AEI Tuesday afternoon links 1. Charts of the Day I and II (above) display graphically the amazing “life course dynamics of affluence” that summarize the research of Thomas Hirschl and Mark Rank, based on their empirical investigation of individual lifetime income data over a 44-year period for individuals from ages 25 to 60 to see what percentage of the American population would experience different levels of affluence during their lifetimes. The results above are striking and remarkable and have been featured before on CD here, here and here, and totally worthy of a re-post here (I’ve never featured the top chart). As Washington University professor Mark Rank wrote in a 2015 New York Times article about his research with Thomas Hirschl, “Rather than being a place of static, income-based
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1. Charts of the Day I and II (above) display graphically the amazing “life course dynamics of affluence” that summarize the research of Thomas Hirschl and Mark Rank, based on their empirical investigation of individual lifetime income data over a 44-year period for individuals from ages 25 to 60 to see what percentage of the American population would experience different levels of affluence during their lifetimes. The results above are striking and remarkable and have been featured before on CD here, here and here, and totally worthy of a re-post here (I’ve never featured the top chart).
As Washington University professor Mark Rank wrote in a 2015 New York Times article about his research with Thomas Hirschl, “Rather than being a place of static, income-based social tiers, America is a place where a large majority of people will experience either wealth or poverty — or both — during their lifetimes.” The charts above are based on the data in Table 2 of the research paper and shows the following remarkable findings of significant income mobility in America, a reality that politicians like AOC and Bernie Sanders don’t seem to appreciate or understand:
Nearly 70% of American adults will be in the top 20% of the income distribution for at least one year between the ages of 25 and 60, about half of Americans will be in the top 20% for four or more years, and 31.4% will be in that group for ten or more years (see top chart).
More than half of American adults (53.1%) will be in the top 10% of the income distribution for one or more years. But staying in the top 10% is much less likely, and only 40% of Americans remain in the top 10% for two or more years between the ages of 25 and 60, about one in three (34.5%) for three or more years, 29.7% for four or more years, and only about one in 4 (26%) for five or more years, only one in seven (14.2%%) stay in the top 10% for ten years or more (see bottom chart).
Doesn’t the evidence uncovered by Hirschl and Rank of significant income mobility between the ages of 25 and 60 (including the finding that nearly 70% of Americans make it into the top 20% for at least one year and nearly 62% for at least two years) pretty much destroy the narrative of income inequality being the “defining challenge of our time,” as we used to hear so frequently from President Obama? As Alan Reynolds commented on Twitter, “Annual income ‘inequality’ is just a brief snapshot, while lifetime income is a motion picture.”
Update: As Mary Anastasia O’Grady, Wall Street Journal’s Americas columnist and editorial board member said on Twitter: “Americans move around income groups over their life times. Educate yourself AOC.”
2. Backfire Economics. Maine lobster orders tank as Chinese turn to tariff-free Canada — “What had been one of the busiest times of the year is a reminder of the devastating impact of the U.S.-China trade war.” More winning…..
3. Every US State, Ranked by How Miserable Its Winters Are: Minnesota is No. 1 followed by Michigan, Alaska, North Dakota and Maine.
4. Chart of the Day III (above) shows a ranking of the harm caused by various legal (alcohol) and illegal drugs based on the 2010 research article “Drug harms in the UK: a multicriteria decision analysis.” The Economist featured it in 2010 in its “Graphic Detail” series with the title “Scoring drugs: A new study suggests alcohol is more harmful than heroin or crack.”
5. Chart of the Day IV (shows) the number of US jobs in iron and steel mills from January 1990 to December 2018, and was inspired by the Wall Street Journal editorial yesterday “Steel Tariff Profiteers: American steelmakers post record earnings—while others pay the bill,” here’s a slice:
Yet Mr. Trump’s promise to bring back steel jobs for the workingman simply hasn’t happened. In November there were 83,400 people employed by American iron and steel mills, according to data from the Labor Department. That’s down 100 from last February, the month before Mr. Trump’s tariff announcement. In 2008, the last time steel companies were busting financial records, the employment figure was touching 100,000. It isn’t a failure that steelmakers have made productivity gains, even if Mr. Trump gives a campaign speech in Pittsburgh and tries to present it that way.
Meanwhile, Mr. Trump’s protectionism has hammered businesses that depend on steel. Ford said last month that tariffs cost the car maker $750 million last year, along with $1.1 billion in higher spending on steel and aluminum. As a result, the profit-sharing checks going to Ford’s hourly workers were reduced by somewhere around $750 to $1,850 each.
Caterpillar’s costs tied to tariffs were $100 million, and the company says they will double in 2019. Whirlpool, a supposed beneficiary of Mr. Trump’s protectionism, expects its bill next year for tariffs and pricier raw materials will hit $300 million.
To calculate the total tariff damage, multiply this effect across every steel buyer nationwide, public and private: metal fabricators, nail manufacturers, pipeline builders, keg makers, and so forth. Then add in the harm that retaliatory tariffs from U.S. trading partners have done to America’s soybean farmers, cranberry growers, bourbon distillers, pork producers, lobster trappers, and so many more. Then add the harm to investment from political uncertainty.
Tariffs offer the classic political problem of concentrated benefits and diffuse losses. Steel executives get to strut with their record profits, earned under Uncle Sam’s protection. Mr. Trump gets to proclaim himself a blue-collar savior, despite flat steel employment (see chart). Everyone else picks up the tab.
6. Graphic of the Day I (above).
7. Graphic of the Day II (above).
8. Redundant Words to Delete From Your Writing via Charles Murray who said “Writers, I don’t care how meticulous you are, some of these still litter your writing (or do mine, anyway).” Here’s a link to the article and here are some examples of redundant words: all-time record, blend together, depreciated in value, free gift, knots per hour, passing fad and PIN number.