[Revised] Homework for Monday, July 28

1.      Figure1: Income Gains at the Top Dwarf Those of Low – and Middle – Income Households (a graph from “Language of Graphs”)

    This graph shows the percent change in after-tax income since 1979 for the top 1 percent, highest fifth, middle fifth and bottom fifth. The most significant trend is the growth of the top 1 percent category, which increased +281% between 1979-2007. Other categories rise only +95% (highest fifth), +25% (middle fifth) and +16% (Bottom fifth) during this time. Although all categories have increased since 1979, the rate of increase is not equal. It can be seen that the increase of after-tax income grows with the amount of each income. From this, it can be said that the rich become more and more wealthy at the time of economic growth. This is one of the characteristics of a capitalist society.

    In order to enjoy economic growth equally, this graph suggests that the current tax system is not optimal. If we do not raise the rate of progressive taxation more progressively, the benefits of economic growth will not be spread among the lower-income class. To prevent the harmful effects of capitalist society, we should do more to promote progressive tax. Otherwise, the rate of After-Tax Income in 2035 since would be as follows; +1000% (top 1 percent), +150% (highest fifth), +20% (middle fifth) and +5% (bottom fifth). Society stratifies when the income gap widens. Therefore, this will not be a healthy society.

2.      Oil consumption in millions of barrels per day (a graph from “Language of Graphs” )

    This graph shows the difference in oil consumption of the United States and Japan between 1975-2004. According to this graph, the amount of oil consumption per day of United States increased remarkably during this time, but that of Japan was stable. In 1975, US oil consumption in millions of barrels per day was 16.32. In 2004, it increased to 20.52. In comparison to this, Japan’s oil consumption in millions of barrels per day was 4.62 in 1975 and 5.58 in 2003. It concludes that “Japan’s oil consumption has remained steady since 1975, while U.S. consumption has risen steadily.” Also, the graph explains this by saying “Japan has no domestic sources of fossil fuel and, facing rising oil prices, has turned energy efficiency into an art form.”

    There are several problems with this conclusion. First, Japan’s oil consumption between 1975-2003 did not remain steady. Although it looks flat from the line chart, when looking at the rate of increase, there is no great difference between the US (+126%) and Japan (+121%). In fact, oil consumption in Japan has increased rather than “remained steady.” Second, while it is true that Japan has developed energy efficient technologies, we should consider other factors. For example, the Japanese economy was stagnant at that time while the US economy grew continuously. As we know, economic activity is the main factor determines the amount of oil consumption. When an economy grows, oil consumption also increases. If the economy is stagnant, oil consumption does not increase. Therefore, energy efficiency cannot be a primary explanation.