren’t they out rallying for campaign finance reform? I get that they’re all mad at the banks, but isn’t this just a classic case of “don’t hate the player, hate the game”?

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      • Marla Louise says:

        Jeff, with regard to your first question, the government has proved again and again that it is only responsive to money, and the 99% do not have the money necessary to buy our own government. As a result, the vote has become pretty much irrelevant since everyone on a ballot, Republican or Democrat are beholding not to the voter but instead to the money. Certainly, as voters we do have a choice of flavors. I tell everyone they should and must vote. But all we are selecting these days is which of two spoiled foods we should consume. I would rather have an unspoiled food, and I’m fighting for it.

        With respect to your second question, to quote the great and mighty Oz, “Ignore that man behind the curtain.” Should we protest the puppet or the puppet master?

        But I also note, there is an Occupy Washington. But up to now Occupy Wall Street has been the Occupy that tipped over the hornets nest. I would suggest this implies they do have the right target.

        Marla

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      • Jeff says:

        Actually, Occupy Wall St started first because they knew they wouldn’t be allowed to occupy Washington in the same way. That one didn’t form until after this one had started to gain steam. I think this implies they were picking the easier target (banks, not Obama)

        And you didn’t answer my first question at all. How does a lack of voice in government stop anyone from helping the less fortunate?

        And yes, government only responds to business, but they are both puppet and puppetmaster. Last time I checked, business didn’t write legislation. Oh, they affect it! But it’s up to Congress to actually enact it. I would suggest taking a long look at that first. Would I take advantage of whatever loopholes were given me? You bet I would. Remove the loopholes, and it would stop in an instant. That’s a campaign finance issue, not a Big Business issue.

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      • Corbin Dallas Multipass says:

        “Actually, Occupy Wall St started first because they knew they wouldn’t be allowed to occupy Washington in the same way. That one didn’t form until after this one had started to gain steam. I think this implies they were picking the easier target (banks, not Obama)”

        Two comments up you claim they’re not doing something, then when it’s pointed out they are doing that thing, you reframe it to fit your argument. And you just continue as if you weren’t rebuffed in any meaningful way. Please cite something that says that’s why they chose Wall St. first, the movement has been absurdly open to its operations so it shouldn’t be hard to find.

        “And you didn’t answer my first question at all. How does a lack of voice in government stop anyone from helping the less fortunate?” Nothing. We could all go volunteer with our personal funds saved up, fly to Africa, and start helping right now. But right now the government has a lot more power to affect massive change and aid to those less fortunate around the world would be more efficient than any single personal act.

        “Last time I checked, business didn’t write legislation” If you don’t realize that a lot of what gets into Bills directly is penned by Lobbyists and other representative groups of organizations you’re not paying attention. Here’s a few samples:

        http://jonathanturley.org/2011/08/05/smart-alec-the-organization-that-may-be-helping-corporations-write-legislation-for-your-state/
        http://www.gather.com/viewArticle.action?articleId=281474978807859
        http://www.summitdaily.com/article/20050325/NEWS/103250050
        http://tpmmuckraker.talkingpointsmemo.com/2009/11/lawmakers_statements_on_health-care_reform_were_gh.php (admittedly only statements, but if your PR is run by lobbyists…)

        Your last argument is like saying it’s not the fault of the person hiring the hitman, the problem is the hitman can receive payments.

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      • Paul M. says:

        1.) The first question is one of national interest in the promotion of global welfare. With a large, and inordinately wealthy, Top 1% having such a disinterest in the well being of the people in their backyard, how can we expect them to care about anyone else in a different hemisphere?

        2.) While self-interest and the profit motive are perfect motivators for personal success, greed is an evil that inspires people to change the game to make them even more successful. Once we have allowed people to influence the rules of the economy with the money they have made in this economy, we create two classes of people. Not Rich and Poor, but Rule Makers and Rule Followers. If I had the ability to “buy” Representatives and Senators with campaign contributions, wouldn’t I do it? Of course! The issue is not that there are “Rich” and “Poor” people, it is that there is an entire class of people who can change the game in their favor, at any time, with a signed check. And the other class has to live with the rules that are handed to them.

        Would you willingly give any meaningful amount of money to something that doesn’t make your net worth grow or provide you with meaningful benefit? Or, in economic terms, would you engage in an exchange that you either didn’t know you would be better off or knew you would be worse off? In private systems, heck no! I won’t give any of my time, money, or wealth to any firm or individual that won’t put me into a better position.

        But governments, purely public systems, and entities designed to benefit the “common good” don’t give anything back to their contributors directly. Since the wealthiest pay most of the taxes, they are the largest contributors. This typically means that the wealthiest people won’t get the benefits of the food stamps or EIC or CDC assistance, etc… that they pay for. So they won’t want to contribute these systems, due to an confusion in what the nature of the system is.

        So the rule makers can change what they pay for and what benefits a government, designed for the benefit of the people, will provide. And they are motivated to pay as little as possible and contribute as little as they can convince people to ask from them. See where the vast majority of people will be slightly discontent with that system?

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      • Shock Puppet says:

        American Legislative Exchange Council (ALEC)
        Ghostwriting the Law for Corporate America

        “The Koch Brothers, big tobacco, insurance companies, and the drug industry: all behind the shadowy corporate front group known as the American Legislative Exchange Council (ALEC). On the surface, ALEC is mostly comprised of thousands of state legislators, each paying a nominal fee to attend ALEC retreats and receive model legislation. In reality, corporations pay ALEC a king’s ransom to access legislators to distribute radical legislation that puts corporate interests over American workers and consumers.

        So, while the membership appears to be public sector, corporate money dominates ALEC. In fact, public sector membership dues account for only around one percent of ALEC’s annual revenues. ALEC claims to be nonpartisan, but its pro-corporate, anti-consumer mission is clear.”
        https://www.justice.org/cps/rde//justice/hs.xsl/15044.htm

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      • Brian says:

        “but as long as the 99% have no say in our government, we are powerless to help the less fortunate.”

        This just simply isn’t true at all.

        Thousands of people voluntarily give money to charities that are dedicated to helping the less fortunate. The government is involved, but not directly. Helping the less fortunate in this way does require the government, but really only as a regulator. And because giving in this way opens NPOs up to competition (I can choose to give money to Charity A or Charity B), by and large, if we use this model instead of social welfare programs, people will tend to give their money to the more efficient and effective NPOs. And these NPOs will probably be more efficient and effective than the governments efforts in the same arenas.

        In a country where the government does not provide social welfare, I see two supporting roles for it: regulation of NPOs as necessary, and education of the public about overhead costs, etc.

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      • pawnman says:

        Or maybe voting?

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    • Sam_L says:

      Marla,

      Your analysis is keen, but fails due to the fallacty of a frequent assumption: ” I think they very much are, but as long as the 99% have no say in our government, we are powerless to help the less fortunate”

      It is a fallacy to assume the government is the only vehicle by which the poor (particularly in other countries) can be helped. Indeed, there are many in the development community who have recently begun to question the effectiveness of foreign aid monies in actually improving the quality of life and economic outlook of the poor in under-developed countries.

      Even without government intervention, we can help those who are less fortunate – both domestically and internationally – through personal charity, involvement, and advocating for change. Unfortunately, conservatives continue to be far more active in providing genuine relief to the poor than do liberals; this disparity puts teeth in the conservative accusation that liberals are only liberal with other peoples’ money.

      Thus, the Tom H. criticism seems valid – the OWS folks are concerned about their level playing field but, based on statistical average, are likely doing nothing to level the field for the genuine 95%.

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  3. twobeef says:

    Over the past few decades, the trend has been to export manufacturing jobs out of the U.S. and overseas to poorer countries with lower wages and less protections. I would suggest that the redistribution that the commenter is talking about has already occurred.

    However, in normal circumstances, this might lead to a weaker dollar or lower domestic demand as the average wage in America drops, but the strength of the dollar and the rate of inflation is buoyed by the large amount of wealth still held by a percentage of people in this country. What’s going on is that the American middle class gets the worst of both worlds – they don’t share in the benefits of a wealthy America, but they also don’t gain the benefits of a poorer America. They get the prices and cost of living of the former and the wage growth of the latter.

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  4. DaveyNC says:

    Oops. Tom’s comment was too pointedly correct. Watch as Freakonomics commenters try to refute his beautifully succinct point with long-winded arguments.

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    • twobeef says:

      There’s something frightening to that line of reasoning. This commenter seems to be saying, “Tom’s comment fits better on a bumper sticker than the list of demands issued by various members of OWS. Therefore, it must be more true.”

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    • Anders Munch says:

      What Tom H. wrote is factually wrong. Even if you exclude the poorest 1%, those who remain are no more than in the top 30% of the world’s population (according to the WSJ calculator combined with the one on http://www.givingwhatwecan.org/resources/how-rich-you-are.php).

      The main reason for that is the highly disparate income distribution in the US. Which, if I’m not much mistaken, is exactly what the “99%” slogan is all about.

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  5. Meghan says:

    I am a long-term volunteer at a public health NGO in Haiti. I posted on this precise claim, and its misdirected underlying assumptions, here: https://www.facebook.com/#!/notes/meghan-elizabeth/the-99-arent-actually-poor-and-other-red-herrings/10150355137482900?notif_t=note_comment

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    • David Leppik says:

      Well said. I particularly like:

      “If you want to see what our country would look like without regulations or safety nets, take a look at how our corporations treat workers in countries without these things.”

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  6. Peter says:

    @Marla, while I appreciate and applaud what you have to say, I have my own 1% of disagreement with one of your comments. The people are not powerless to help the less fortunate simply because the government is not responsive. The only obstacle to making a difference in the life of someone less fortunate than ourselves that most individuals in a free society face (even an economically divisive one like ours) is ourselves.

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    • Jeff says:

      But it’s easier to blame the rich/government/whomever than to take any personal responsibility.

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      • Marla Louise says:

        @jeff, I would suggest the very reason for the Occupy movement is people are waking up and deciding to take responsibility for our country. I for one am very proud of the movement and the people that are willing to risk a lot for a better country.

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      • Mike B says:

        That’s like saying someone who loses at Roulette should have taken more “personal responsibility” to picking which numbers to bet on. People can’t choose to have above average intelligence, to have a well resourced support network, to come from an affluent family that can afford the best schools, have good health, etc. Despite what we like to think about free will and life in America, most of what happens to you is a product of your circumstances.

        If you look at how technology is progressing or even just the 80/20 rule it will be clear that a small minority of people can capture, completely legitimately, a large proportion of the surplus they generate. Some say its perfectly fine to eat what you kill, but in a world where some are armed with pointed sticks and others machine guns, perhaps those armed with the gun shouldn’t begrudge those with sticks a free meal now and then.

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      • James says:

        “People can’t choose to have above average intelligence, to have a well resourced support network, to come from an affluent family that can afford the best schools, have good health, etc.”

        Yet some of us manage to do well without any of those things, except possibly intelligence, and I’d argue that even average intelligence is more than sufficient IF ONE CHOOSES TO EXERCISE IT.

        Likewise, if one chooses, one can learn as well in schools that aren’t the high-tuition “best”, while much of one’s health is subject to personal control.

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      • Asaf says:

        I see. So the new standard is “If you can’t get a top-notch education just by reading in an undirected fashion on your own, then that’s your fault. We provided the books”.

        Apathetic teachers.
        Unacademic parents.
        A society that places more stock in athletes and party-kids than academics and intellectuals.

        Clearly those things are mere impediments that Rugged Individualism can overcome! Forward, and the devil take the hindmost(actually, all but the 3 fastest)!

        The fact that a few individuals DID manage all of this doesn’t mean everyone should be expected to. This isn’t math, and you don’t win by showing a counter-example. It must not merely possible but plausible, which plausibility is determined by…. the average person. Tragic, I know.

        And no, if you’re arguing on a Freakanomics blog in a literate fashion, your personal experience does NOT get to determine the “average person”.

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      • pawnman says:

        Didn’t Levitt and Dubner point out that above-average intelligence doesn’t matter? Or was that Malcolm Gladwell? IN any case, once you are “smart enough” to succeed, additional intelligence does not correlate to additional success. Once you can achieve an average GMAT score, get a 3.0 GPA in your undergrad and graduate courses, and talk coherently in a job interview, you are as likely to succeed as someone with a 180 IQ.

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    • Marla Louise says:

      @Peter, in general, you are correct with some important caveats. I did simplify a complex argument just to make a point. But let’s look at one of the caveats…

      One of the purposes of government is to do things that we as individuals cannot do, or are very inefficient at doing as individuals. I would suggest bringing up the quality of life for all on this planet may just be one of those things that a government can do. Actually, even better might be a community of governments to tackle the problem. But if the government is not responsive to it’s population, but instead it is only responsive to those that consider economic self interest to be the primary driving morality, such actions will not be taken by the government. In other words, we do need to take the government back in order to do those things that government does best.

      Now I agree the individual can do a lot, even by joining with other individuals outside of government. That actually is where my charity dollar goes, specifically into small business loans. I very much like the organization Kiva and highly recommend it to everyone ( kiva.org).

      Marla

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      • stedebonnet says:

        “I would suggest bringing up the quality of life for all on this planet may just be one of those things that a government can do.”

        Markets solve the economic problem to make poor countries rich. Markets; however, require a system of private property rights. Most developing countries lack such a system (that is why they are undeveloped). The greatest violators of private property rights in the developing world are those nations’ governments. A limited government, which protects property rights, could help make the quality of life on the planet better. Outside of those types of governments, it is likely that people will be made worse off by more government. Ensuring property rights is the only thing that government does best. Everything else the market does more efficiently and effectively.

        Everyone acting in their own economic self-interest isn’t a bad thing. However, when government and politicians have enough power (ie through the bigger governments that you support) to dispense rents in the expectation of acquiring campaign contributions, political endorsements, and future employment, government becomes unresponsive. Politicians can sell policies at the expense of the public good. Rent-seeking is the problem, not profit-seeking. The problem isn’t the market or people trying to maximize profit; its government being able to chose who makes the profit. This is the cause of our problems. To see real change in America I would propose 4 measures:

        1. Greater use of referenda
        2. Supra-majority voting
        3. Campaign Finance reform (as in a direct limit so votes can’t be purchased)
        4. The costs and benefits of legislation be borne by all individuals in a society

        These might be largely impossible at this point, but I guarantee they would do more to protect the 99% from the 1% than a bigger a government. Government power is the problem, not the solution to our situation.

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      • James says:

        “I would suggest bringing up the quality of life for all on this planet may just be one of those things that a government can do.”

        Fine idea, but how do you get representative governments to do that, when most people are intent on worsening the quality of life for everyone else (and for themselves in the long term) for their immediate convenience?

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  7. Joshua Northey says:

    Well it depends on who you see as part of your moral/legal/societal community.

    There are a lot of really obvious reasons why US citizens would see the US as its community in this sense.

    While is a strong vein of redistribution, there are also a lot of people who would be just as happy with simple effective regulation done by technocrats not enslaved to the industries they regulate.

    You have the banking sector writing the rules the banking sector operates under, and then when it helps destroy huge amounts of wealth through encouraging mal-investment, it says “Oops my bad! Now can I have some money, because I cannot pay my bills?”.

    Markets are incredibly powerful tools for goods distribution/information transmission/et cetera, they are also incredibly simple and have a lot of gaping holes. Government’s main role in the economy should be to compensate for/paper over those holes.

    Yet our political system is set up in such a way that government’s main role in the economy is pandering to the donors to the parties’ political campaign.

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  8. Eric M. Jones. says:

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      • Sam_L says:

        Eric,

        I suspect it was the smarmy manner in which you implied that a complex situation should be resolved simply because you said so that elicited an outpouring of negative thumbs. But maybe I am the only one who criticized the terrible graphics and naive reductionism in this manner.

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