Sad state of American Economics

[57Brave]

I've never voted for Hillary --

Paul Ryan grew up on SS and now wants to eliminate SS. That, is all you need to know about Paul Ryan -- he will say whatever he needs to say to ingratiate himself with those he is speaking to. He is a chameleon

Rand Paul
a) will never be POTUS
b) if by some accident he does become POTUS he will never get anything done he wants done. Even his party laughs at him
I think Noam Chomsky makes a lot of sense speaking economics. But, do you know the difference between Chomsky and Paul ?
Chomsky isn't an ambitious little dick

C) the tax code ain't changing and the Federal Reserve is here to stay
///////////

In what world did trickle down econ ever work? You say the 80's -- judging that Reagan initiated the notion 82-83 and give a year to get the policy ducks ib a row that gives a 6-7 year sample of trickle down -- me thinks judging a policy the scope of TDE would be at least 20-30 years. In that light TDE doesn't fair so well. Because the money never trickled down
re: The Waltons

[Hawk]

I mean I'm willing to have a legit debate about this, but if you're unwilling to admit that trickle down actually worked in the 80's then I can't have a reasonable discussion with you. I mean your graph you posted in the OP is clear evidence of this. Not only did the income gap remain stagnant but both the rich and the poor became wealthier than they ever have. Clinton increased income rates and capital gains rates yet the gap between the rich and the poor increased under his watch. There's no correlation between increasing taxes on the wealthy and the income inequality gap. So far this thread looks like it's going to be another thread full of useless memes.

Spot on.

[acesfull86]

Paul Ryan wants to get rid of SS? I'm gonna have to read up on him. Sounds like there's potential.

[goldfly]

I mean I'm willing to have a legit debate about this, but if you're unwilling to admit that trickle down actually worked in the 80's then I can't have a reasonable discussion with you. I mean your graph you posted in the OP is clear evidence of this. Not only did the income gap remain stagnant but both the rich and the poor became wealthier than they ever have. Clinton increased income rates and capital gains rates yet the gap between the rich and the poor increased under his watch. There's no correlation between increasing taxes on the wealthy and the income inequality gap. So far this thread looks like it's going to be another thread full of useless memes. .

it didn't work in the 80's

the 80's is when it was all stripped away

are we looking at the same chart on that link?


mine aren't meme's. they are charts with info on them btw

[weso1]

I'm looking at the graph Zito linked in the OP. The wage gap didn't start changing in a significant way till the mid 90's or so. I think aces is looking at the same thing I am too.

[thethe]

I'm looking at the graph Zito linked in the OP. The wage gap didn't start changing in a significant way till the mid 90's or so. I think aces is looking at the same thing I am too.

That doesn't mean that the groundwork wasn't laid in the 80's.

Problem is the top down approach or the government interventionist alternatives don't work. There needs to be a compromise with an eye on ensuring the extremes aren't allowed.

[acesfull86]

BTW, can anyone define what the "right" amount of inequality is? I don't think anyone right of Marx would say 0%, because clearly we're not all equal in terms work ethic and skills brought to the marketplace, so at what point does the acceptable become the unacceptable?

[goldfly]

BTW, can anyone define what the "right" amount of inequality is? I don't think anyone right of Marx would say 0%, because clearly we're not all equal in terms work ethic and skills brought to the marketplace, so at what point does the acceptable become the unacceptable?

well, let's see your number and we will go from there

[50PoundHead]

I mean I'm willing to have a legit debate about this, but if you're unwilling to admit that trickle down actually worked in the 80's then I can't have a reasonable discussion with you. I mean your graph you posted in the OP is clear evidence of this. Not only did the income gap remain stagnant but both the rich and the poor became wealthier than they ever have. Clinton increased income rates and capital gains rates yet the gap between the rich and the poor increased under his watch. There's no correlation between increasing taxes on the wealthy and the income inequality gap. So far this thread looks like it's going to be another thread full of useless memes.

Income inequality only became an issue when the internet boom started and the welfare pool began increasing exponentially both on the corporate and personal side. Obviously the housing crash had a huge part to do with the current spike in income inequality. We haven't been practicing true trickle down economics.

What's funny is that you guys grump and moan about Paul Ryan, but he's 100% in support of cutting out corporate welfare and welfare for the wealthy. The same thing you guys grump about. Ryan supports doing the same thing Reagan tried to do back in the 80's but didn't take in the 90's and 2000's thanks to failed economic leadership from both sides of the aisle. Corporate subsides have jumped the shark and everyone and their mother can take advantage of tax shelters and credits.

Only way to fix this issue is a complete overhaul in the tax system. Only way to get that is to empower strong economic leadership like Paul Ryan or Rand Paul. Vote in the guys that actually support expansive tax reform or stop complaining about it. Stop supporting the dems whose only solution is a proven losing strategy. The problem is that some of you guys constantly grump about it and then go vote for people who are hopeless in actually doing anything about it. Hillary? lol.

Sorry, weso. You better head to graph reading school. Looking at the graph, it was still the 1980s when the bottom 90% started going into its relatively uninterrupted decline in the percentage of wealth they held by that group. There's a lot of reasons for that, but I don't think anyone can deny that changes to the tax/budget system haven't contributed to that. Falling wages relative to inflation have also contributed. Some of that is due to the erosion of collective bargaining and some is related to changes in the global economy.

The only way out of this is for people to realize that things cost money and if the government is going to provide the good, that means paying taxes for it. Military. Income support (SS/Medicare included). Education (Mostly state and local). You want those things? They come at a price. The problem as I see it is that Reagan convinced the middle class that everything was free and that the threat to the Middle Class comes from the Underclass (kr's argument). Forget the ginormous defense build-up (which was about as Keynesian as you can get). But also forget that the Middle Class in many instances was convinced that they were better off getting a $3 tax break than $5 in the form of government services. At least Reagan was honest about that exchange. But if you contend Reagan cut deficits by cutting programs, read John Samples' work from the Cato Institute (hardly a haven of leftist thought) W tried to convince people that you could have both a $3 tax break and still get the $5 in government services (Dick Cheney's "deficits don't matter" line). What Paul Ryan suggests is far more extensive than anything Reagan ever proposed. Whether that would be good or bad will depend on who you are. I will say this (having done my graduate work in the 1980s on the topic long before it was cool) is that the current array of deductions and tax credits are greatly skewed toward the Middle Class. If you get rid of deductions and credits and lower the marginal tax rates to levels to the maximum extent possible as a result of the elimination of deductions and credits, the effective tax burden goes up for most everyone and goes down for people at the top.

The other thing I would need to know about that chart is how they are calculating assets. It's well documented that most of the assets held by everyone below the 90% mark is being propped up by credit. I don't know how that credit is accounted for in the chart. If credit is not factored into the equation, the picture is even worse.

[acesfull86]

well, let's see your number and we will go from there

I'm really not sure....but I'm also not one arguing that we have a major problem

[goldfly]

I'm really not sure....but I'm also not one arguing that we have a major problem

so, you aren't saying there isn't a major problem of wealth inequality in this country?

if that is true, why waste the time accepting the premise of your question?

[acesfull86]

so, you aren't saying there isn't a major problem of wealth inequality in this country?

if that is true, why waste the time accepting the premise of your question?

Because I think it's strange to claim there's a problem that needs drastic action without actually being able to define the problem beyond "hmm, that just doesn't look right to me."

[acesfull86]

Because I think it's strange to claim there's a problem that needs drastic action without actually being able to define the problem beyond "hmm, that just doesn't look right to me."

Should the top 1% = the bottom 5? 10%? 25%? What's the goal?

[Garmel]

Interesting read. Income inequality is due to globalization.

http://www.forbes.com/sites/timworst...globalisation/

[weso1]

Sorry, weso. You better head to graph reading school. Looking at the graph, it was still the 1980s when the bottom 90% started going into its relatively uninterrupted decline in the percentage of wealth they held by that group. There's a lot of reasons for that, but I don't think anyone can deny that changes to the tax/budget system haven't contributed to that. Falling wages relative to inflation have also contributed. Some of that is due to the erosion of collective bargaining and some is related to changes in the global economy.

The only way out of this is for people to realize that things cost money and if the government is going to provide the good, that means paying taxes for it. Military. Income support (SS/Medicare included). Education (Mostly state and local). You want those things? They come at a price. The problem as I see it is that Reagan convinced the middle class that everything was free and that the threat to the Middle Class comes from the Underclass (kr's argument). Forget the ginormous defense build-up (which was about as Keynesian as you can get). But also forget that the Middle Class in many instances was convinced that they were better off getting a $3 tax break than $5 in the form of government services. At least Reagan was honest about that exchange. But if you contend Reagan cut deficits by cutting programs, read John Samples' work from the Cato Institute (hardly a haven of leftist thought) W tried to convince people that you could have both a $3 tax break and still get the $5 in government services (Dick Cheney's "deficits don't matter" line). What Paul Ryan suggests is far more extensive than anything Reagan ever proposed. Whether that would be good or bad will depend on who you are. I will say this (having done my graduate work in the 1980s on the topic long before it was cool) is that the current array of deductions and tax credits are greatly skewed toward the Middle Class. If you get rid of deductions and credits and lower the marginal tax rates to levels to the maximum extent possible as a result of the elimination of deductions and credits, the effective tax burden goes up for most everyone and goes down for people at the top.

The other thing I would need to know about that chart is how they are calculating assets. It's well documented that most of the assets held by everyone below the 90% mark is being propped up by credit. I don't know how that credit is accounted for in the chart. If credit is not factored into the equation, the picture is even worse.

I know very well how to read these graphs. It appears that you are the one who needs to go to graph reading school. You have to read these graphs with trend lines. I mean the reason it started going down is because the bottom 90 were at an unprecedented high in the late 80's. The true trend downward begins in the mid 90's onward. From 1980-1995 there is what I believe to be a positive trend. Even if you go back to the mid 70's you still have a neutral trend line. So the 80's saw strong growth whilest the income gap remained steady over time. Sure if you start your trend line at the inflection point then there's a negative trend for Reagan, but that's an incredibly dishonest technique.

I don't think we should sacrifice economic growth by just blindly raising taxes to keep up with what is essentially unnecessary demand from a public that will just seek more and more. You'd just have to constantly raise taxes until you get to a point on the Laffer curve where you can't support that demand anymore. The true answer, imo, is to keep taxes relatively low and most importantly simple. Also need to make social security, medicare more workable whilest doing away with most corporate welfare and wealthy individual welfare. I feel like this is a solution that a majority could get behind.

[weso1]

That doesn't mean that the groundwork wasn't laid in the 80's.

Problem is the top down approach or the government interventionist alternatives don't work. There needs to be a compromise with an eye on ensuring the extremes aren't allowed.

JFK believed in Reaganomics to a lesser extent, and after he died the marginal tax rate was lowered and it showed no impact in regards to widening the income gap in a similar time frame. The thing about Reagan was that he tinkered with the tax rate a bit. I don't think he always had an idea that we needed to stay at a certain rate.

To me maybe the best correlation is in regards to how the after math of modern day popped bubbles are handled by the Fed and executive branch. I mean in the mid 90's we had the dot com bubble which I think added a lot of wealth to investors. They were bailed out by the G-Dub stimulus. Then right after that started the housing bubble. They were bailed out by TARP and the Obama stimulus. I think the biggest issue we may have going forward is that we as a country aren't willing to pay for these bubbles. Bailing out the wealthy might be the number one reason the income gap is where it is right now. I think we need to avoid these bubbles at all costs. The bad news is that we might be in a bubble right now.

I think as sturg suggested, the fed has played a big role in this widening income gap.

I think the internet also played an important role. Lots of wealthy people emerged from the computing/internet boom.

Also, I do agree that increased globalization is playing a key role.

[AerchAngel]

Also, I do agree that increased globalization is playing a key role.

The dreaded word that has killed our jobs = OUTSOURCING

[50PoundHead]

I know very well how to read these graphs. It appears that you are the one who needs to go to graph reading school. You have to read these graphs with trend lines. I mean the reason it started going down is because the bottom 90 were at an unprecedented high in the late 80's. The true trend downward begins in the mid 90's onward. From 1980-1995 there is what I believe to be a positive trend. Even if you go back to the mid 70's you still have a neutral trend line. So the 80's saw strong growth whilest the income gap remained steady over time. Sure if you start your trend line at the inflection point then there's a negative trend for Reagan, but that's an incredibly dishonest technique.

I don't think we should sacrifice economic growth by just blindly raising taxes to keep up with what is essentially unnecessary demand from a public that will just seek more and more. You'd just have to constantly raise taxes until you get to a point on the Laffer curve where you can't support that demand anymore. The true answer, imo, is to keep taxes relatively low and most importantly simple. Also need to make social security, medicare more workable whilest doing away with most corporate welfare and wealthy individual welfare. I feel like this is a solution that a majority could get behind.

Check your bifocals. It's not the late-80s when the share for the 90% peaked. It's the mid-80s. It's been steadily downhill since then, with the precipitous drop in the late-00's. Now that may be quibbling, but I think it's important for a couple of reasons. First, when Reagan took office, the economy was at a low point. Given the business cycle, it was bound to improve whatever Reagan did and, as I pointed out, a lot of that growth came from a Keynesian deficit spending (largely on defense). Second, the tax reform of 1986 eliminated a ton of deductions/credits and lowered marginal rates. I'm not going to claim that the tax reform is at the root of the reasons why the inequality trends are what they are, but for those who believe that tax reform will turn the trend around, I think they are sadly mistaken.

The more pertinent trend has been the rise in share for the upper 0.1% that has risen upward steadily since the mid-1970s. Probably coincidental to some extent, but that trend began shortly after Lewis Powell (before his appointment to the Supreme Court) wrote his famous memorandum that unleashed an unprecedented wave of pro-business lobbying at the national level.

The root cause for all of this is the lag in household income. If median household income had followed the same pattern as overall economic growth, it would be nearly $40,000 higher per year than it is right now. That means income (which begats wealth over time) has been moving steadily to the higher percentiles. That means to "hold" their wealth, households have had to resort to consumer credit and harvesting the equity in their homes. However unfair that is in concept, it kept things afloat until the housing market crashed.

As for the tax burden, the United States ranks 32nd out of 34 OECD countries, so things can't get much lower. This ranking includes federal, state, and local taxes. I'm with you on budget hawkery, but Ryan's budget/tax bill simply doesn't add up. All it will do is cut the tax bill of those at the top while cutting services they don't consume. So much for any semblance of a social contract.

As for Social Security and Medicare, I'm all for reform. I was at a seminar the other night and two investment counselors will telling retirees (of which I am not) how to avoid their federal tax burden. Social Security isn't taxed, so this was about IRAs and 401 (K)s. But I found the whole thing ridiculous. A large segment of senior citizens in this country is concerned about not paying taxes while Xers and Millenials are worried about jobs and long-term economic trends. Social Security and Medicare are vital for a number of senior citizens, but what was designed as a subsistence/basic care programs has grown well beyond that. As a result, personal savings has gone down (until the 2008 meltdown) and consumption has gone up. Now I'm the one sounding like an arch-conservative, but that's no way to run a railroad. We need a predictable and sufficient tax system and a predictable and prudent budget that hovers around the balanced mark. I was down with Simpson/Bowles and was disappointed when it was dismissed by both sides.

[Garmel]

The dreaded word that has killed our jobs = OUTSOURCING

Yep. The good manufacturing jobs that were prevalent in America are now going away and are being replaced by poor paying service jobs. That's what's killing the middle class.

[50PoundHead]

Yep. The good manufacturing jobs that were prevalent in America are now going away and are being replaced by poor paying service jobs. That's what's killing the middle class.

That and changes to the agricultural economy probably comprise the biggest contributors to the trend lines.