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How can it be? (Walter E. Williams)
townhall.com ^ | January 14, 2004 | Walter E. Williams

Posted on 01/15/2004 12:57:59 PM PST by NutCrackerBoy

It might have been Ross Perot who first used the expression that America is turning into a nation of "hamburger flippers," in reference to the decline in good paying manufacturing jobs replaced by low-pay service sector jobs.

Here's my question: If millions of high-paying jobs are leaving the country only to be replaced by millions of low-paying jobs, what prediction would you make about the trend in our standard of living? It would have to be in steep decline, but the facts don't square with that. Per capita GDP, the population divided into the value of goods and services produced, is one of the methods used to gauge the standard of living. The historical trend, including today, is a rising American standard of living. In fact, our per capita GDP in 1980 was $21,500 and, as of 2002, it was $36,000 -- a 59 percent increase. So how can it be that we're becoming a nation of low-pay hamburger flippers?

How about this pronouncement: The rich are getting richer, and the poor are getting poorer? The Census Bureau just came out with a report saying that 35 million Americans are living in poverty. Robert Rector and Kirk A. Johnson addressed this figure in their recent publication "Understanding Poverty in America," produced by the Washington-based Heritage Foundation.

From various government reports they find that: 46 percent of poor households actually own their homes; 76 percent have air conditioning; the typical poor American has more living space than the average non-poor individual living in Paris, London, Vienna, Athens and other cities in Europe; nearly 75 percent of poor households own one car, and 30 percent own two or more cars; 97 percent have at least one color television; 62 percent have cable or satellite reception; and 25 percent have cell phones.

While "poor" Americans don't live in opulence, they are surely not poor either by international or historical standards in our own country. I'm betting if God condemned an unborn spirit to a lifetime of poverty but He left him free to choose the country in which to be poor, he'd choose United States.

How many times have we heard that the rich are getting richer, and the poor are getting poorer? Contrary to that nonsense, the fact of the matter is that some of the rich are getting poorer, and many of the poorer are getting richer.

According to the 1995 Annual Report of the Federal Reserve Bank of Dallas, only 5 percent of those in the bottom 20 percent category of income earners in 1975 were still there in 1991. What happened to them? A majority made it to the top 60 percent of the income distribution -- middle class or better -- over that 16-year span. Almost 29 percent of them rose to the top 20 percent.

The evidence suggests that low income is largely a transitory experience for those willing to work. There's no mystery to it: As a function of age, people get wiser and gain more experience. That means it's not very intelligent to think one can make meaningful statements about poverty simply by measuring income at a particular point in time. By the way, people are also mobile downward, as suggested by the joke that the easiest way to become a Texas millionaire is to start out as a Texas billionaire.

Here's Williams' roadmap out of poverty: Complete high school; get a job, any kind of a job; get married before having children; and be a law-abiding citizen. Among both black and white Americans so described, the poverty rate is in the single digits.


TOPICS: Business/Economy; Constitution/Conservatism; Crime/Corruption; Culture/Society; Editorial; Foreign Affairs; Government; Philosophy; Political Humor/Cartoons; Politics/Elections
KEYWORDS: economy; poor; poverty; rich; walterewilliams; walterwilliams
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Here's Williams' roadmap out of poverty: Complete high school; get a job, any kind of a job; get married before having children; and be a law-abiding citizen. Among both black and white Americans so described, the poverty rate is in the single digits. -Walter E. Williams

Single digits! Yet, there are so many who subscribe to the philosophy that the system causes poverty.

1 posted on 01/15/2004 12:58:00 PM PST by NutCrackerBoy
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To: NutCrackerBoy
Very good post ... Bump ...
2 posted on 01/15/2004 1:02:36 PM PST by Hodar (With Rights, comes Responsibilities. Don't assume one, without assuming the other.)
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To: NutCrackerBoy
I'm betting if God condemned an unborn spirit to a lifetime of poverty but He left him free to choose the country in which to be poor, he'd choose United States.

Yet another priceless quote. I'll be consigning this one to memory.

3 posted on 01/15/2004 1:04:15 PM PST by Agnes Heep
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To: NutCrackerBoy
Walter Williams is a breath of fresh air on FR. The populist rant that sometimes passes for economic analysis around here is just frightening.
4 posted on 01/15/2004 1:09:49 PM PST by kevao
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To: kevao
The populist rant that sometimes passes for economic analysis around here is just frightening.

Not only that; it's positively sickening.

5 posted on 01/15/2004 1:15:07 PM PST by Agnes Heep
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To: NutCrackerBoy
Trade deficit, smeficit. Wouldn't it be a great idea if we made nothing because somewhere it can be made cheaper. We could print a lot of money [it's just paper] and pay for everything we want. We could just consume forever. We would not have to work. Just keep that trade deficit rolling. Double it every year. Utopia.
6 posted on 01/15/2004 1:15:09 PM PST by ex-snook (Where is the patriotism in the war on American jobs?)
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To: NutCrackerBoy
Sheeeesh, Walter. Did you forget EVERYTHING you ever learned about economics?
Get a clue: we're being propped up by an humongously gigantic bubble of DEBT!
7 posted on 01/15/2004 1:15:32 PM PST by Willie Green (Go Pat Go!!!)
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To: NutCrackerBoy
Walter Williams is one of my favorites. Clear, straightforward, no nonsense.
8 posted on 01/15/2004 1:16:35 PM PST by iceskater (....and when h*ll freezes over, I'll skate there, too.)
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To: Agnes Heep
Yet another priceless quote.

Yes, Walter E. is full of it...

....WISDOM, that is.

(Bumped for Future Reference.)
9 posted on 01/15/2004 1:19:17 PM PST by gooleyman
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To: gooleyman
Yes, Walter E. is full of it...
....WISDOM, that is.

Penny wise and pound foolish, if you ask me.
Walter is just another shill for those who are mortgaging our future national security and sovereignty by increasing our National Debt.

"I am one of those who do not believe that a national debt is a national blessing, but rather a curse to a republic; inasmuch as it is calculated to raise around the administration a moneyed aristocracy dangerous to the liberties of the country."

-- President Andrew Jackson - (1824)


10 posted on 01/15/2004 1:27:40 PM PST by Willie Green (Go Pat Go!!!)
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To: NutCrackerBoy
I am a big Walter Williams fan. The problem with the statistics that are quoted today is the reference to "own."
How many people do you know that do not have a mortgage on their home and are not making either loan or lease payments on their vehicles. I think the reference "own" is a misnomer. The banks actually "own" the homes, vehicles and chances are every major appliance in the home. I would venture to say that those who are cash flush and debt free are a miniscule few. There may be full employment but the male and female in families have to work today just to be able to make those payments. More people are working making less money. How many people have a sizable savings account, investment portfolio and are mortgage free. Now that would be a better barometer than how many "own" their homes.
11 posted on 01/15/2004 1:36:07 PM PST by kellynla ("C" 1/5 1st Mar. Div. U.S.M.C. Viet Nam 69&70 Semper Fi!)
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To: NutCrackerBoy
My sister-in-law and her husband are poor, no doubt about it. They have sattelite TV, several DVD players, VCRs, gaming systems, a personal computer and less than 10 years left on their current mortgage. The drink soda pop, smoke cigarettes and eat potato chips. They often bemoan the fact that they have so little money; they are also Democrats. They often can't pay their bills and have to run to my mother-in-law to help them out. Did I mention my sister-in-law is 48 years old?

Then there are several aquaintances of mine who get WIC for their children (each has several). They also have lots of goodies like personal computers, cell phones, DVD players, etc. They don't use them to get training so they can find a better job; they're just toys to them. The government considers them poor; I consider them irresponsible.

Indeed, any poor person would be priviledged to live in the USA.
12 posted on 01/15/2004 1:37:07 PM PST by FourPeas
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To: kellynla
There may be full employment but the male and female in families have to work today just to be able to make those payments. More people are working making less money.

This is actually a common misconception. I don't have the reference handy, but I recently read/heard that in order for us to live with the same standard of living as people did in the late 1940's, most families would only have to work 8 months each year. This statistic was quoted for the "average" family, not the super rich.

As a family that lives on a single income, I know many people to "must" have two incomes to live. Some truly do but the vast majority don't. They'd have to give up some of the nicities of life, but they could easily and comfortably live on one income. I've seen stats on that somewhere, too, but don't have them handy.

We've been convinced by years of Democrat propaganda that most families NEED two incomes to survive. It's simply not the case.

13 posted on 01/15/2004 1:42:07 PM PST by FourPeas
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To: FourPeas
Oh I appreciate what you are saying. I have heard of families who live in the US that make less than 20K a year. And they are not on government assistance. God bless them. I just don't know any of them. LOL
14 posted on 01/15/2004 1:46:10 PM PST by kellynla ("C" 1/5 1st Mar. Div. U.S.M.C. Viet Nam 69&70 Semper Fi!)
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To: NutCrackerBoy
I like what William's says in general, but there's a statistical flaw in his logic in this theme:

1) Assume 1 man making $1,000,000 and 4 men making $500,000 in total. They would, on average, have an income per capita of $300,000 ($1,500,000 / 5).

2) Assume that the man making $1,000,000 suddenly makes $2,100,000. The new per capita income figure is $500,000 ($2,500,000 / 5).

3) Wow! But did everyone get a raise, from $300,000 to $500,000? No, only one person got a raise. That was the high income guy.

4) The correct way to determine this kind of issue is to take the mode (the most likely value) or the median (the middle value): not the median (average).

The correct approach would show a zero percent growth, as $100,000 would be the income in both cases.

So, Williams here has introduced some happy talk. There most likely has been a greater disparity in income over the last 5 years. This has been well documented by liberals but not addressed by Bush. Williams needs to address this before he makes his conclusions, per capita.

So, what we need are better figures before we can accept Williams pronouncements here. Otherwise, we just have the "more hamburger flippers" story.

Hoppy
15 posted on 01/15/2004 1:46:18 PM PST by Hop A Long Cassidy
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To: NutCrackerBoy
In fact, our per capita GDP in 1980 was $21,500 and, as of 2002, it was $36,000 -- a 59 percent increase.

I'm rooting for Walt but is inflation factored?

16 posted on 01/15/2004 1:49:55 PM PST by Tribune7 (Vote Toomey April 27)
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To: NutCrackerBoy
1980 was $21,500 and, as of 2002, it was $36,000 -- a 59 percent increase

There is a simple math calculation of future value that shows the problem differently than the author suggests.

If I had 21500 dollars in 1980, what would be the same purchasing power in 2002, 22 years later IF inflation were at the 4 percent level. (Which is a fair estimate - Reagan, Bush, Clinton, Bush all have had fairly controlled inflation.)

21500 would need to be 50,550 in 2002 to have the same purchasing power 22 years later. Therefore, the per capita GDP has not kept pace with inflation.

Because of the poor math at the beginning of his article, the remainder of the article is moot.

We are foolish if we do not recognize that for security reasons we should have war-time portions of all industries here in this country.

17 posted on 01/15/2004 2:23:26 PM PST by xzins (Retired Army and Proud of it!)
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To: NutCrackerBoy
A Walter Williams bump.
18 posted on 01/15/2004 2:29:57 PM PST by jimt
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To: xzins
I would expect he indexed it to inflation. He's not an idiot.
19 posted on 01/15/2004 2:35:04 PM PST by The Old Hoosier (Right makes might.)
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To: The Old Hoosier
I am telling you that I just did the math.

He is impressed that it's risen, but it hasn't risen at the pace of inflation. The math don't lie.

It should be $50,550 to have kept pace with inflation of 4%. If 3% (which is clearly low) it should have risen to 40,600. Either way he's not kept pace with inflation with his rise to 36000.
20 posted on 01/15/2004 2:39:15 PM PST by xzins (Retired Army and Proud of it!)
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