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The week's question
In March 2025, in the thread "Re: OT, out", Umm asked the members: "Do you think it is because America is made up of magical soil that makes businesses based in America magically profitable?" This week it is put to everyone again. The button below opens the small thread re-asking it - read what others have said so far, then give your own answer as an ordinary reply.
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Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
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Author: Knighted ✧  😊 😞
Number: of 22350 
Subject: Re: Should I change how I invest? Confused in the U
Date: 11/25/24 10:21 AM
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Americans have become richer in terms of income, but it hasn't just been the rich.
The real after-tax after-transfer average income among the top quintile of households rose 2.17%/year 1997-2020: The rich have become a lot richer.
The real after-tax after-transfer average income among the bottom quintile of households rose about 2.01%/year 1997-2020. Americans have helped the poor quite a lot.
The difference is not so large that one would characterize it as "the rich are crushing the poor".


Moreover, a point that is often neglected on this topic is that of income -mobility-.

It's extremely common for media outlets & research institutes to treat income percentiles as static groups of people when analyzing time series of income growth/share changes over time, but the movement & composition of the people in these groups is anything but static, and not taking that into account paints a skewed picture.

For example, let's suppose the US had the most amazing income mobility possible, with virtually everyone becoming extremely rich in their working careers, yet each person started their careers at today's minimum wage. Income inequality measures would still show terrible income inequality between the poorest (those newest in their careers) and the richest (those later in their careers), yet I think most would consider this a resounding success story rather than a problem.

To properly analyze income mobility, income of the -same- people must be measured and tracked over a series of years.

In a recent study on it, 63% of US children born to parents in the bottom income quintile (bottom 20%) ended up better off than their parents in higher quintiles than their parents. And interestingly, there's not just significant upward mobility of the poor, but also significant -downward- mobility for the top 20% of income. 62% of children whose parents were in the top 20% income ended up in -lower- quintiles than their parents. In fact, almost 1 in 10 children whose parents were in the top 20% of income actually ended up in the bottom 20% for income.

This result also mirrors studies I've seen on income mobility which track specific individuals over time and their own income changes from decade to decade, rather than comparing children's income to their parents.

This result demonstrates that upward mobility for the poorest is as-strong as downward mobility for the richest, which I think is exactly what we'd want to see in a merit-based country founded on equal opportunity (not equal outcomes). And I believe this is a far better gauge of the health of opportunity within the US than income inequality metrics.

Source: cato.org - Upward mobility alive well america
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This community has written 21,861 posts about Berkshire Hathaway. The article-length ones it recommended most:
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