Do we have criteria to estimate the income one deserves?

In the course of the equality and equity discussion, there are a few questions that make me feel uncomfortable.  One of these questions the role of government in economic and social life it has to govern. The gender and race inequality in income are commonplace and the demand for equality seems to be absolutely justified. 

To understand the income inequality problem, let's first take a look at real income inequality estimates and start with white (alone) males as published by the US Census Bureau. Figure 1 presents the age dependence of the Gini ratio in 2019. One can see that there is no equality in income distribution for the white males in any age group. The equality implies that the Gini ratio is equal to 0, but it is rather 0.5, i.e. income inequality is extremely high. The highest inequality (Gini=0.539) is observed in the youngest age group from 15 to 24 years of age. This group also has the lowerest mean income, as Figure 2 shows.  Interestingly, the lowermost income inequality (Gini =0.405) is observed in the next to the youngest group - from 25 to 29 years of age. Then the income inequality grows with age to the age of the peak mean income - 57.5 years of age in 2019. The level and the age evolution of income inequality in the white-alone-male population does not ignite any visible discussion. It seems to be a fair one, i.e. the income distribution is considered as proportional to some widely accepted criteria (which I do not know except the one used in our income distribution model). In our previous post, we discussed the secular impoverishment in the youngest age group but it was not connected to the unfairness of income distribution as such. Therefore, the observed income inequality is not considered unfair when we talk about white males. 

For the white females in Figure 3, the overall evolution of the Gini ratio is very similar, except it grows much faster in the mid-ages between 30 and 50. This reflects the fact that the white females have larger income inequality in the age interval when the mean income grows fast. Black males and females demonstrate similar Gini ratios with some small deviations. Therefore, within each of these four groups, we observe similar income inequality levels and evolution with age. It is highly likely that the same economic forces drive the distribution of income and these forces do not raise any questions about their unfairness. At least at the level of the unfairness of income differences observed between the groups - a major topic of discussion in the USA. 

I wonder that the government servants have to be merciless robots to resolve the conflict between different gender/race (and age) groups. On one hand, any mechanical leveling of income will demolish the fair criteria of the current distribution of income in any of the groups. Essentially, the relatively fair income distribution mechanism has to be replaced with something artificial. One needs to defend such a new set of mechanisms to be accepted by all participants. On the other hand, income disparity between genders and races is obvious, has a clear historical background, and definitely needs urgent action. The real fight is ahead. However, the income distribution in and between the groups is a result of similar fights in the past when the capabilities and power distribution were different. 

As a researcher, I would like to see the new criteria of the income distribution, i.e. who deserves what? 

 

Figure 1. Gini ratio (published by the US Census Bureau. Table pinc01_1_2_3) in 2019. Dependence on age for white alone males.

Figure 2. Mean income of white (alone) males and females in 2019 as a function of age

Figure 3. Gini ratio in 2019. Dependence on age for white males and females, black males and females.

Why liberals do not join the police 2

I wrote in the previous post: 

The current police discussion in the USA reminds me of the excellent book by J.Haidt "The righteous mind" discussing the inherent difference between liberal and conservative moral foundations. This difference is well experimentally described in the book but what strikes my (conservative) mind is how liberal minds can serve the army and police. The liberal mind does not like authority and loyalty - the basis of hierarchy, order, honor, and duty. The police reformation (defund) discussion does not have a significant point - liberals have to reform the police from the inside, i.e. join the police and replace the rude policemen. However, they want the dirty part of the justice work to be done by somebody else and thus denying their own conviction that nobody has to be forced to do such a job. I do understand why liberals do not have overwhelming representation in the police force, but I do not understand how they are going to resolve actual social and criminal conflicts.

Now I have something to add. With the police crisis unfolding and the real depopulation of precincts, it seems that the idea behind the police defunding is much deeper than just to make the police weaker. I guess that the liberal mind sees the future force enforcement of the political power as applied to the society as driven by rules not be the law. As we observe now, the rules are adaptive and out of the legal field. The rules are developed ad hoc by the "derin devlet"   and introduced through media (old Soviet joke - newspaper cannot tell lies). This procedure is now under successful testing in the "cancel culture" process. We will see actual force enforcement actions very soon. 

On secular relative impoverishment of young people

The problem with young people's income deficiency attracts more and more attention from media and politicians. Almost every day one can find a publication in non-negligible (e.g. FT) media resources comparing the current young people generation with historical records. We have explained in this blog and many academic papers that this problem cannot be resolved in the situation with growing real GDP per capita. 

Figure 1 describes the growth in average income in the USA for work experience between 4 and 10 years, i.e. for 19 to 25 years of age according to the CPS ASEC conducted by the Census Bureau every March for the BLS. (All data were retrieved from  IPUMS USA, University of Minnesota, www.ipums.org.) Because of the growing nominal and real GDP, the curves in Figure 1 are normalized to the peak value for a given year and we observed how fast people can reach the peak income on average.  In 1950, the mean income grew from 0.26 for 4 years of work experience to 0.70 for 10 years. The linear regression shows that extremely good fit (Rsq=0.991) and a linear growth rate of 0.073 relative units per year. In 2019, the rate was only 0.054 per year, and the change from 0.082 for 4 years of work experience to 0.40 for 10 years (Rsq.= 0.995). This observation indicates the progressive decay in the relative mean income for a given work experience. Figure 2 presents an example of such decay for 10 years of work experience from 1950 to 2019, i.e. during the last 70 years. The linear decay over decades implies that extremely strong natural economic forces drive this process.  These forces are fully related to real GDP per capita linear growth.  

We have developed an income distribution and evolution model describing also these effects of the relative decrease in the young people incomes - the mean income obviously means that all young people of a given age have lower relative incomes. We also well documented the process of full similarity of the personal income distribution in various countries when compared according to real GDP per capita. The linear fall in the mean income relative with time is explained by the effect of the increasing age of the peak income, as Figure 3 shows. The peak age has been increasing as a square root of the real GDP per capita since the beginning of the 20^th century, where we have income measurements. According to our model, the initial mean income growth is approximately a linear function of time.

Real income measurements reveal the process which underlies the relative impoverishment of the youngest cohorts. This is not an economic problem in sense of natural forces driving this effect. One cannot make younger people richer by economic measures. This is a social problem, however. This social problem will deepen and expand with time if to ignore the real economic forces behind it. These forces are fully related to real economic growth.  

Figure 1. Relative growth of the mean income depending on work experience between 4 and 10 years in 1950, 1980, and 2019.   

Figure 2. The fall of the relative mean income of people with 10 years of work experience between 1950 and 2019.

 

Figure 3. Relative growth of the mean income depending on work experience in 1950, 1980, and 2019.  

 

Will Green ruin Berlin?

I am waiting for the Greens victory and green Chancellor in Germany this fall. This would be a great social experiment when amateurs will run the biggest economy in Europe. The secret of German success was always in excellent engineering (industry)  and order (social agreement). Both cornerstones will be deposed and the decay of the German economy will be dramatic with negative social consequences. I hope that Germany will compete in this race with the US - recognized leader of self-destruction.  

МОК запретил вставать на колено во время Олимпийских Игр

Надеюсь чернокожие американцы откажутся от участия в этих ксенофобских и расистских соревнованиях, а остальные развитые страны их поддержат. Недопустимо ограничивать права угнетенных.

Why liberals do not join the police

The current police discussion in the USA reminds me of the excellent book by J.Haidt "The righteous mind" discussing the inherent difference between liberal and conservative moral foundations. This difference is well experimentally described in the book but what strikes my (conservative) mind is how liberal mids can serve the army and police. The liberal mind does not like authority and loyalty - the basis of hierarchy, order, honor, and duty. The police reformation (defund) discussion does not have a significant point - liberals have to reform the police from the inside, i.e. join the police and replace the rude policemen. However, they want the dirty part of the justice work to be done by somebody else and thus denying their own conviction that nobody has to be forced to do such a job. I do understand why liberals do not have overwhelming representation in the police force, but I do not understand how they are going to resolve actual social and criminal conflicts.

Why the whites pretend they do not understand the meaning of George Floyd's death

The (western European) whites and their descendants have many excuses for their cruel global expansion accompanied by extermination - genocide is a new term - of the native population (literally everywhere) and slavery. There are many considerations why they pretend that they do not understand their crimes and the feelings related to Floyd's death. 

1. they say that slavery was prohibited more than 150 years ago and none of the living humans participated in that. To understand the feelings the whites have to get through 300 years of slavery themselves and then judge what does it mean.

2. many white (and not only white) say that they are not guilty because joined later. Since the whites is a gang humiliating everyone who is not in the gang and protecting their own bandits one can say that the members joining the gang at the later stage are also guilty in all criminal actions, including the genocide of the native population. They knew whom they joined and were ready to use all preferences obtained from all the crimes. 

The mean income gap between white males and black females grows during the democratic presidencies

Two days ago, we compared the mean income evolution of the white and black population and demonstrated that the difference did not change much since the 1980s. Finer details might be more graphic and Figure 1 shows that the mean income of white males is now 1.72 times larger than the man income of black females. In 2019, the black males earned 1.21 times more than black females.  The relative values are important and demonstrate some convergence between various population groups but they are partially misleading since the absolute difference in mean income might be more painful. Moreover, the absolute difference may reveal important details which are ironed out in the relative representation.

In Figure 2, the difference between the real mean incomes of the white males and black females is shown. One can see that the difference was growing between the 1950s and 1070s and reached its peak in ($30,599) in 1973. It has been oscillating between $28,000 and $25,000 ever since. It is interesting that since the 1980s the difference grows during the democratic presidency and falls during the republican one. Having President Biden representing Democratic Party, one can guess that the absolute gap between white males and black women will be growing in the years to come. During the Trump period, the difference did not move much. 

Figure 3 shows that the difference between the white and black population mean income was stable between the late 1980s and the mid-2010s. During the Trump period, the mean income of white females surged, and the overall difference increased from $11,312 in 2016 to $13,244 in 2018. 

 Figure 1. The ratio of white male/ black female and black male/black female mean incomes

 

Figure 2. The difference between white male and black female mean income

Figure 3. The difference between the white and black  population mean income

The US lost face - Biden called Putin

On April 9, I wrote that the US is losing face in the Russia-Ukraine escalation. It really happened and Biden called Putin putting forward the Global stability issue. Essentially it means that the US blinked first and the agenda and terms of the proposed Summit (which is extremely important for global stability) will be formulated by Putin. Otherwise, the Summit will not happen. The lesson learned is that the aggressive counteraction on the brink of global extinction is not acceptable for the US establishment. This is a powerful tool to push own interests through. The next time, the readiness of Russia to defend existential interest will not be tested by the West.   

The third Japanese COVID-19 wave and Tokyo Olympiad

The growth in the daily number of new COVID-19 cases is observed in Japan. It started in the middle of March. The second wave was approximately 4 months long. Considering a higher activity and personal communication related to the 2020 Tokyo Olympiad one can make a thought experiment and project a possible repetition of the second wave extending into the mid-summer.  The Japanese population also does not find the idea of the Olympiad in 2021 too attractive.  I do not expect that the 2020 Summer Olympics will be declared open in 2021.  

A quick comparison of the mean income growth of the white and black population as well as males and females

New income data are available for 2019 and it is a good time to revise the estimates of our income evolution model. The model includes the difference (actually disparity) between genders and races observed since 1947, when personal incomes were measured the first time. Figure 1 shows the evolution of mean income (for people with reported income) since 1947 for males and females, black and white. One can see that the most recent development is the fast growth in females' mean income since 2014. Effectively, white females ($43,315) almost caught black males ($45,103) in 2019.  The effect of 2020 pandemic is of great interest. 

In Figure 2, the male/female mean income ratio for the white and black populations is compared. In the 1940s, the ratio was high but similar for black and white people. With the increasing females’ participation rate in the 1960s and 1970s, the ratio grew to its maximum for white people but decreased for the black population. Currently, white males get 1.5 times more than white females and the rate of convergence between two genders has been deceleration since 2010. For black people, the ratio was 1.2 in 2019. 

Finally, Figure 3 demonstrates the ratio of mean incomes of white and black people. In 1950, it was 1.85. With the increasing labor force participation rate for white females between 1960 and 1980, the disparity fell to 1.4. This was mainly the effect of lower mean incomes for white females, as one can judge by the curves in Figure 1.  In 1980, the ratio was 1.38 and in 2018 reached 1.35. Effectively, the mean income of the black population is 1.35 times lower than the mean income of the white population during the last 40 years. 

 Figure 1. Mean income for four race/gender combinations.

 

Figure 2. The ratio of male/female mean incomes for black and white people

 

Figure 3. The ratio of the mean income of the white and black population.

Поздравляю всех с Днем Космонавтики!

Это замечательный праздник для всего мира. Юрий Гагарин изменил нашу жизнь - началась новая эпоха.   

The US is losing face in the Russian escalation and open the road to Paris

The current escalation of the conflict on the Russian border looks like a game of nerves. Russia has declared an existential threat and is ready for any war including the global nuclear one. The US cannot decide to participate in the nuclear war against Russia because  Biden is a weak point. The decision on war made by himself will be considered as a hallucination of the old mind by the majority of the population and the decision made by real power behind his shoulders will be considered as a conspiracy of the deep state. Both decisions will likely be considered illegal and never implemented by militaries. This means to lose face and demonstrate weakness. Effectively, then there is no obstacle for Russia to conquest entire Europe without a single shot. The escalation works only when one is ready to cross Rubicon and lose everything. West is not ready to lose anything.     

Biden's dog Major is the best expression of aggression and fear in WH

 The dog is just an animal with normal Pavlov reflexes. Anybody having a dog knows very well that it often feels the host's mood.  The crowd around Biden (team) is likely full of aggressive thoughts, revenge, and fear. Biden's dog Major is not aggressive - it does what it must - defends the host.  No training will help - the atmosphere is driving the dog.

ЕС как реинкарнация нацисткой Германии

Продвижение ЕС своих "ценностей" полностью аналогично продвижению своего арийского превосходства нацисткой Германией. Почти все европейские страны поддержали Гитлера (ссылка на фильм о приветствии Гитлера в Австрии), чувствуя то же превосходство, что и немцы (кстати, королева Англии тоже зиговала). В ЕС снова выросло чувство собственного превосходства, теперь это ценности за пределами ВДПЧ. Но пахнет это нацизмом, и тут трудно скрыть острое чувство превосходства европейцев. Кончится это как всегда. Но в этот раз союзников из ЕС не надо отмазывать от трибунала.

EU as a new Nazi superstate

Almost all European countries (maybe just except Poland and UK) participated in WWII on the side of Nazi Germany and shifted to the Allies' side as traitors (practical joke - Austria admiring Hitler in 1938 is a victim of Nazism). The general mood in these countries was based on the acceptance of the supremacy of European nations over the "less developed counties" or "Untermenschen". (In the UK,  many celebrities also saluting Hitler). The SS Division Charlemagne was French by the nation of origin and we have numerous examples of high exasperation in the war against the Allies (USSR, USA, UK, and partly Poland). The current wave of the supremacy of the EU uses "Values" instead of upright Supremacy, but this substitution looks childish - the EU stinks with supremacy. Interestingly, Poland is a part of the EU and still against its values, but the UK is finally on the EU values side.  Actual humanitarian values are well described in the Universal Declaration of Human Rights. Any change to this document has to be only by consensus and any country or union trying to change or block the UDHR has to be punished and was with Nazi Germany and its allies. Formally, the EU is a new Nazi superstate stating and forcing supremacy of its values not shared by the majority of states and population. The outcome of such a move is always the same - failure. This time the participants have to be punished according to their guilt.