Continuing on from my last post this Henderson issue continues. Today Brad DeLong uses the following image to show how rich Henderson is

Now the guesstimate from a previous post was that Henderson earns $455,000. Which makes him the “the 107,565 richest person in the world! ”  according to this site. But looking at the site there are some problems. Lets suppose that instead of being in the top 0.001% of the world Henderson is the world, i.e. he earns world gdp which for 2009 according to the World Bank was $72302635000000.This gets the following result:

Which you might notice is similar to Henderson’s position. As is the result for someone earning $200,001.However, the person who earns $200,000 a year is merely “786,570 richest person in the world!” What a difference a dollar makes! So who made the site? Answer is

Poke are a creative company based in London. Our aim is to inspire people through interactive media. We built this site because we wanted to challenge people’s perception of their personal wealth. And while we’re at it hopefully raise some money for a good cause.

Why have they made the site?

We are obsessed with wealth. But we gauge how rich we are by looking upwards at those who have more than us. This makes us feel poor.We wanted to do something which would help people understand, in real terms, where they stand globally. And make us realise that in fact most of us (who are able to view this web page) are in the privileged minority. We want people to feel rich. And give some of their extra money to a worthwhile charity.

Long and short I wouldn’t trust this site as far as i can throw it. And as it is an internet site, I can’t throw it at all. So a ‘radical’ creative company in London spouting shite in, you guessed it, Shoreditch:  View Map

Only odd thing about the website is that its not called Bloody Nathan Barleys.



A little blogosphere controversy has erupted in America over University of Chicago law professor Todd Henderson claiming that he is the working middle class. He objected to having to pay more taxes on the basis that he ‘like most americans’ is just getting by. The discussion on Henderson has raised some interesting issues and resulted in some interesting posts which I will share with you. First from Brad DeLong, where I first came across the controversy (Professor Xxxx Xxxxxxxxx = Todd Henderson, DeLong seems to have Xed out his name this morning):

the Xxxxxxxxx annual family budget is this:

$455,000 a year of income, of which:

  • $60,000 in student loan payments
  • $40,000 is employer contributions to 401(k) and similar retirement savings vehicles
  • $15,000 is employer contributions to health insurance
  • $60,000 is untaxed employee contributions to tax-favored retirement savings vehicles
  • $25,000 building equity in their house
  • $80,000 in state and federal income taxes
  • $15,000 in property taxes
  • $10,000 for automobiles
  • $55,000 in housing costs for a $1M house (three times the average price in the Hyde Park neighborhood
  • $60,000 in private school costs for three children
  • $35,000 in other living expenses

And of this budget, Professor Xxxx Xxxxxxxxx (or whoever) writes:

Like most working Americans, insurance, doctors’ bills, utilities, two cars, daycare, groceries, gasoline, cell phones, and cable TV (no movie channels) round out our monthly expenses. We also have someone who cuts our grass, cleans our house, and watches our new baby…. [W]e have less than a few hundred dollars per month of discretionary income. We occasionally eat out but with a baby sitter, these nights take a toll on our budget. Life in America is wonderful, but expensive. If our taxes rise significantly… the (legal) immigrant from Mexico who owns the lawn service we employ will suffer, as will the (legal) immigrant from Poland who cleans our house a few times a month. We can cancel our cell phones and some cable channels, as well as take our daughter from her art class at the community art center…

Now it is time for a reality check on this “most working Americans.” The median household income in the United States today is $50,000. Half of all households make more than this. Half of all households make less. The big expenses in the Xxxxxxxxx family budget–their $60,000 a year in contributions to tax-favored retirement savings vehicles, their $25,000 a year savings building home equity, their $55,000 for housing, their $60,000 in private school costs, even their $10,000 a year for new cars–are simply out of reach for the overwhelming majority of Americans. Half of all households make less than $50,000 a year–the Xxxxxxxxxs make nine times that. 90% of households make less than $100,000 a year–the Xxxxxxxxx’s make 4.5 times that. The Xxxxxxxxx’s are solidly in the top 1% of American households, in the select 1% group that receives more than $350,000 a year.

By any standard, they are really rich.

But they don’t feel rich. They have a cash flow problem. When the bills are paid at the end of the month, the money is gone–and they feel that they have to scrimp.

I know how they feel. My household income is of the same order of magnitude than theirs (although somewhat less) and we too had to juggle assets quickly when it developed that an error in Reed College’s housing system had caused them not to charge us $5,000 that we owe. We too have chosen to put our income in places (tax-favored retirement savings vehicles, building equity, housing, private college costs) where we think it is better used than $200 restaurant meals, $1000 a night resort hotel rooms, or $75,000 automobiles. But I don’t think that I am not rich.

Professor Xxxx Xxxxxxxxx’s problem is that he thinks that he ought to be able to pay off student loans, contribute to retirement savings vehicles, build equity, drive new cars, live in a big expensive house, send his children to private school, and still have plenty of cash at the end of the month for the $200 restaurant meals, the $1000 a night resort hotel rooms, and the $75,000 automobiles. And even half a million dollars a year cannot be you all of that.

But if he values the high-end consumption so much, why doesn’t he rearrange his budget? Why not stop the retirement savings contributions, why not rent rather than buy, why not send the kids to public school? Then the disposable cash at the end of the month would flow like water. His problem is that some of these decisions would strike him as imprudent. And all of them would strike him as degradations–doctor-law professor couples ought to send their kids to private schools, and live in big houses, and contribute to their 401(k)s, and also still have lots of cash for splurges. That is the way things should be.

But why does he think that that is the way things should be?

And here is the dirty secret: Professor Xxxx Xxxxxxxxx thinks that that is the way things should be because he knows people for whom that is the way it is.

Cast yourself back to 1980. In 1980 a household at the bottom of the 1% rich households in America had an income equivalent in today’s dollars $190,000 a year. They know of 1000 people–900 of them poorer than they are in income brackets 90-99% and 100 people richer than they are in the top 1% income bracket. The 900 people poorer than them back in 1980 had incomes from $85,000-$190,000 a year. Those are, if you are sitting at the bottom of the top 1%, the middle class who are not as successful as you. You don’t look downward much. Instead, you look upward. Of the 100 above you, 90 in 1980 had incomes less than three times their incomes. And they would have known of 1 person of that 100 who was seven times as rich as they were.

Thus Professor Xxxx Xxxxxxxxx in 1980 would have known who the really rich were, and they would on average have had about four times his income–more, considerably more, but not a huge gulf. He would have known people who were truly rich, and he would have seen himself as one of them–or as almost one of them.

Now fast forward to today. Today a household at the bottom of the 1% rich households in America has an income of nearly $400,000 a year–the income of that slot in the labor market has more than doubled, while the incomes of those at the slot at the bottom of the 10% wealthy has grown by only 20% in two decades. The 900 people he knows in the 90%-99% slots have incomes that start at $110,000 a year. Compared to Xxxx Xxxxxxxxx’s $455,000, they are barely middle class–“How can they afford cell phones?” Xxxxxxxxx sometimes wonders.

But he wonders rarely. He doesn’t say: “Wow! My real income is more than twice the income of somebody in this slot a generation ago! Wow! A generation ago the income of my slot was only twice that of somebody at the bottom of the 10% wealthy, and now it is 3 1/2 times as much!” For he doesn’t look down at the 99% of American households who have less income than he does. And he looks up. And when he looks up today he sees as wide a gap yawning above him as the gap between Dives and Lazarus. Mr. Xxxxxxxxx doesn’t look down.

Instead, Mr. Xxxx Xxxxxxxxx looks up. Of the 100 people richer than he is, fully ten have more than four times his income. And he knows of one person with 20 times his income. He knows who the really rich are, and they have ten times his income: They have not $450,000 a year. They have $4.5 million a year. And, to him, they are in a different world.

And so he is sad. He and his wife deserve to be successful. And he knows people who are successful. But he is not one of them–widening income inequality over the past generation has excluded him from the rich who truly have money.

And this makes him sad. And angry. But, curiously enough, not angry at the senior law firm partners who extract surplus value from their associates and their clients, or angry at the financiers, but angry at… Barack Obama, who dares to suggest that the U.S. government’s funding gap should be closed partly by taxing him, and angry at the great hordes of the unwashed who will receive the Medicare, Medicaid, and Social Security payments that the government will make over the next several generations.

Do I wish that Professor Xxxxxxxxx had a little more self-knowledge? Yes. Is it pathetic that somebody with nine times the median household income thinks of himself as just another average Joe, just another “working American”? Yes. Do I find it embarrassing that somebody whose income is in the top 1% of American households thinks that he is not rich? Yes.

Do I hope to educate him so that he has a better grasp on reality and better understanding of America and of public policy? Yes.

This raises the question who is poor in America, who is poor elsewhere and why does public policy discussion focus so much on the rich and sol little on the poor.

John Scalzi notes what it is to be poor in America:

Being poor is knowing exactly how much everything costs.

Being poor is getting angry at your kids for asking for all the crap they see on TV.

Being poor is having to keep buying $800 cars because they’re what you can afford, and then having the cars break down on you, because there’s not an $800 car in America that’s worth a damn.

Being poor is hoping the toothache goes away.

Being poor is knowing your kid goes to friends’ houses but never has friends over to yours.

Being poor is going to the restroom before you get in the school lunch line so your friends will be ahead of you and won’t hear you say ‘I get free lunch’ when you get to the cashier.

Being poor is living next to the freeway.

Being poor is coming back to the car with your children in the back seat, clutching that box of Raisin Bran you just bought and trying to think of a way to make the kids understand that the box has to last.

Being poor is wondering if your well-off sibling is lying when he says he doesn’t mind when you ask for help.

Being poor is off-brand toys.

Being poor is a heater in only one room of the house.

Being poor is knowing you can’t leave $5 on the coffee table when your friends are around.

Being poor is hoping your kids don’t have a growth spurt.

Being poor is stealing meat from the store, frying it up before your mom gets home and then telling her she doesn’t have make dinner tonight because you’re not hungry anyway.

Being poor is Goodwill underwear.

Being poor is not enough space for everyone who lives with you.

Being poor is feeling the glued soles tear off your supermarket shoes when you run around the playground.

Being poor is your kid’s school being the one with the 15-year-old textbooks and no air conditioning.

Being poor is thinking $8 an hour is a really good deal.

Being poor is relying on people who don’t give a damn about you.

Being poor is an overnight shift under florescent lights.

Being poor is finding the letter your mom wrote to your dad, begging him for the child support.

Being poor is a bathtub you have to empty into the toilet.

Being poor is stopping the car to take a lamp from a stranger’s trash.

Being poor is making lunch for your kid when a cockroach skitters over the bread, and you looking over to see if your kid saw.

Being poor is believing a GED actually makes a goddamned difference.

Being poor is people angry at you just for walking around in the mall.

Being poor is not taking the job because you can’t find someone you trust to watch your kids.

Being poor is the police busting into the apartment right next to yours.

Being poor is not talking to that girl because she’ll probably just laugh at your clothes.

Being poor is hoping you’ll be invited for dinner.

Being poor is a sidewalk with lots of brown glass on it.

Being poor is people thinking they know something about you by the way you talk.

Being poor is needing that 35-cent raise.

Being poor is your kid’s teacher assuming you don’t have any books in your home.

Being poor is six dollars short on the utility bill and no way to close the gap.

Being poor is crying when you drop the mac and cheese on the floor.

Being poor is knowing you work as hard as anyone, anywhere.

Being poor is people surprised to discover you’re not actually stupid.

Being poor is people surprised to discover you’re not actually lazy.

Being poor is a six-hour wait in an emergency room with a sick child asleep on your lap.

Being poor is never buying anything someone else hasn’t bought first.

Being poor is picking the 10 cent ramen instead of the 12 cent ramen because that’s two extra packages for every dollar.

Being poor is having to live with choices you didn’t know you made when you were 14 years old.

Being poor is getting tired of people wanting you to be grateful.

Being poor is knowing you’re being judged.

Being poor is a box of crayons and a $1 coloring book from a community center Santa.

Being poor is checking the coin return slot of every soda machine you go by.

Being poor is deciding that it’s all right to base a relationship on shelter.

Being poor is knowing you really shouldn’t spend that buck on a Lotto ticket.

Being poor is hoping the register lady will spot you the dime.

Being poor is feeling helpless when your child makes the same mistakes you did, and won’t listen to you beg them against doing so.

Being poor is a cough that doesn’t go away.

Being poor is making sure you don’t spill on the couch, just in case you have to give it back before the lease is up.

Being poor is a $200 paycheck advance from a company that takes $250 when the paycheck comes in.

Being poor is four years of night classes for an Associates of Art degree.

Being poor is a lumpy futon bed.

Being poor is knowing where the shelter is.

Being poor is people who have never been poor wondering why you choose to be so.

Being poor is knowing how hard it is to stop being poor.

Being poor is seeing how few options you have.

Being poor is running in place.

Being poor is people wondering why you didn’t leave.

It was mainly to share that post by Scalzi that I decided to write this blog post, but I want to note two other blog posts.

Firstly, how the rich currently feel entitled to talk as though they are poor. Paul Krugman:

Let me recommend, once again, Brad DeLong’s superb discussion of how it is that people at the 99th percentile, despite making twice what their counterparts made in 1980, feel poorer now than they did then. On reflection, however (and discussion with Robin), it seems to me that there’s something Brad didn’t say that’s worth mentioning — the change in social norms.

Even in 1980, there were surely many people at or near the 99th percentile who felt sorry for themselves, at least some of the time. It happens to everyone, after all: I lead a very privileged life (yes, I’m well into the range that will pay higher taxes under the Obama plan), yet even now I find myself experiencing occasional flashes of green-eyed envy. (What? You’re driving me back to the airport in Sao Paulo, in all that traffic? Don’t I rate a helicopter?)

But 30 years ago people with high but not super-high incomes generally felt ashamed of themselves for griping — or at least, felt that they would be ridiculed if they gave voice to their gripes. Today, all restraints are off. The fuss over Messrs. Henderson and Stein is the exception that proves the rule: they wouldn’t be providing this spectacle if they didn’t normally swim in social circles where complaining that you only have 9 or 10 times median family income is considered totally acceptable.

Pretty soon, we’ll be having serious, completely un-self-conscious discussions in major magazines about the servant problem.

Second, why they don’t care about the poor, and why we don’t care about the poor but do care about the rich. Chris Dillow:

There are 1.4 billion people who live on less than $1.25 a day. Name one of them. The fact that you can’t might be even more significant than generally supposed, as this new paper shows (pdf). The authors got subjects to play a simple dictator game, in which people were asked to split $10 between themselves and a partner. They found that when the dictator and the partner were not allowed to communicate with each other, dictators handed over an average of $1.53. However, when subjects could communicate, things changed. When the dictator was asked to provide an explanation to his partner for his decision, the average donation fell to 60 cents. But when his decision was preceded by a request from his partner, he gave an average of $2.40. And when there was two-way communication, donations were above $2.50. Communication triggers increased altruism. This chimes in with a point made by Robert Cialdini in Influence. He tells the story of a woman trying to jump a queue to use a photocopier in a university library. The simple request to jump in elicited 60% compliance. Not bad. But the question ‘May I use the Xerox machine because I have to make some copies?’ got a 93% compliance rate, even though no extra meaningful information was given. People, says Cialdini, like to have reasons for what they do. Even basic communication generates such reasons – a request gives us a reason to donate, but the opportunity to explain gives us a means of justifying our selfishness. All of which brings me to where I started. The world’s poorest do not communicate with us, which causes us to give less to them than we otherwise would. By contrast, we are bombarded with messages from the well-off, which – on its own – tends to dispose us to be altruistic towards them. In this sense, inequality perpetuates itself.



Four completely unrelated things in reverse order of what you should read. ONE: Libertarianism

The road to Serfdom…

Oddly enough some modern right-wing libertarians, inheritors of the Hayekian tradition are holding out Feudalism as a positive and desirable society. In “Democracy: The God That Failed” by Hans-Hermann Hoppe, a libertarian and professor of economics in the University of Nevada, Las Vegas, the author ‘debunks’ such myths as the idea that the move from monarchism is parliamentary democracy was a progressive one. Little could Hayek have known that his disciples would be one day be arguing not only against the road to serfdom but also against the road from serfdom.

TWO: Ben Bernanke

Ben Bernanke, chair of the Fed,  doesn’t really seem to care all that much about the unemployed. From the Washington post:

“if the pace of recovery is moderate, as I expect, a significant amount of time will be required to restore the 8 1/2 million jobs that were lost during the past two years.”

THREE: JK Rowling

This has been doing the rounds on facebook and elsewhere but in case any read hasn’t seen it. This article by JK Rowling in The Times is brilliant. It’s on being a single mother under the Tories and why she won’t be voting Tory in the upcoming election.

FOUR:  Economic Geography

Paul Krugman delivered a talk for the Association of American Geographers this week which is up online here. It’s pretty interesting and includes some interesting comments on economics as a social science and responding to critiques of New Economic Geography.


I’m not sure if this says something negative about humanity, America, the American Right or polling as a methodology, but, as the Telegraphreports, 24% of American republicans think Obama “may be the anti-Christ”. The full details are over here. The poll seems to have been conducted in connection with the publication of some book, which might raise methodological questions. Nevertheless, one of the pollsters explains that when he saw the poll results:

he was “flabbergasted. I would’ve guessed the numbers would’ve been a lot smaller than that.” 

He added, “It means that very large numbers of people are misninformed not only about President Obama but many things in modern life.”

Its a funny world we live in.


About 30-40 mins after reading Andrew’s thought provoking piece on the Better Questions series in Seomra Sproi, I was watching Tuesday’sDaily Show. In it they make an amuzing point that the recent credit card reform act in the US does little more than make credit card companies and the state than enforces it little more ethical than the mob. As the former mob loan shark says “We might have broken your legs, maybe pushed back your nuckles. You might have fallen down the stairs, accidentally. But if you didn’t pay, we never took your house. We never took your house.” Anyway, it made me think of how so much of the left in recent years will talk about everything apart from ‘the economy’. Andrew’s post drew me back to a post by Chris Dillow over at Stumbling and Mumbling where he says “I blame the 80’s”. In Chris’s post he gives an anecdote about the Andrw Glyn, the late Oxford economist. Dr. Glyn, who despite dieing 2-3 months before I discovered his writings, is something of an inspiration to me. Or perhaps it would be better to say an aspiration.

Anyway here’s the anecdote

 I remembered an exchange at Oxford in the 80s between Andrew Glyn and a whiney London woman. Andrew had just given a talk outlining a Marxist view of Thatcherism. Whiney woman: “Yah, Andrew. I agree with your analysis, but don’t you think we have to build a radical feminist critique?” Andrew: “No.”


First, Part 3 from Ian Dury


Second, Part 4 from Maxim Pinkovskiy, Xavier Sala-i-Martin

We use a parametric method to estimate the income distribution for 191 countries between 1970 and 2006. We estimate the World Distribution of Income and estimate poverty rates, poverty counts and various measures of income inequality and welfare. Using the official $1/day line, we estimate that world poverty rates have fallen by 80% from 0.268 in 1970 to 0.054 in 2006. The corresponding total number of poor has fallen from 403 million in 1970 to 152 million in 2006. Our estimates of the global poverty count in 2006 are much smaller than found by other researchers. We also find similar reductions in poverty if we use other poverty lines. We find that various measures of global inequality have declined substantially and measures of global welfare increased by somewhere between 128% and 145%. We analyze poverty in various regions. Finally, we show that our results are robust to a battery of sensitivity tests involving functional forms, data sources for the largest countries, methods of interpolating and extrapolating missing data, and dealing with survey misreporting.

[Empahasis mine]



Ian McEwan wrote in ‘Amsterdam’ of the 68 generation.

How prosperous, how influential, how they had flourished under a government they despised for almost seventeen years. Talking ’bout my generation. Such energy, such luck. Nurtured in the post-war settlement with the State’s own milk and juice, and then sustained by their parents tentative, innocent prosperity, to come of age in full employment, new universities, bright paperback books, the Augustan age of rock and roll, affordable ideals. When the ladder crumbled behind them, when the State withdrew her tit and became a scold, they were already safe, they consolidated, and settled down to forming this or that – taste, opinion, fortunes. pp.11-12 

When I was added to this blog I said I had about 5 posts I was going to make immediately. I didn’t make them. One was an observation with regards to Obama defeating Clinton in the primaries for Presidential nominee way back, fado, fado.

A lot of people had observed that age was an issue. That Obama was young, and this was something really unique and attractive about him.  But others observed that Bill Clinton was actually a younger candidate, he was 46 when inaugurated whereas Obama will be 47. The issue wasn’t simply that Obama was young though, rather what was attractive about him was that he was not a ’68-er.

Since the 1960 western politics has been dominated by its legacy, with the growth of civil unrest and class struggle throughout the 70s and the honest belief held by many that the 70’s would bring issue in Socialism in the west. ‘The 70s will be socialist’. While since the fall of the Berlin Wall we have seen the same people fight out the same battle after the battle was lost. So we had the student revolutionaries of the 70s make up Blair’s cabinet, the young hotshots of the Reagan Revolution make up Bush’s cabinet and even Daniel Cohn-Bendit throw his weight in with the now almost forgotten ‘Third Way’.

Obama for all his faults was not part of this. He is a different generation. And with that got the support of many of those who in 2000 were out for Nader and in 2004 were out for Howard Dean. (The anti-globalisation generation.)

One of the few promising things of the last 2-3 years is how the 60s have faded into distant memory. As have the defeats of the 70s and 80s. Remember in 1996 when Britpop was all go and Blair was being elected, the rather bizarre parallels being drawn with 1966, when London was swinging? But in 2008, the 40th anniversary of 1968, we heard remarkably little paralleling of anything with 1968, and we say very few commemorative events. Rather with Obama we had the ridiculous statement in his acceptance speech ‘It’s been a long time coming, but tonight, because of what we did on this day, in this election, at this defining moment, change has come to America.’ The 60s are over, the dream is over because it has been achieved. Of course, it hasn’t been achieved. But the dream is over. 2008 marked the end of 1968. And now we can work on new better dreams that respond to our lives today not those lead in the 60s.




 Okay my first flagging of stuff.

Firstly we are hearing a lot of talk about a global downturn. How true is this? Is there really a global downturn happening? The answer simply is yes but it is not affecting all regions of the world equally.

The IMF in its 2008 World Economic Outlook published last in April presents us with the following information on world growth rates:

Immediately we can see that there has indeed been a secular decline in the world growth rate. There is a decrease in projected 2009 world growth rate of 24% relative to the 2006 rate. However the decrease in the projected 2009 rate relative to the 2006 rate in advanced economies is 57% while in emerging and developing economies it is only 15%. The only area where there is no projected decrease is in the Middle East which where the projected growth rate for 2009 is 105% of the 2006 rate.

Anyway the point of this is simply to show that the global downturn is hitting advanced economies much harder than the rest of the world.

 1 Comment 


Written by Oisín GilmoreOn July 9, 2008


Okay well… Hello. I have no connection with NUI-M and am not a sociologist. So I really am a token on this blog. Aileen persuaded me to join her, I mean this blog by telling me that I could just use it to flag stuff that I thought was interesting. She said it’s somewhere I could put up notes on stuff I’m reading and want to read and somewhere I could put up half thought out criticisms of stuff I’m reading etc.

So that’s the plan.

I suppose I should also say some stuff about what I’m interested in. Basically my interests in economics are in economic history, monetary and financial economics, labour economics, institutional economics, growth theory and the history of economic thought. I’m also interested in trying to make sense of what is happening to the world economy. On a somewhat different level I’m interest in industrial organisation and feminist economics. Outside of economics qua economics I’m interested to varying degrees in pretty much all of the humanities to varying degrees. I’m particularly interested in the various forms of communist theory: Marxist and anarchist. I’m also interested in social movement: how they develop and how they bring about change. (I do have other interested non academic interests but probably won’t post much about them on here.)

Err so that’s my first post. Other’s will be better.