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Subject: US income gap is holding back economy rss

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I guess trickle-down isn't working...


WASHINGTON (AP) - The growing gap between the richest Americans and everyone else isn't bad just for individuals.

It's hurting the U.S. economy.

So says a majority of more than three dozen economists surveyed last week by The Associated Press.

A key source of the economists' concern: Higher pay and outsize stock market gains are flowing mainly to affluent Americans. Yet these households spend less of their money than do low- and middle-income consumers who make up most of the population but whose pay is barely rising.

"What you want is a broader spending base," says Scott Brown, chief economist at Raymond James, a financial advisory firm. "You want more people spending money."

A wide gap in pay limits the ability of poorer and middle-income Americans to improve their living standards, the economists say. About 80 percent of stock market wealth is held by the richest 10 percent of Americans. That means the stock market's outsize gains this year have mostly benefited the already affluent.


http://apnews.myway.com/article/20131218/DAAOIOMO2.html
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Agent J
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People with money are better able to acquire more money. Story at 11.
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But surely all economists agree that making the rich richer is best for the economy, or is that most of the economists that matter?

Me I have long said that the way to be real economic stimulus is to get money into the hands of the have wants, as they will spend it.
 
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tesuji wrote:
I guess trickle-down isn't working...


OBAMA !!!!!! the trickle up poverty scheme is not working either.
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Junior McSpiffy
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Buncha selfish poor people, not willing to help the economy out by earning money....
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Agent J
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GameCrossing wrote:
Buncha selfish poor people, not willing to help the economy out by earning money....




Poor people spend more money than they earn, while rich people earn more money than they spend.
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galad2003 wrote:
Jythier wrote:
GameCrossing wrote:
Buncha selfish poor people, not willing to help the economy out by earning money....




Poor people spend more money than they earn, while rich people earn more money than they spend.


Which is why if we took all the money and evenly distributed it among the population and run waited a few years 95% of the people who were rich would be rich again and 95% of the people who were poor would be poor again.

Rich people understand money, business, finance and economics etc whi h is why they are rich and the majority of poor people suck with money which is why they are poor.
No, they just have more money to hire better advisers. Most rich people did not earn their wealth, they inherited it.
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Jythier wrote:
GameCrossing wrote:
Buncha selfish poor people, not willing to help the economy out by earning money....




Poor people spend more money than they earn, while rich people earn more money than they spend.


Oh, I don't dispute that. Not at all. It's a lot easier for someone making $100,000 to not spend all that on housing, food and transportation than it is for someone making $30,000.

To the point galad made, though, it's true. Money will gravitate to those who know how to master it rather than be mastered by it. So how do we educate the less-fortunate about money and how to use it effectively, especially when people are bombarded by "easy money" ads and offers all the time? Follow-up to that: how do we teach them that when such a large portion of their income goes to basic needs and they have so much less with which to be discretionary?
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Drew1365 wrote:
Some people have more money. Some have less. This is how it goes.


And now the grown-ups are trying to have a conversation about the effects that this reality have on a macroeconomic scale.

Or rather, they will in a page or so. Right now, it's all about posturing. But give it time...
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Long run vs short run rears its ugly head again.

I would be interested to know who they surveyed.
 
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Drew1365 wrote:
GameCrossing wrote:
Drew1365 wrote:
Some people have more money. Some have less. This is how it goes.


And now the grown-ups are trying to have a conversation about the effects that this reality have on a macroeconomic scale.


Grown-ups would understand that repealing Obamacare is an important step to turning around the economy.

Children still think Obamacare is like having your own special wishing fairy.


But grown-ups also realize that as the signature* piece of legislation of the president, as long as he has the party backing in the senate, it's not going anywhere.







* A crappy signature, to be sure. Worse than a doctor's.
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Drew1365 wrote:
Is there any reason to keep up the charade that President Obama isn't a communist at heart?


Because that would imply President Obama had a heart.
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From what I've read, one of the big problems is that the income gap is widening. The middle class is being hollowed out. Our economy is producing a lot of low paying service jobs (McDonalds etc) and the traditional middle class jobs (manufacturing etc) are being done overseas or are being done by automation (software, robots).

 
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Drew1365 wrote:
Can someone explain how this suddenly became a serious issue that has to be addressed RIGHT NOW!? Or is it just the latest in the series of invented crises that this administration is famous for?

In the perhaps foolish idea that you are seriously asking this question:

1) Occupy Wall-Street (Although there have been people interested in inequality for a long time)

2) We have reached unprecedented levels of income and wealth inequality in this country that people are (finally) becoming more cognizant of. The Great Recession poked a big gaping hole in the Chicago School economic consensus that some economists are finally recognizing.

Inequality is not just "how it goes." There are policy and social reasons for inequality and levels of inequality. The current unprecedented inequality is a result of policy choices made beginning in the late seventies but accelerated under President Reagan and continued by both Republican and Democratic presidents since. UK Prime Minister Thatcher and President Reagan helped launch the neo-liberal revolution of re-regulation in favor of finance, corporate profits and high wealth/income individuals that lead to an upward re-distribution of income and wealth. Neo-liberalism and its favorite tool austerity are at heart class formation projects, as David Harvey notes.

Much of the recent growth of economic inequality is a result of a shift in how Americans earn money. Increasingly our national wealth comes from investment income (earned largely by the few at the very top) and less and less from income earned through work. The tax preferences for capital income adopted in recent decades, combined with reductions in marginal income tax rates that mostly benefited the wealthy have exacerbated the concentration of both income and wealth at the top. Tax changes have resulted in what Andrew Fieldhouse calls a “zero-sum, nonproductive shift of income from non-supervisory workers to managers and executives.” Because the shift in income is to nonproductive "work" Fieldhouse argues that raising taxes on the wealthiest would reduce economic inequality without harming the economy at all.

On top of that income shift, in recent decades both political parties have accepted the need for and use of public aid instead of pushing for higher wages. Wages have stagnated for most people. Corporation have become much more profitable and productive but they are not sharing that with their worker. Productivity roughly doubled in the past decade but wages have remained flat.

I suggest some long but approachable internet reading if you want to really understand why this is a serious issue:
Andrew Fieldhouse: Rising Income Inequality and the Role of Shifting Market-Income Distribution, Tax Burdens, and Tax Rates

Joan Walsh: Poverty nation: How America created a low-wage work swamp

Lawrence Mishel and Heidi Shierholz: A Decade of Flat Wages - The Key Barrier to Shared Prosperity and a Rising Middle Class
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CaffeineBot wrote:
Long run vs short run rears its ugly head again.

I would be interested to know who they surveyed.
The income gap has been widening since the 70's.
If 35 years is "short term" in your book, then I guess we should start officially writing off a few generations of poor people.



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I would like more detail about these statements - more facts, more reasoned arguments, etc:

Drew1365 wrote:
Is there any reason to keep up the charade that President Obama isn't a communist at heart?

How is he a communist?

Drew1365 wrote:
What we're seeing is a consequence of this administration's economic policy, not an indication that we need a more aggressive redistribution.

What exactly has Obama done to cause the rich to get richer and the poor poorer?
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Drew1365 wrote:
Is there any reason to keep up the charade that President Obama isn't a communist at heart?

com·mu·nist
ˈkämyənist
noun
1.
a person who supports or believes in the principles of communism.
"I was very left-wing, but I was never a communist"
synonyms: collectivist, leftist, (radical) socialist; More
adjective
noun: communist
1.
adhering to or based on the principles of communism.
"a French communist writer"

com·mu·nism
ˈkämyəˌnizəm
noun
1.
a political theory derived from Karl Marx, advocating class war and leading to a society in which all property is publicly owned and each person works and is paid according to their abilities and needs.

Both definitions are from Google.

They're close enough.

Obama is not a socialist. Even were he a socialist, that s not hte same as a communist.
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I'll note also that this is a an issue of widespread public concern.

A new Washington Post-ABC News poll finds that 66% support increasing the minimum wage, 57% think the federal government should "pursue policies that try to reduce the gap between wealthy and less well-off Americans" and 64% think federal policy favors the wealthy (there is no widespread conception of Obama as a commie, in other words).
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Here's a video you probably haven't seen.

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Drew1365 wrote:
Is there any reason to keep up the charade that President Obama isn't a communist at heart?

I do not think that word means what you think it means...
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Elfbane wrote:
Drew1365 wrote:
Can someone explain how this suddenly became a serious issue that has to be addressed RIGHT NOW!? Or is it just the latest in the series of invented crises that this administration is famous for?

In the perhaps foolish idea that you are seriously asking this question:

1) Occupy Wall-Street (Although there have been people interested in inequality for a long time)

2) We have reached unprecedented levels of income and wealth inequality in this country that people are (finally) becoming more cognizant of. The Great Recession poked a big gaping hole in the Chicago School economic consensus that some economists are finally recognizing.

Inequality is not just "how it goes." There are policy and social reasons for inequality and levels of inequality. The current unprecedented inequality is a result of policy choices made beginning in the late seventies but accelerated under President Reagan and continued by both Republican and Democratic presidents since. UK Prime Minister Thatcher and President Reagan helped launch the neo-liberal revolution of re-regulation in favor of finance, corporate profits and high wealth/income individuals that lead to an upward re-distribution of income and wealth. Neo-liberalism and its favorite tool austerity are at heart class formation projects, as David Harvey notes.

Much of the recent growth of economic inequality is a result of a shift in how Americans earn money. Increasingly our national wealth comes from investment income (earned largely by the few at the very top) and less and less from income earned through work. The tax preferences for capital income adopted in recent decades, combined with reductions in marginal income tax rates that mostly benefited the wealthy have exacerbated the concentration of both income and wealth at the top. Tax changes have resulted in what Andrew Fieldhouse calls a “zero-sum, nonproductive shift of income from non-supervisory workers to managers and executives.” Because the shift in income is to nonproductive "work" Fieldhouse argues that raising taxes on the wealthiest would reduce economic inequality without harming the economy at all.

On top of that income shift, in recent decades both political parties have accepted the need for and use of public aid instead of pushing for higher wages. Wages have stagnated for most people. Corporation have become much more profitable and productive but they are not sharing that with their worker. Productivity roughly doubled in the past decade but wages have remained flat.

I suggest some long but approachable internet reading if you want to really understand why this is a serious issue:
Andrew Fieldhouse: Rising Income Inequality and the Role of Shifting Market-Income Distribution, Tax Burdens, and Tax Rates

Joan Walsh: Poverty nation: How America created a low-wage work swamp

Lawrence Mishel and Heidi Shierholz: A Decade of Flat Wages - The Key Barrier to Shared Prosperity and a Rising Middle Class

Nicely stated, sir. This is all what I understand too, from various news articles in recent years.


Note:
You mean "UK Prime Minister Thatcher and President Reagan helped launch the neo-liberal revolution of de-regulation in favor of finance..."
instead of "UK Prime Minister Thatcher and President Reagan helped launch the neo-liberal revolution of re-regulation in favor of finance.."
- right?
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tesuji wrote:
Note:
You mean "UK Prime Minister Thatcher and President Reagan helped launch the neo-liberal revolution of de-regulation in favor of finance..."
instead of "UK Prime Minister Thatcher and President Reagan helped launch the neo-liberal revolution of re-regulation in favor of finance.."
- right?

Nope. It's commonly called deregulation, but deregulation is really just re-regulation, i.e. not eliminating regulations but creating a new set of regulations that favor certain interests or goals.
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Jythier wrote:
Here's a video you probably haven't seen.



This is amazing, if true. Anyone have any critique of this?
 
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tesuji wrote:
Jythier wrote:
Here's a video you probably haven't seen.



This is amazing, if true. Anyone have any critique of this?


There have been multiple threads on this video, but none of them really went anywhere IIRC.
 
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Its the single issue our resident conservatives like to talk about the least (except maybe gerrymandering). On the other side of things your just skating around the edges without major changes to the tax system and at least tax increases are verboten.
 
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