Broadland v. Richistan: We Do the Math

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In the first chapter of Winner-Take-All Politics: How Washington Made the Rich Richer — and Turned Its Back on the Middle Class, Paul Pierson and Jacob Hacker write that during the post World War II years, annual incomes for all Americans grew at pretty much the same rate. But in the 1970s, something changed, and the incomes of the top one percent starting growing faster than everybody else’s — so much so that the share of pre-tax income received by that group grew from 9 percent (in 1979) to 19 percent (in 2007).

Hacker and Pierson wondered what the economic outcome would have been for the bottom and middle classes if the deregulation and tax code changes they describe in their book not taken place and incomes had continued to grow at the same rate for all income groups (but no faster or slower overall than they actually did after the 1970s). They called this fictitious world “Broadland” and, borrowing a word coined by Robert Frank, described the world we really live in as “Richistan.”

If household incomes had grown at the same rate for all Americans after 1979, someone in the top 1% (whose average household income in 2011 was approximately $2,043,622*) would see their pre-tax income cut in half. But what would happen to you?

Plug in your pre-tax household income to get an idea of what your income would be in Broadland.*

* Calculations based on data from the Congressional Budget Office, using its measure of “comprehensive household income” (pretax cash income plus income from other sources). The CBO’s income categories are based on comprehensive household income adjusted for household size—that is, income divided by the square root of the household’s size. The CBO reports income thresholds and average incomes for each of five equally sized categories, or “quintiles,” as well as for the top 10 percent, top 5 percent and top 1 percent. We compute Broadland income by first determining what income group ranking your income (adjusted for household size and deflated to 2007 dollars) fell within in 2007—the last year of the CBO data. We then calculate how much more household income would have grown in this income group if income gains between 1979 and 2007 had been equal across all income groups. This addition (or reduction) in income is added to your current (“Richistan”) income to produce your Broadland income. Finally, we inflate this value to express it in 2011 dollars. Special thanks to emberactive.com, Stuart Craig and Jacob Hacker.

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  • Senior Citizen

    IF I had that additional amount from your calculator , I would be able to buy a car! As it is now, its buses and walking everywhere  – oh, and a weekly cab with my groceries.

  • Gonvoethe

    No material change…

  • dalbin

    And that I think is the most striking difference. For many of us, it is a huge difference in the quality of our lives.

  • RossTrex

    Even though this calculator is a contrivance based on a factious land that has not existed in reality, I see what they are getting at.  I do not completely agree that the OWS movement is accomplishing anything other than costing cities precious dollars to clean up the messes left by the occupiers. 
     
    Realizing that the Cities of Los Angeles, New York and many others had to pay to clean up after OWS.  I see little difference between OWS and the criminals on Wall St. or the Political Class that enables them.  The common taxpayer has to foot the bill for both, albeit the price tag for Wall St. and the Political Class is astronomically higher.  

  • Jcpro1

    …this difference would allow us to plan our retirement independent from the government, and to insure our health and long term care without government programs.

  • Jenelle Facebook

    I’d be able to buy a new car every YEAR!

  • Jdyar50

    All most 30 percent difference, new life style.

  • Maumeeguy

    AMEN.  It’s time for those of us in the MIDDLE CLASS to un-hijack politics.  As a master’s degree PA-C I live paycheck to paycheck, unable to save money due to rising gasoline costs, living expenses and the fact that I am in the 28% tax bracket, carrying the loads of Warren Buffett and Donald Trump so they can get a third yacht and helicopter

  • Antonio Bklyn

    Money talks, everyone contribute a few dollars to political party

  • Senior Citizen

    Amen!

  • Senior Citizen

    I can no longer afford to contribute to political party. Let those who can, contribute. I’m done. Mind you, I don’t blame the Pres because he is only one man; however, I need to start thinking about not being on the ‘street’ in my retirement. So let the big wigs contribute. For 30 years or more, the ‘system’ under which we live has had the money moving up from the bottom — not even a damn “trickle down” — and that, as far as I’m concerned, has been unconscionable, with a lot of illegality in there to boot. I’m mad as hell and I’m not going to take it anymore!

  • Fan

    Is there something wrong with the calculator?  Type in $158,700 in Richistan and a family size of 2 and you get $172,731 in Broadland, but if you earn just $100 more ($158,800)in Richistan you get $156,140 in Broadland.  So earning an extra $100 a year in Richistan costs you more than $16,000 in Broadland.

  • Senior Citizen

    I have no problem with most government programs. This country NEEDS to be able to take care of its citizens. What I have a problem with is people who want to do away with government programs and leave every single citizen on her/his own and education at the whim of each state. If there is some corruption in government programs and someone is getting food stamps who shouldn’t, I’d rather that than some billionaire paying less in taxes than I do.

  • Senior Citizen

    There was a time when the income of the have’s and the have not’s was not so far apart. That wasn’t enough for the top earners, so they found creative ways to screw the rest of us!

  • Senior Citizen

    Lucky you, but can you agree that it would make a huge difference to so many people?

  • Senior Citizen

    Wow, I got the same results. Will you email Mr. Moyers about it?

  • Senior Citizen

    I’m sorry to read that you have a master’s degree and still have to live paycheck-to-paycheck like I do. When I was young and working full time, I was in the 28% bracket with only a high school education and a piddly little clerical worker’s paycheck. So it is not the tax bracket that is killing you, it is as stated cost of living increases added to decreased salaries, Trickle Down Economics, Dick Cheney and his oil buddies, the filthy rich not paying their fair share, the list goes on and on. During the Eisenhower administration when, for example our country’s highway system was being built (thank you Pres. Eisenhower), our top earners paid up to 90-91% in taxes. Now they scream if they have to pay 10% in taxes. Do you see what has happened in this country?

  • Donangelo

    Hi Bill!  Welcome back
    to PBS! I’ve been working with the Occupy movement, and I have a couple of
    questions about Free Trade that perhaps you would like to address. Here’s my
    present position: Free Trade may profit a few corporations, but otherwise it is
    an absolute disaster and we should explore strong alternatives. Everyone from
    Ron Paul to Paul Krugman seems to support Free Trade, even though Free Trade
    has shipped a huge portion of our manufacturing jobs and even some of our
    service jobs overseas, and over the last 20 years we have accumulated a trade
    deficit of over $8 trillion, causing us to be out of jobs and out of money. The
    US concept of Free Trade does not protect American workers or our true
    financial interests. The French protect their workers, and consequently they
    have high wages, a 35 hour week, six weeks of vacation, and retirement at 62.
    The Germans pretend to support Free Trade, but in fact have all kinds of trade
    barriers that protect their manufacturing and enable them to be the third largest
    exporter on the planet. Furthermore, in the name of Free Trade we have
    destroyed various components of other countries’ economies, such as the dairy
    industry in Jamaica or the indigenous corn growers in Mexico. Through the WTO
    and World Bank we have required so many Third World countries to grow coffee,
    cocoa, cotton, and other commodities that the world prices on these items have
    been driven so low that no one can make any money growing them. We have seen
    what Free Trade has done to us and other countries. It’s time to explore a
    little protectionism.

     

                So what do
    you and your experts think about Free Trade? My second question is about the
    more than $8 trillion trade deficit we have accumulated over the last 20 years.
    How is it counted? Is it part of our national debt or counted separately, so
    that our true debt is really more like $23 trillion?

     

                Since Obama
    is a complete traitor, we have no one to vote for. What would happen if a
    majority of Americans refused to vote?

     

                Thanks, and
    keep it up! I’m nine months younger than you, and I know how hard it is to keep
    functioning. Huperzine and phosphatidylserine!

     

                Best
    regards!  Donangelo

     
     

  • Ingkai

    Appreciating the seriousness of how the past 30 years of growing inequality in wages & opportunities has affected our lives is no joke to the majority of Americans. When you’ve worked over the past 30-40 years, you’ve lived it. Get involved, democracy is a participatory sport.

  • Senior Citizen

    Sorry to be posting this on your comments page but I’m hoping that everyone whose comments I can see, can see mine — so forgive me, but: check out the following Web site for how much each of the GOP contenders is worth (oh, and they include the Pres. but it is not much considering). Thanks.  http://finance.yahoo.com/news/election-2012–how-rich-are-these-guys.html.

  • paluca

    Welcome back, Bill!!  And thank you for the perfect topic for your first show.  I’m also glad to welcome the return of sane commentary and real investigative reporting.  Your voice, your show, is an invaluable contribution to the American conversation; and it’s nice to have real conversation again.

  • Perryb56

    what’s sad is we knew this 30 years ago, yet we still believed that the old economic system was going to make everything work out. now we have to try to live on the scraps that corporations want to leave for us.

  • glen

    Another dimension to all this is that while the rich get richer, the gov’t issues debt in order to subsidize bailouts and corporate tax breaks, as well as other functions.  So they pocket the cash by converting it into debt that they don’t pay for….we do, and will for years to come.

  • Judith Hodgens

    Wow-enough to pay for our monthly private health insurance plan ( no prescription drugs included)

  • vcgris

    Welcome back Bill !  You have been missed and are srely needed.

  • uninsured in LA

    W/the calculator I see that I would have been able to afford health insurance!  And the cost of insurance would be a lot less because more people could afford it.uninsured in LA

  • Wovenin

    Bill, You came back at the exact time we need you the most! Thank you. 

  • frustrated

    I think it is fair to say we are all fed up with our illustrious governing force whether represented by EQUUS ASINUS or PACHYDERM. It seems that King Herod and Pontius Pilate have been resurrected, only this time they are intimidated by the well educated America’s working class. Best proof of this intimidation was indicated by a former, LEADER????, who thought Manuel Labor was an illegal immigrant who was willing to do the job a well educated American should be doing. Of course he was saying this because his sound strings were being pulled by his corporate greed supporters. If an average American working class individual were to betray his country in the same manner our political leaders betrayed the very people they were elected to protect, that average American would experience the wrath of our modern day King Herods and Pontius Pilates.
    I am confident our young educated people will find a way to correct this matter, however they may correct the problem by taking their valued expertise to another country.  

  • CMS

    Retired a d surviving but harder and harder in that lowest bracket as savings are amking nothing now!

  • where is justice

    The Fed releases a memo to Congress’ financial services committees and banking committees stating that $7trillion in home equity is lost. This was done the day after Cordray was appointed to CFPB. This demonstrates the largest INEQUALITY to the working class.
    Yet, despite countless settlements with the SEC, no criminal charges against violators for securities fraud. Despite countless court foreclosure proceedings displaying fraudulent, forged couterfeit mortgage notes, no criminal charges of counterfeiting.
    Securities fraud and couterfeiting are federal crimes under the RICO ACT.

  • Ana

    Thank you for coming back Mr. Moyers.  As I suspected, your first program was on target with what is urgent in America.  It was wonderful and heartbreaking.  I am one of those who believes more often than not, that there is no one to turn to in Washington to defend me or those poorer, and that nothing can be done of the gross inequalities.  I cannot see a way out of this economical/financial mess both parties are complicit in…not in my lifetime.  When you asked the question: “But if both political parties are indebted to the winner, where do the losers find an army to join?”  A great question and one that is on the minds of many people.  But your guest Mr. Hacker could not offer an adequate answer.  He said when citizens organize and reformist leaders within government and outside it work on people’s behalf, then we see reform.  I’ve heard this answer before in many different incarnations and still nothing, or very little, changes.
    Mr. Hacker’s body language (that recognizable crossing of the arms when one is uncomfortable with something, and then suddenly realizes the appearance of such does not fare well so one uncrosses them quickly),  leads me to believe Mr. Hacker is not confident in his own answer.  Saying this is the story of the Democratic experiment, of waive after waive of reform leading to a much broader franchise, to a much broader understanding of the American idea seems preposterous.  How many years have we spent in this Democratic experiment?!  And how many people have still gotten richer on the backs of the poor?!  I’m not saying we should not organize or not elect leaders that can speak for the majority, but something else has got to be done.  It is no longer about the Democratic or Republican party.  It is about the Rich party.  People in power slowly, and many times secretively, changing laws and rights that were put in place to protect those who could not so easily defend themselves.   When you think about it, how many unions are actually left in America?!  Unions have slowly dwindled for a reason: unions do not serve the Rich party’s agenda.  I’m afraid America is quickly turning into america.  And I’m frustrated and ashamed to say I too cannot offer a better solution…so I keep listening to great minds such as yours in the hopes that collectively we can do different, for at the very least future generations.

  • Anonymous

    Any discussion of this topic which doesn’t recognize the effect of inflated asset prices misses the point.  Not only does printing money put it directly into the hands of stockholders and other owners, but it makes everyone absolutely poorer with respect to the past and of course especially with respect to indebtedness.  Our Keynesian economic structure amounts to a pyramid scheme and when can no longer go up, it must come down.

  • Tj3usa

    My dad always bought a new car every year in the 1950s. He was a laundry owner, middle class. He had surgery for an ulcer back then, he did not need Insurance or Medicare. The cost was rational he just paid the bill.

    We have been slowly robbed blind by the snake oil salesmen and their political stooges.

  • NolaJ

    This $100 mark is probably where the % tax rate changes.  This is why in my father’s day when he was offered overtime later in the year, he and my mom would sit at the kitchen table look at the tax chart and decide if it “was worth it”.

  • NolaJ

    In the mid 80s I got a job with a very large corporation. They sat us down and explained how we all needed to participate in the 401K Savings Plan.  The presentatons all sounded to me like I was being told that my financial well being when (back then it was when not if) I retired was hinged on how well this Wall St buy Stocks Savings Program would work. It sounded like I was being told that to succeed/be Financially safe that I would literally have to gamble with my income.  Well … it’s good and sad to know, I was right.  And I still know that I am one of the lucky ones.

  • Lin

    I think the problem is that our system of government is broken beyond repair. Both parties are equally corrupted by corporate money. If we can’t move to a system where all political campaigns are funded by public dollars with absolutely no private donations, then the wealthy will continue to buy our elected officials. I think that’s why Hacker wasn’t confident in his answer. No one wants to admit that the only solution is to dissolve our current government and institute one that is fair. That’s a radical step with terrible consequences. But the alternative is to continue with a system that is rigged in favor of the super-rich and which is rapidly reducing 99% of Americans to the status of peasants.

  • Lin

    I think that the majority of American are worried about going homeless. I think that most Americans will spend much of their lives struggling to avoid that, particularly when they are either too old to work or simply cannot find a job anymore.

  • Lee

    There is not enough inforamtion or me to understand Richistan Vs. Broadlands.  What is the “income ranking”?  Idon’t quite even get the narrative, let alone the visual. 

  • http://billmoyers.com BillMoyers.com

      The chart basically shows the approximate difference in income in two scenarios: 1) If the rate of income increase was equivalent for all economic groups since 1979 (“Broadland”); and 2)
    Under the current rates of increase, which are different for different
    incomes (“Richistan”). In Richistan — approximate to our current system
    — the rate of increase for top income groups is very disproportionate
    to the other groups. This chart shows by how much.

    The best way to use the chart is to plug in different incomes, and
    see how low, middle,and high-income earners fare under each of those two
    scenarios. The “income ranking” groupings come from the CBO, are
    admittedly not all that intuitive, and are less significant in terms of
    the calculator’s point.

  • Mary-Perry Miller

    Thank you once again, Mr. Moyers, for bringing an intelligent perspective to the most important topic of our times.  I have spent my lifetime following your career as I grew up not far from where you were born.  It has been a real pleasure to feel seen and heard in our experience.  Bravo!

  • CHESTERWB

    In the chart above, why is the resullting RICHISTAN income lower than the BROADLAND

    INCOME?

    p.s.  wE THANK YOU VERY MUCH FOR YOUR INTERESTING & INFORMATIVE SHOWS

  • Jpestevez

    Thanks to Jacob Hacker and Paul Pierson for exposing the corruption that exist amongst our Government and Wall Street for the past 30 years and many thanks to Mr. Bill Moyer considering and interviewing both Jacob and Paul on such important topic and wonderful book.  I’m a Hispanic middle aged woman who is a victim of Washington and Wall street crime.  In Sept. 2008 I lost my job of 20 years, working for a CBO as the senior Case Manager.  It devastated me and my family.  Although I am currently working, we now find ourselves living on paycheck to paycheck. We’re  no-longer able to save for what was once our Dream – to buy our home.!

  • JF

    The thing that maddens me the most is how those in power have managed to divide the American people. The conservatives call the progressives Libertards… the progressives call the conservatives Republi-cons. And the voices are so strident and hostile. I’m willing to bet, that except for the top 1% (who seemingly want us to revert back to feudalism) almost all Americans want the same things. Yes, are there ideological differences between people, but most can be intelligently discussed. The wealthy elite pulled out a playbook of Ayn Rand mixed with Aldous Huxley and pulled the rug out from underneath the rest of us. The question is… how do we take it back? Abraham Lincoln said that a nation, divided against itself, cannot stand. How do we re-unite the American people so as to restore sanity and clean the corruption out of Washington? Elizabeth Warren seems to be a good start but she seems like a lone wolf.

  • GO

    I shared your comment on my share to Facebook. Thank you. I think division is exactly what the wealthy elite want. Us shooting ourselves and each other. GO

  • http://www.facebook.com/stephen.cataldo1 Stephen Cataldo

    One small piece of the answer is liberals listening to the conservative viewpoints more carefully, talking to conservatives and the middle instead of to ourselves. There has recently been a deluge of inequality posts in social media … almost nothing talking about how rich people are not contributing more, nor working people contributing less. The conservative starting assumption is that capitalism works, and people are paid according to their contribution. It’s a very wrong, very fragile frame, but I’ve seen almost nothing focused on breaking that frame, almost nothing focused on explaining WHY the “broadland” income distribution is closer to our real contributions, and the current distribution is market manipulations and so on taking from people who contribute and redistributing (through the broken market) to the wealthy. Focus on why the current distribution is unfair, how it does not match people’s actual contributions. Americans do not want to be the recipients of charity, we want to be independent and successful: liberals often sound like we do when we take our assumptions and jump to the end-point of income distribution.

  • Anonymous

    So Glad You’re Back Bill. Love your program, Thank you for a great article.

  • James Artman

    I buy the premise but am suspicious of the calculator. Income of $158779 yields a +$14k answer but $158780 answers -$2660. What gives here?

  • http://twitter.com/seriouslyyouguy you guys

    ” carrying the loads of Warren Buffett and Donald Trump so they can get a third yacht and helicopter”

  • John M

    Um, taxes don’t work that way. It’s always “worth it.”

  • John M

    And the same thing happens for single taxpayers at a lower number. It’s too bad because it does call the whole calculation and, therefore, the analysis (which really HAS to be correct in broad strokes) into question.

  • http://twitter.com/muncievoice Muncie Voice

    This is embarrassing as a country and the folks in Washington, including the current President, have not focused our nations dialogue on this important issue. They remain focused on deficits and the need to cut back social programs to balance the budget versus bringing in more revenue.

    Cutting programs while Americans struggle is abusive. We hold ourselves up examples of how well democracy and capitalism work, yet the facts tell a different story.

    We should be spending all our time, resources, and energy rebuilding our infrastructure, education, health, food, economic, tax and financial systems. Once that is complete, and we’ve developed a better track record, then we can respond to other countries who request our assistance.

  • Socialmedic

    Right, they show up in overwhelming numbers to vote for the same criminals who created this problem … the same public has voted for the same BS over and over and over again for three decades. I am sorry, but please don’t ask them to participate any more.

  • Anonymous

    Hmm, it says my income would be about $3000 less. I guess I am one of the plutocrats, although I don’t feel like it. Still, I see what my children make and know that there is a need for more income equality.

  • Correy Law

    I think the calculator does this because it can only use a fixed percentage for a range of income based on the 1979 data. So when you nudge over the boundary of a range it can make a large jump instead of a smooth one.

  • Anonymous

    ours was 13, 000 more…that sure would help!!!

  • jamiejoy

    Mine dropped a few thousand also. Does that mean we are in the top 1%?

  • Travis

    It also depends on the size of the family. At 4 people, you have to get into a weird range of about 225-235k Richistan before you start seeing a loss (seriously, at 224k Richistan, the Broadland number jumps to almost 244k, but at 225k Richistan the Broadland number _drops_ to 221k). Any opinion I have is colored by the fact I grew up with absolutely nothing, but regardless of which scale you use, if you are not living well at around 225k, I doubt the money is the problem.

  • Anonymous

    The problem is that people consider an employee a necessary evil. They don’t consider that the employee has needs now AND for 15-20 years after retirement. If you’re paying an employee $60,000/yr, for they need to save at least $20,000/yr for retirement (remember, inflation causes your money to lose 50% of its purchasing power every 20 years) which drops their actual earnings to $40,000. Imagine an employee earning $24k/yr and trying to save $12k/yr for retirement. Can you live on $12k?/yr?

  • charles champion

    mine is + $4,393, of course we have a family of four with about a $12,000 income.

  • Anonymous

    Sorry, I don’t think more centrism and more compromise is what we need here. That’s what we’ve been doing for decades. There is no party that represents the interests of the poor–which is why you can’t even name a “far left party.” Both parties represent the wealthy, that’s not even up for debate. Compared to other countries, we have two Right parties, one more moderate than the other–we don’t actually have a Left. This is why I’m completely bored of discussions of partisan politics. What we need is activism, not “politics.”

  • MattB

    i agree, I’m suspicious of this calculator I put in $112274 and got a broadland number of $110393 for a difference of ($1881)…. BUT if you put in $112273 you get a broadland income of $122199 for a difference of $9926 ….. That doesn’t make any sense at all…

  • Nic Subtirelu

    I find your statement that “income equality should be a major concern” difficult to reconcile with your next claim that it’s not fair for those who take in $1,000,000 per year to have their incomes cut in half. Such a statement seems to imply that people who have earned $1,000,000 have done so by selling their labor or products within a system that is on the whole a fair one. In order to accept that the political economic system is in fact fair, we would have to accept that the person accruing $1,000,000 has performed as much labor or added as much value as 50 people making $20,000 per year. I don’t accept that assumption and instead believe that we overvalue certain skill sets and forms of labor (e.g., finance) while simultaneously undervaluing others (especially retail work), and that this situation is a major contributor (perhaps the major contributor) to income inequality. Thus I believe what is not fair is the under-/over-valuing of different forms of labor performed by different groups of people. Hence, not only is it fair that different forms of labor would see their rate of pay converge (since those making $1,000,000 are currently benefiting from an unfair system that works to their material interests), but it is also necessary for addressing the issue of income inequality since the central issue in inequality is the relative distance between the incomes of higher and lower earners. The relative distribution of resources accrued by the higher earners must logically be decreased in order for lower earners to be compensated with a higher distribution.