1. Transparency. We need to see where every dollar of the US federal gov't is spent. It needs to be on the internet, and it needs to be easily accessable. An exception can be made for classified spending in specific, but not so categorically (IE we spend X on classified stuff). Additionally, just like there is a Surgeon's General Warning on cigarette packages, there needs to be a link on every candidates webpage that lists their top 100 donors, and what industry they are in. This website URL needs to be easily visible and placed in every television and radio advert as well.
2. Investment banks cannot also be commercial (depository banks). Investment banks become partnerships where c-level owners are financially responsible for the actions of their banks. The banking system survived before things changed from this, and it will survive afterward.
3. There should be a small federal tax on the sale of any type of derivative, bond, stock, or other financial instrument every time it is sold. Say $.10 per share, every time. The financial markets are for raising capitol for companies, not for financial hackers to make money. HFT is a waste of time and energy, adds unnecessary volatility, and has yet to be shown to be anything more than tangentially related to the goals of a financial security market, established for the purpose of raising capitol.
4. The tax code needs to be simplified. There are a number of ways to do this, but the end goal should be to end loopholes that allow companies like exxon to pay no federal taxes. Or any company for that matter to realize losses in the US and gains in a foreign country.
5. Finally, there should be a 4 term limit on US Senators, and an 8 Term limit on US Representatives. Self-explanatory.
Activision-Blizzard Share Price (ATVI): 13.50
Tax on a $100,000 trade: ~$7407.40
Google share price (GOOG): $586.31
Tax on a $100,000 trade: ~$170.55
Berkshire Hathaway Class A share price (BRK.A): 117,100.000
Tax on a $100,000 trade: ~$.10
This idea is clearly half-baked. I think a number of your other ideas are as well. You need to think through what actual benefits you expect from your proposed changes, as well as what the unintended consequences would be. Your post does not explain this very well at all.
To cite another example: forcing a split between retail and investment banking is a common talking point from people who want "more regulation". But most folks advocating for this do not have a coherent explanation for why this would actually be helpful. It's often claimed that deregulation contributed to the crisis, therefore we need to bring back this regulation. But the institutions that precipitated the crisis were all pure investment banks, so this regulation would have done absolutely nothing to prevent the financial crisis. This post does a great job of explaining why this particular policy proposal is poorly thought out, as well as covering the general issue of advocating policies without actually understanding what they would do or why they might be worthwhile: <http://www.theatlantic.com/business/archive/2011/10/if-you-f....
Glass-Steagall meant that investment banks had to entice investors to put their money into the system. The repeal allowed investment banks to raid and leverage depositors accounts. This introduces systemic risk because depositors unlike investors view their savings as a demand account and receive little interest because of that. Their money is basically cheap for the banks to get and the depositors always expect that money to be there. Investors expect a return that justifies the risk that they are entering into together with the investment bank/brokerage. Their money is relatively expensive to banks to get because the investor knows that money could disappear. Once banks could treat all those deposits as levergable funds for risky investments they didn't have to entice the expensive investment money or use caution in their investments (FDIC will pick up the losses). So with the repeal of G-S, brokerages suddenly had access to huge piles of FDIC insured money and all that money needed some place to go... and we've coincidentally had 2 major bubbles since. First the dotcoms, then mbs's and other related cdo's and now Treasuries. Break up the banks, make the investment houses have to make sensible bets (not 50:1 levers) that return better returns for investors and force banks to make terribly boring investments to return terribly boring rates to depositors and we have the beginnings of the return of sanity in banking. Without that, we will continue to inflate bubbles, pay bonuses and then bailout losses after the unavoidable asset deflation.
Here is another, more informed than me, argument for reinstatement http://moneywatch.bnet.com/economic-news/blog/maximum-utilit... "However, whether the elimination of the Glass-Steagall act caused the present crisis is the wrong question to ask. To determine the value of reinstating a similar rule, the question is whether the elimination of the Glass-Steagall act made the system more vulnerable to crashes. When the question is phrased in this way, it’s clear that it has made the system more vulnerable for the reasons outlined above.
Regarding splitting retail/investment banking, the following is a completely ignorant question, phrased in the form of a rambling incoherent hypothesis. I don't understand why it was a good idea for the U.S. to bail out the banks, but I can see how retail banking is essential to the month-to-month life of Main St, and so I can see why the government might be willing to spend taxpayer money to save it (to save taxpayers). It seems like maybe if retail banks weren't all playing the investment-bank game, maybe the suicidal investment banks could have been allowed to fail?
Corporate taxes are idiotic. They should tax them at zero and replace the lost revenue with a new upper-margin tax. Reasons:
1. Corporate taxes are effectively a sales tax.
2. Corporations, unlike individuals, can hire armies of lawyers, accountants, and lobbyists to get around the taxes.
3. Those same professionals are more often deployed by large, rather than small, companies.
4. Those same professionals are intelligent people wasting their intelligence on tax avoidance. They could just as easily be useful to society. Engineers, doctors, teachers, etc.
What you really want is an integrated tax system like Canada and many other countries have: Corporations pay income taxes, but when they pay out their profits as dividends, the individuals receiving those dividends pay tax on their share of the corporation's pre-tax income, but get a tax credit equal to the amount of taxes the corporation paid. (Sounds complicated? It is -- but it works.)
As a side benefit, this fixes the "Buffett pays less tax" problem, since the taxes paid on corporate taxes (in the end, once they've been paid out as dividends) are based on the same progressive system of increasing marginal rates as any other income.
However, I think it's important to acknowledge that corporate taxes are useful for providing an incentive for corporations to do something a certain way. That is, they can avoid the tax if they change their behaviour. (see: equal-opportunities employment, regional commercialisation incentives, emissions control, recycling, etc)
Like Romney said “Corporations are people, my friend."
Second, all of guilmarin's points: 1) Transparency - Only politicians would disagree with this. Good idea. 2) As other readers pointed out, this is a red herring, and would not solve anything. 3) This has the effect of killing the messenger, and there is a lot of evidence that derivatives are extremely helpful to markets as an information tool and reducing volatility. I certainly can't come up with a compelling moral reason to limit free people from doing what they want with their property. 4) The tax code should be simplified, but because simplicity is inherently better. Removing the corporate tax, as indicated, would both decrease complexity and promote investment. 5) Do you have any evidence that junior senators and representatives are better or worse? I could see a problem with lame ducks increasing their cronyism rather than decreasing it. I don't have an intrinsic opinion on this, but certainly sounds like a reasonable goal if you can come up with a clear mechanism on how this would help and particularly data to support. Looking at incumbent stuff might be a good way to do this.
We know that markets aren't perfect or else Buffet and other value investors couldn't survive. Does HFT make markets more or less perfect at pricing? Does this matter for making markets more efficient in reality, not some hypothetical perfect market?
I don't know enough to form a proper opinion whether or not this is the case.
Of course part of the problem is defining HFT or algorithmic trading. If you build a robot to press an appropriate button at a trading terminal really fast, is that algorithmic, HFT, and should that be banned? Do you fix the tax at 10 cents, and if so how do you react if companies just create massive securities worth millions of dollars and trade those?
There's also a subset of algorithmic trading that inserts large stop-loss orders (not much of an algorithm there, it's just done by computer program instead of an individual), which have been known to cause flash crashes.
Hence the confusion and belief that by eliminating HFT we'll eliminate automatic stop-loss orders.
The possibility of HFT raises the barriers of entry. Therefore it causes at least some bad.
Personally, I think the markets should just operate at, say, 15 minute heartbeats. Anybody is open to place orders at any point in time in secret. Then, at a predetermined heartbeat time, all orders are revealed and some standard auctioning mechanism is used to match them up against each other.
Sure, spreads would be larger than they are now, but at the same time there would also be less volatility by definition. More importantly, barriers of entry would be much lower, which will cause the market to function closer to a "perfect market" over time.
This is a topic where the critics, who argue in favor of the status quo are at an advantage, because the realities of HFT are not easily discernable to the layman, and require a much deeper understanding of the entire modern financial ecosystem. Suffice to say, there were/are pros and cons to having a specialist.
I think what you want is for derivatives to not have the chance to bring down entire sectors of the economy. That's fine, and your point in (2) would acheive this. There is also a case to be made for larger capital and margin requirements for trading firms above a certain size - ie, anyone who trades over X,000 contracts per year.
Derivatives traders can fail as much as they want as long as the failure doesn't threaten stability. It's when they bet too large, and use depositors money, that the problems start. Introducing capital and margin requirements keeps the size of the bets down and isolating trading from banking keeps them from using depositors money.
Regarding 4, specifically "to realize losses in the US and gains in a foreign country", how do you propose companies avoid this situation? Should they deliberately lose money overseas as well? What would this accomplish?
to answer 4. The point of this is to stop companies from making subsidiaries in another country to realize gains, and then wait for a tax holiday for repatriation.
Every item bought, even if it costs $1.50 should be recorded? That will cause a massive increase in paperwork (how much will that cost? Will it be in paper? Or an online service that employees fill in when they buy something? What happens when their internet/computer in their office goes down? Should they not buy the thing or buy the thing and fill it in later? Do you want to turn up to your office, find no paper there and hear 'Sorry we can't go across the street to get paper cause we have to wait for the person from $FAR_AWAY to come here and fix our computer's browser?')
I was pleased about this but I would say it is not a perfect solution, payments could be split up to go under the limit for example.
Ideally we would have a system where this is all automated, every invoice goes through a system and the results are collected. I admit this is a very tricky one though.
At the time of the crash there was something like $60 trillion in Credit Default Swaps floating around. A 5% reserve requirement sure would have slowed that down. A reserve requirement would reduce the volatility of the commodities market, which would allow those who needed it a hedge, but reduce the incentive for speculators to churn.
Regulating crazy financial instruments will occur when what we call 'investment banks' but you could easily extend to all cooperatives that make money on financial instruments, are required to be partnerships. It's amazing how much self-regulation occurs when an actual person is personally responsible.
Edit: typo
The reason it is so high is that it was set a long time ago on a sliding scale, and bracket creep of house prices means that every house traded is on the old 'high' value.
As a result, housing liquidity is low and people sit on unsuitable houses for long periods of time because they can't afford to sell and buy another. This leads to excessive commuting as people drive long distances rather than move closer to jobs, and leads to old people staying in oversized houses, tying up housing stock.
With a median priced home, if you sell it, and buy another of identical value, you will have spent nearly $50,000 on agents fees, stamp duties and other costs.
I would dearly love someone to explain to me how that is a good idea, fair or any other justification.
30-1 and up leverage never has been and never will be safe, necessary, or a good idea. Not for Fannie and Freddie, not for investment banks, not for Citi and Wamu, not for LTCM, not for the Euro banks, not for individual mortgage borrowers.
Never, for anyone, ever, a good idea. Far, far, far more destabilizing than something like HFT.
1 rule and you can pretty much put a cap on how badly things can get blown up. Limit everyone everywhere to 10-1 leverage.
We can live with a slightly lower, more consistent growth rate.
The strictly investment banks (as opposed to the consolidated ones) were the ones that had the most trouble / caused the most problems in the recent recession.
But... my rights side says all that is doing is taking away my right to vote for whom I want.
Income is adjusted for inflation using the Bureau of Labor Statistics’ research series of the consumer price index for all urban consumers (CPI-U-RS). -http://cbo.gov/ftpdocs/124xx/doc12485/10-25-HouseholdIncome....
That report is much more detailed than the Economist's summary.
So, in 2007 the top 1% made ~375% of what they did in 1979 (~275% gain). In 2007 the bottom 20% made ~120% of what they did in 1979 (~20% gain).
The graph is labelled "US real average after-tax income" (emphasis mine). Real income is, by definition, income that has been adjusted for inflation.
Consumerism worked for a while to keep things even, but we've reached a plateau. People can only buy so much crap. But we're more productive now than ever [1].
So where does all that extra money go? The people at the top take it. CEOs don't give their employees raises, and pocket the rest. Bankers play games with your excess money you've dumped into the market and "lose" it. etc.
No-one's missed that extra money until now, because there's always been enough work to go around. Now there's not. Maybe people aren't buying because their "confidence" is shaken. Maybe the Chinese are "taking our jobs". Maybe people don't need more crap.
Guess what, it doesn't matter. Everyone's stuck on debating why there's not enough work to go around. But really, the solution's simple.
Everyone should do less work.
The only way to simultaneously (a) reduce the income gap, (b) lower unemployment, and (c) not return to wasteful excessive consumerism is to shorten the work week and raise the minimum wage.
Those at the top will be forced to pay more per hour worked due to decrease in supply. This will fix the income gap.
The unemployed will suddenly find work, now that more workers are required to perform the same amount of work.
And no-one needs to find any arcane means of "increasing consumer confidence".
I propose a mandatory maximum of 35-hour non-overtime weeks, coupled with a 20% (or greater) increase in minimum wage. Necessarily will likely be a short-term (5-year or less) exemption from these policies for small business owners (defined as those whose executives take home in salary + bonuses less than some threshold, say $200k).
There once came a day when humans were productive enough that a two-day weekend was warranted. As we continue our march down the road of automation, it is only natural that we give ourselves more time to enjoy the fruits of our labors, and not devote our time to serve those more fortunate than us.
You are so, so wrong.
I was hoping you were being ironic, but apparently you're serious.
Raising minimum wage and cutting working hours will drop productivity like a stone. You're effectively saying that all workers are equal, and interchangeable. You want to forcibly stop the more productive ones from working, so that their tasks and livelihoods can be given to others.
In the case of a software company you're introducing the twin evils of bad hires and oversized teams. For what? An inferior product produced at a higher price.
Dropping productivity means a drop in living standards for everyone, not just the rich people.
The reason people are out of work is because too many people are paying back too much debt, and that equates to negative savings.
Minimum wages increase unemployment because they set a price floor above the clearing price for the going price of a worker. Now, that's not an argument for getting rid of minimum wages, but you can't argue against the reality of what they do.
The solution is to continue paying back debt, and learn the lesson not to borrow so much next time around. Yes, that sucks, but hard lessons seldom have pleasant consequences.
If you want to stop a lot of wealth accumulating at the top end of the pyramid, by all means break up banking cartels and break the ties between legislators and big business, you won't get many arguments from most people. But fairyland schemes to force people to pay more than wages are worth, and force people to work less hours than they want? Hello, central planning. Hello, centralised control. The only way for this to work is to put the needs of the state above the needs of the individual. Which must, by definition, mean less individual freedom and more state control. What are you going to do with someone who works more than 35 hours? Lock them up at the point of a gun?
"Wasteful excessive consumerism" is an entirely relative proposition. One persons waste is another satisfactory standard of living. To impose an arbitary living standard on someone is to completely control their lives.
You're asking everyone to do less work. Less work by definition means less production, and less production means a lower living standard. And guess where the bulk of that lower living standard will fall - that's right, you can bet your peasant clothes it won't be on the 1%.
To conclude : you're effectively asking for centralised control of peoples wages, centralised control of how much a person can work, and centralised and arbitary division of what is small, medium and large business for the purposes of handing out favors, subsidies and handouts. Eventually businesses will start to fail and so will seek more handouts, bailouts, concessions or are nationalised because they are vital to society (eg mining, energy, farming).
You've effectively described a blend of National Socialism and Stalinism. And we know that both eventually lead to mass murder and misery of millions. This experiment has been tried before, it ends badly for all involved.
I hope you're young and still learning, because if you're of any reasonable age, you should know better by now.
> You are so, so wrong.
...
> You've effectively described a blend of National Socialism and Stalinism.
Hyperbole much? It saddens me to see this kind of nonsense on HN.
Also, let me point out that your disagreement is not on the highest level of the disagreement scale. In particular, your parent brings up the very reasonable point that mankind introduced the two-day-weekend at some point during the industrial revolution. It's likely difficult to find anybody who says that that's a bad thing. So what's wrong with drawing an analogy here between the introduction of the two-day-weekend and reducing the maximum length of the regular work week?
I'm not saying that all your points are without merit, but you have not addressed the parent's point, and your comment is so full of rhetorical bullshit, it's disgusting.
By the way: too many people are paying back too much debt, and that equates to negative savings.
This is factually incorrect (or perhaps you misstated). The savings rate is the ratio of disposable income that people do not spend. Since paying back debt means that you use some of your disposable income to pay back the debt instead of spending it, it actually equates positive savings.
You can see that the savings rate had a huge spike upwards in the US after the mortgage bubble burst, for precisely that reason: http://research.stlouisfed.org/fred2/series/PSAVERT
And - as you say - that's largely responsible for the economic mess we're in right now, because larger savings have translated to lower aggregate demand, which has lead to net layoffs. It's the paradox of thrift at work.
Fantastic, except where are all of these consumed goods going to come from? You'll see huge inflationary pressure which means tighter monetary policy; higher interest rates and reduced borrowing and lending. Yes, there will be economic growth and increased GDP on paper, but there won't be any benefit to society. Furthermore, inflation actually helps the '1%' through arbitrary redistribution of wealth.
First year macroeconomics - I seriously think it should be a prerequisite to adulthood.
Now, it's reasonable to point out that skilled laborers are basically fully employed right now, so the proposal would marginally reduce the supply of skilled labor hours -- and could thereby reduce skilled output.
But FWIW I don't think that's a very good point. Skilled labor is not really hour-limited in the same way that unskilled labor is -- that is, the output of a salaried full-time knowledge-worker employee is unlikely to change much (certainly not by 12.5%) if the standard workweek drops from 40 hours to 35. That's not how knowledge jobs work and that's not how salaried positions work. Whereas productivity in unskilled positions really would drop by somewhere close to 12.5% under the proposal. (Which is good; it opens up more of these "job" things that are so crucial to wealth distribution in the modern world.)
At any rate, if shorter work weeks for skilled workers bothers you that much, there's an easy solution: just say that you can only pay the minimum wage for the first 35 hours of the week, after which you have to pay at least 1.5 * minimum wage. Leave everything else the same. (Well, I like the parent's minimum wage hike too.) Now we're only cutting the output of near-minimum-wage workers.
I'm not at all sure that this idea wouldn't be disastrous, but I can't think of any good reasons that it might be. I feel like it's the most obvious way out of the current economic situation.
> In the case of a software company you're introducing the twin evils of bad hires and oversized teams. For what? An inferior product produced at a higher price.
Software engineers are not hourly workers last time I checked.
> What are you going to do with someone who works more than 35 hours?
The same thing we do with people who work more than 40 hours now. Pay them overtime.
> I hope you're young and still learning, because if you're of any reasonable age, you should know better by now.
You sir are an asshole.
As a founder, this seems intuitively obvious. I have problems finding the correct people. There simply aren't enough skilled people who can do work (that is where the overhead of managing them + their cost < my time loss). Consequently, it makes economic sense for everyone to just work longer hours. If we had to limit hours, we'd simply produce less. And because our product provides time-savings for our customers, all of society suffers.
I also completely disagree that people can buy so much stuff. Sure, physical items, yes. But 77% of the US economy is services.
From a personal perspective, I don't need more trinkets. But if I had the money, I'd never do my own laundry, shopping, driving, etc. -- that is I would spend a lot of money to gain time. Whether that time goes toward pleasure or working harder, it doesn't matter -- society still wins.
There is much to be said about the legal work week in France. It has been badly misrepresented again and again.
In most industries, the reduction of work hours was more than compensated by "annualization". That means that you must do 35 hours a week, not every week but as a mean value along the whole year. What's the result? Where people used to work 39 hours all year long, even when the activity was in a low cycle, an work paid overtime when activity was high, they now work 30 hours a week at times and up to 48 hours a week at other times, always paid the standard wage all year long.
Furthermore, even the definition of "work hour" changed. For instance, in some industries people are now allowed to take a piss only 2 times a day instead of 4. In "sales" (actually, supermarket cashiers mostly), people are now "working" only while they're actually on duty (they used to be "working" while present on the premises); so they may be given "free time" for up to two or three hours during the day (there aren't many customers in shops for hours during the week), though they often have no other choice but wait at the workplace or the immediate vicinity because they haven't got time or resource to do anything else.
So actually for a large part of the economy, going from 39 to 35 hours was quite a big improvement of productivity. What is usually represented abroad as a scandalous, quasi communist change was actually a boon for the "great capital". Further "adjustments" made to the system in the past 12 years by right wing governments have achieved the picture; though they still love to bad mouth "the 35 hours" (lazy leftists! profiteering socialists!), getting rid of the many "progresses" induced by this system is absolutely out of the question.
This is, by the way, perfectly in line with the habit to ditch French (now dead) retirement law: "Lazy French retire at 60! Courageous Germans retire at 67!", while the truth is that French retire at 62.5 years, and German 62.7...
> But 77% of the US economy is services.
Many of these services don't always make sense economically. Is it for the best that so many Americans eat out almost every day? Sure, that creates demand for a lot of low wage jobs, then what?
This sort of short-sighted insistence on GDP growth (more business! more jobs!) is toxic in the long term. Some of the basics tenets seriously need to be revised.
Outsourcing wealth production to low-wage countries increased profit margins and enabled the meteoric rise in CEO and executive compensation relative to labor, whose wages were stagnant at best, or who were being outsourced and laid off at worst (eg, labor wasn't benefitting from the increased profit margins, only executives and shareholders/owners).
Cheap money and debt bubbles enabled labor to continue consuming on credit beyond their means, sustaining the increased profit margins longer than should have been possible, while simultaneously paying interest on their consumption.
Hence, the 99% (or whatever the % is) has been transferring wealth to the 1% from both ends. The solution is, stay out of debt as much as possible, and find ways to incentivize repatriation of production operations to the US (ostensibly by reducing the cost-basis of manufacturing here). Certain legal proposals, like financial transaction taxes and the like, may help as well.
[1] http://www.orionmagazine.org/index.php/articles/article/2962...
I had more relevant comments here: http://news.ycombinator.com/item?id=3120123
You seem to subscribe to the aim of total income equality as a goal. To do this you would force the productive to hand over most of the product of their work to those who are less productive. Obviously, to do this, you need to force them using the apparatus of the state to do so.
In other words, they either spend the majority of their time working for others or they go to jail. They are not asked to share the product of their work, they are threatened to do so or be locked up.
Does that sound fair to you? That is a very perverse sense of justice, where you don't have a choice in how the output of your labour is divided.
Honestly I cannot understand after a century of misery from forced wealth redistribution and forced work and millions of deaths people still come up with these ideas.
E.g., small businesses like Apple and Google.
There is no cure for cancer, no clean energy, no cheap housing, no good education. There are so many things to do.
Everytime someones says there's "only one way", that person turned out to be:
* Dogmatic
and
* Wrong
There's certainly not a single reason behind the current situation, and certainly not one single answer to it.
However the fact that you must choose four of {decrease excess wealth, decrease employment, maintain moderate per-capita consumption, maintain high per-capita work output, maintain high per-hour work output} is a logical truth.
Proof:
Wealth can be created (work), destroyed (consumed), or accumulated and held (income/wealth inequality). Wealth must be created at the same rate it is accumulated or destroyed (i.e. Wc = Wa + Wd). Since OWS wants to decrease wealth accumulated and it is undesirable to increase wealth destroyed (unless in the example given above), we must therefore decrease wealth created. Right now this is happening due to unemployment. Since OWS also wants to minimize that, we must decrease wealth created in another manner. Obviously, decreasing wealth created per hour worked is out of the question (that would mean reverting to a pre-industrial age). The only remaining option is to decrease hours worked. QED.
I have no idea what The Economist could possibly mean by "pick up the bill" in this context. They know as well as anyone that wealth isn't conserved. If my company makes twice as much money next year as this one, I've added to the world's wealth, not subtracted from it.
I think both The Economist and the Occupy Wall Street protestors are conflating two distinct groups: those who get rich by creating wealth, and those who get rich by diverting the revenues of the state into their own pockets. The latter group consists of special interest groups—and certainly includes virtually the entire banking and finance industry. What most of the protesters seem to misunderstand is that their target shouldn't be capitalism, but rather special interest groups—and the system of government that allows such groups to thrive. Unfortunately, the latter is a problem so big it's hard to grasp, and solutions aimed at the actual source are, to put it charitably, off the political map.
A lot of people also think that the economy/creation of wealth can only go up, by only focusing on the last 200 years or so of economic history. I call it "blind faith in economic progress", which was fine to believe in around the 1880s or so, but anymore.
the top 1% of earners pay 38% of all income tax while earning 27% of all income. The top 50% pay 97% of all income tax.
Broken windows fallacy, broken window fallacy and zero-sum thinking everywhere in this whole debate.
How much of the income does the top 50% get? Without that, your figures are useless.
Just concentrating on income tax hides the fact lower earners tend to spend a higher proportion of their income on other taxes (such as sales tax).
ycombinator is not the place to repeat poorly researched, often quoted and misleading statistics, without a proper discussion of how they effect the current discussion. Sorry.
1. Choosing 1979. If you started from 1999 all the graphs would look nearly the same. So, does that mean in the last 12 years the 1% is no better off?
2. Notice that the 1%'s advantage drops down significantly in a recession. They seem to have ignored the last one though, and stopped right at the height of the bubble.
That's what I can read.
There is not an inherent problem in income inequality if everyone has an acceptable standard of living. The problem is when the poor go without health care, food, shelter, education, Internet, and heating. Unemployment can be a large part of this.
I don't use an iPhone myself by the way. The smartphone plans are ridiculously expensive here in Canada. Any middle class family bearing iPhones are making other non-trivial sacrifices to do so... like education or retirement savings.