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Life is Great ... But Only If You Are Already Mega-Wealthy
As I pointed out in November:
A report
by University of California, Berkeley economics professor Emmanuel Saez
concludes that income inequality in the United States is at an all-time
high, surpassing even levels seen during the Great Depression.The report shows that:
- Income inequality is worse than it has been since at least 1917
- "The top 1 percent incomes captured half of the overall economic growth over the period 1993-2007"
- "In the economic expansion of 2002-2007, the top 1 percent captured two thirds of income growth."
As others have pointed out, the average wage of Americans, adjusting for inflation, is lower than it was in the 1970s. The minimum wage, adjusting for inflation, is lower than it was in the 1950s. See this.
On the other hand, billionaires have never had it better (and see this).
Now, state-run Russian news service RIA Novosti notes that the number of billionaires has soared during the economic crisis:
The
current global financial and economic crisis once again confirms the
fact that during economic upheavals the rich get richer and the poor
become even more destitute.
On Thursday, Forbes Magazine carried an updated list of the world's wealthiest people.
As
of late 2009, the number of billionaires soared from 793 to 1,011 and
their total fortunes from $2.4 trillion to $3.6 trillion. The number of
Russian billionaires almost doubled, from 32 to 62.
***
Despite
the crisis, the list of billionaires has grown by 200 people and their
aggregate capital has expanded by 50%. This may seem paradoxical but
only at first glance. This result was predictable, if we recall how
governments all over the world have dealt with the economic crisis.
Anti-crisis
measures essentially implied massive infusion of money into the
economy. The United States alone spent over $10 trillion. Against the
backdrop of a global recession, the funding could only be put to good
use on stock and raw materials markets, leading to the creation of new
financial bubbles.***
The
volume of federal allocations injected by the Russian government into
the economy was much higher than in Europe and the U.S. Forbes
tactfully referred to this as the government's cooperation with big
business, primarily raw materials companies.
However,
even high-ranking Russian officials have repeatedly complained that
anti-crisis allocations were either used for stock market operations or
deposited in foreign bank accounts.
Life is good ... but only if you are already mega-wealthy.
Even Alan Greenspan recently called
the recovery "extremely unbalanced," driven largely by high earners
benefiting from recovering stock markets and large corporations.
As economics professor and former Secretary of Labor Robert Reich writes today in an outstanding piece:
Are
we finally in a recovery? Who's "we," kemosabe? Big global companies,
Wall Street, and high-income Americans who hold their savings in
financial instruments are clearly doing better. As to the rest of us --
small businesses along Main Streets, and middle and lower-income
Americans -- forget it.
Business cheerleaders naturally want to
emphasize the positive. They assume the economy runs on optimism and
that if average consumers think the economy is getting better, they'll
empty their wallets more readily and -- presto! -- the economy will get
better. The cheerleaders fail to understand that regardless of how
people feel, they won't spend if they don't have the money.
The
US economy grew at a 5.9 percent annual rate in the fourth quarter of
2009. That sounds good until you realize GDP figures are badly
distorted by structural changes in the economy. For example, part of
the increase is due to rising health care costs. When WellPoint
ratchets up premiums, that enlarges the GDP. But you'd have to be out
of your mind to consider this evidence of a recovery.
Part of
the perceived growth in GDP is due to rising government expenditures.
But this is smoke and mirrors. The stimulus is reaching its peak and
will be smaller in months to come. And a bigger federal debt eventually
has to be repaid.
So when you hear some economists say the
current recovery is following the traditional path, don't believe a
word. The path itself is being used to construct the GDP data.
Look
more closely and the only ones doing better are the people and
private-sector institutions at the top ... Companies in the
Standard&Poor 500 stock index had sales of $2.18 trillion in the
fourth quarter, up from $2.02 trillion last year, and their earnings
tripled. Why? Mainly because they're global, and selling into
fast-growing markets in places like India, China, and Brazil.
America's
biggest companies are also showing fat profits and productivity gains
because they continue to slash payrolls and cut expenditures...
Firms
in S&P 500 ... can borrow money cheaply. Corporate bond sales are
brisk. So far in 2010, big U.S. corporations have issued $195.2 billion
of debt, excluding government-guaranteed bonds. Does this spell a
recovery? It all depends on what the big companies are doing with all
this cash. In fact, they're doing two things that don't help at all.
First, they're buying other companies... This buying doesn't create new
jobs. One of the first things companies do when they buy other
companies is fire lots of people who are considered "redundant." That's
where the so-called merger efficiencies and synergies come from, after
all. [My note: As I pointed out a year ago: "The Treasury Department encouraged banks to use the bailout money to buy their competitors, and pushed through an amendment to the tax laws
which rewards mergers in the banking industry (this has caused a lot of
companies to bite off more than they can chew, destabilizing the
acquiring companies)"]
The
second thing big companies are doing with all their cash is buying back
their own stock, in order to boost their share prices. There were 62
such share buy-backs in February, valued at $40.1 billion. We're
witnessing the biggest share buyback spree since Sept 2008. The major
beneficiaries are current shareholders, including top executives, whose
pay is linked to share prices. The buy-backs do absolutely nothing for
most Americans.
***
The picture on Main Street is quite
the opposite. Small businesses aren't selling much because they have to
rely on American -- rather than foreign -- consumers, and Americans
still aren't buying much.
Small businesses are also finding it
difficult to get credit. In the credit survey conducted in February by
the National Federation of Independent Businesses, only 34 percent of
small businesses reported normal and adequate access to credit. Not
incidentally, the NFIB's "Small Business Optimism Index" fell 1.3
points last month, just about where it's been since April.
That's
a problem for most Americans. Small businesses are where the jobs are.
In fact, small businesses are responsible for almost all job growth in
a typical recovery. So if small businesses are hurting, we're not going
to see much job growth any time soon.
The Federal Reserve
reported Thursday that American consumers are shedding their debts like
mad. Total US household debt, including mortgages and credit card
balances, fell 1.7 percent last year - the first drop since the
government began recording consumer debt in 1945. Much of the
debt-shedding has been through default -- consumers simply not repaying
and walking away from homes and big-ticket purchases.
This is
hardly good news. But here's the Wall Street Journal's take on it: "the
defaults are leaving many people with more cash to spend and save,
jump-starting the financial rehabilitiation" of the economy.
Baloney.
As of end of 2009, debt averaged $43, 874 per American, or about 122
percent of annual disposable income. Most economic analysts think a
sustainable debt load is around 100 percent of disposable income --
assuming a normal level of employment and normal access to credit. But
unemployment is still sky-high and it's becoming harder for most people
to get new mortgages and credit cards. And with housing prices still in
the doldrums, they can't refinance their homes or take out new loans on
them...
Some cheerleaders say rising stock prices make
consumers feel wealthier and therefore readier to spend. But to the
extent most Americans have any assets at all their net worth is mostly
in their homes, and those homes are still worth less than they were in
2007. The "wealth effect" is relevant mainly to the richest 10 percent
of Americans, most of whose net worth is in stocks and bonds. The top
10 percent accounted for about half of total national income in 2007.
But they were only about 40 percent of total spending, and a
sustainable recovery can't be based on the top ten percent.
Add
to all this the joblessness or fear of it that continues to haunt a
large portion of the American population. Add in the trauma of what
most of us have been through over the past year and a half. Consider
also the extra need to save as tens of millions of boomers see
retirement on the horizon. Bottom line: Thrifty consumers are doing the
right and sensible thing by holding back from the malls. They saved a
little over 4 percent of their disposable income in fourth quarter of
2009. In the months or years ahead they may save more.
Right
and sensible for each household but a disaster for the economy as a
whole. American consumers accounted for 70 percent of the total demand
for goods and services in the American economy before the Great
Recession, and a sizable chunk of world demand.
So what happens
when the stimulus is over and the Fed begins to tighten again? Where
will demand come from to get Main Street back, create jobs, raise
middle class wages? Not from big businesses. Certainly not from Wall
Street. Not from exports. Not from government.
So, where? That
question is the big unknown hanging over the U.S. economy. Until
there's an answer, an economic "recovery" for anyone other than big
corporations, Wall Street, and the wealthy is a mirage.
YAWN
Here it is ....
Hey GW....
I am a saver....Yeah I actually have saved and put cash aside....and I started with nothing....
But here is what is happening....
I no longer get any interest on "no risk" money....
But I do not want any part of low grade paper yields.....because as the economy gets worse ...and it will...the low grade paper will lose principal...
Now...the way I understand it GW....the banks and even GS can borrow from the Fed at 0% ....and then can buy short term government paper at 2 to 3%....thus in effect is STEALING 2 to 3% from the tax paper either directly via taxes or the printing of money dilution....
2 to 3% is not much to someone like me....but to a bank....since they lever 20 to 1 or more.....it is a lot of money to them....
And as I recall....it was the banks who lost our money....I know one thing....It wasn't me....
Now since I will not take high risk at the top ....I am forced to spend my actual savings....which in effect is reducing my lifestyle...and my children's future....
Now let me tell you this....
Money does not disappear....When you find money that actually disappears or reappears....let me know ...and we will both make some dough on a road show....
During the credit debacle.....money that left money market mutual funds went somewhere.....did not disappear....
And Mr. Facism Fraternal Paulson and comrades infiltrating the US govt....stole the "scare" show....
Why ? Because the 2 to 3% that the govt. is giving the banks...is being bonus-ed out to Paulson comrades....
...................................
What's left is this...
Obama just increased our taxes by over $3 Trillion over the next 10 years....and this does not include the new VAT that will be added on shortly...as well as additional state taxes.....
....................................
Now I want you to consider this....
The top economies of the world...
Are going to show dramatic losses
Will increase taxes
Will print more money
In order to appease FREE ICE CREAM poly blabbers voters....
...................................
So at the end of the day....
I a small business man ...
Will be asked to employ more people....when my taxes are going to the stratosphere....while also I have no incentive to save....and will have to satisfy more govt. impositions such as health care....energy taxes...etc....
..........................................
I can tell you this....
The first large economy that has the balls to reduce taxes and spending....and reward savers....not bank losers....will be the BIG WINNERS.....
The first goes that moves to a sole 15% consumption tax....will dwarf the other economies in terms of revenues....and overall prosperity....
The current govt. path will lead to massive poverty....
THIS IS A GUARANTEE.....
Amen ... poverty ahead ... but with new definitions of poverty created by Obama last Tuesday:
http://www.washingtonpost.com/wp-dyn/content/article/2010/03/02/AR2010030202316.html
we will at least know the exact percentage. I think we are headed for a long time down ... we are not headed for a W, V, or U recovery but a:
\_________________________________________/ recovery
DOUBLE, REPLACE THE WORD "MAKING" WITH "WORTH" IN MY POST AS AN OVER SIGHT. IT STILL DOES NOT CHANGE YOUR CONTENTION THAT THE STRATIFICATION POSTED ABOUT IS THE 99% VS THE 1%. YOU, HOWEVER, ARE TRYING TO CREATE EXTRA TENSION BETWEEN THE 99%! YOU'RE ALSO A RUDE LITTLE PRICK.
Stipulating the truth of "income inequality", only harm can come from any supposed remedy. This we know. And calls for warfare by the have-nots against the haves is a cynical ploy used by tyrants - usually of the Left. The question should be about economic mobility - are thrift and effort rewarded by the System. Are barriers to advancement manageable? Unfortunately, the very ideologues pushing redistribution, progressive taxation, central planning, and regulations as remedy to unequal outcomes, ensure unequal opportunity, rigidity and corruption in the form of rent-seeking and cronyism.
Reich is among that group. Beware the whole line of rhetoric that starts with income inequality as a market failure.
Excellent! This is a typical liberal line of attack: find ANY inequality of outcome, attribute it to market failure, prescribe a government solution. What this ends with is the attribution of the resulting much bigger inequality of outcome to the remnants of market influences and complete take over by the government due to complete "market failure".
"Where will demand come from to get Main Street back, create jobs, raise middle class wages? Not from big businesses. Certainly not from Wall Street. Not from exports. Not from government."
"recovery" for anyone other than big corporations, Wall Street, and the wealthy is a mirage."
ME>If the U.S.A. would Legalize Medical Marijuana it would cut the financial teeth of Cartels and the corruption, at the same time this would Stimulate the Economy across the Nation with just one single action. Cut expenses, save blood and stimulate the Nation with some green shoots businesses.
Old Fashion Trickle- Up businesses. (Jim Beam, Jack Daniels)
Dumbass middle class were spending more than their paychecks every week for years, now they are broke and cry foul? There is one iron rule: NEVER spend more than you make, then you can't go broke. Was that so hard to understand? I guess. Now the poor and broke are waking up from their debt infused spending frenzy and realize their sold their life away. They realize it's game over. And they're very very pissed.
and desperately trying to find someone or something to blame ... other than their spending.
I lived in Cali and boy did I see it ... everyone (that could) maxed out credit cards, car loans, got home equity loans, borrowed on their 401Ks and then went out and spent it on who knows what ... now they look back and say wtf where did it all go?? And ... say they were cheated by the mortgage company that gave them the loan, the car was too much - the dealer screwed me, the credit card company is charging me too much ... do I really have to repay the 401K loan?
Oh well, I think I'll just declare bankruptcy, after all it's really not my fault.
There is no such thing as "the wealthy"; there is no such thing as "the middle class"...
There is only one "class" - Americans.
as always george you are a blazing torch of light in a dark world of evil....
the top 1% of american wealth holders are as a generalization evil and must be destroyed.....aaron russo spoke chillingly of the fuck you rockefellers: http://www.youtube.com/watch?v=7nD7dbkkBIA - these scum are botchulism on the economy and the body politic....
the fundamental theorem of the crash is that there has been no recovery and there will never be a recovery.....
the top 1% botchulism got their wealth through favorable tax, regulatory, and monetary policy supporting the fire economy....i will be pleased when i read the headline of lloyd blankenfiend's death - the sooner the better....
The wealthy have always had a great life ... so what's new?
This only brings to mind that America is the best place on earth. We have the most wealthy people on the planet and ... anyone in America has the potential to rise from nothing to mega wealthy ... where else can this happen (maybe Australia, New Zealand)
I prefer Liberty and Freedom ... even Liberty and Freedom for Wall Street Banksters, the S and P 500, and the Mega Wealthy
What I would really like to see is a Free Press that would tell the truth about Wall Street and Washington
amerika is the most foul place on earth....it is
a cauldron of lies and deceit where the oligarchs
murder the wealthy and powerful....
from the lie of 11/22/1963 when the elite
murdered an american president to 9/11/2001 when
the elite destroyed the wtc america has been the
personification of lies and fraud....
http://www.youtube.com/watch?v=7nD7dbkkBIA
www.ae911truth.org
and fucktards spout off about that disgusting
rags to riches bullshit to justify the rule of
the tyrants among flowing blood...
From one fucktard to another ... You obviously do not live in the USA ... and if you do live here, pray tell what is the greatest nation of earth?
Your question should be phrased in the past tense.
Denial is worth a lot of money to the thieves.
Ok ... but what is the best place to live on this planet?
Robert Reich writes:
Are we finally in a recovery? Who's "we," kemosabe? Big global companies, Wall Street, and high-income Americans who hold their savings in financial instruments are clearly doing better. As to the rest of us -- small businesses along Main Streets, and middle and lower-income Americans -- forget it.
Robert Reich is among the super wealthy, a Wall Street insider and mentor of many moneyed kingpins and thusly an absolutely lier as are most of his proteges such as Larry Summers and Tim Geithner. They believe that they know what is best for the "rest of us" and yet have laid the foundation of our most recent problems ... this is Hypocrisy on steriods.
He mixes some truth with his lies so it is very difficult to ferret out ... but his over arching philosophy is bash the Rich, bash the Corporation, and bash Wall Street ... He has been the most potent individual in forging the unholy alliance of Wall Street with Washington, financial Corporations with Washington and the Rich with Washington. He would have the wealthy give all their wealth to Washington.
Reich Lies and Peoples Cries
Soros, Buffett (to a lesser extent), Gates and the weasel trolls like Reich and Krugman are all haters of the system that made them enormously wealthy and/or influential. It's a peculiar kind of hate, evidence of some deep-seated psychological problems, be it simple guilt/insecurity or total lack of integrity.
Yep ... Double Dittos
cash is that the same as money .. yoga berra
Of course, had the government let financial matters run their course, unemployment would be higher, but there would have been a great leveling effect as declines in capital smacked the very wealthy where they live - and any of them that were even moderately levered would have contemplated jumping out the window. The Fed's alphabet programs short-circuited the process and now we are worse off than ever before as a society. Such is the stuff of which revolutions are made..unfortunately.....
I miss the old WASP elites. As bad as they were in some minor respects, at least they cared about other Americans to some extent.
I am an immigrant myself, but it's clear that immigration is one of the waves of cultural influences that has helped to destroy this country. It's hard to imagine some of the immigrants who are not particularly educated and can barely speak English caring the Constitution and the traditions of fair play in this country. It's true that many immigrants are some of the most patriotic Americans, but the overall effect is of turning this country into something less special than what was created by the Founding Fathers.
What will cause middle America to grow again? When at least 30% more of the consumer debt is gone and when the banks mark their non performing assets to the current price. This will take a long time because the Fed and Washington will NEVER support an acceleration of debt clearing. To me the Wall Street article was spot on.
The majority of these dopes who ran their credit to the moon, used their homes as ATM's and fraudulently purchased homes with the thought of making tons of money on it didn't have a nickle to begin with anyway, but they love to spend.
They become burdened with the debt service when the ATM was unplugged and they could no longer sell their home. Now, each day thousands of dead beats breath a sigh of relief when they find themselves no longer having to make that $3,000 house payment and $1,000 credit card payment. Now this same dead beat can rent something for $1,500.00 and has no credit card payments. Man he may have the ability to squander away another $2,000 a month that he didn't have before.
It's the dead beats that lead us into this mess and it will be the dead beats who lead us out. It will just take a while for enough dead beats to get whole again.
Yeah right, deadbeats caused this. Couldn't possibly be the fact that the FBI stated back in 2004 that there was a wave of fraudulent mortgages being peddled, up to 80%.
No, it's the deadbeats. Couldn't possibly be a group of Ivy league pricks that took these mortgages, packaged them all together and then resold them a million freakin times over and over again ? No, they had nothing to do it with it.
Must've been the poor trying to buy a house ! Yeah, that's it ! I wonder if the fraudulent rating agencies could have anything to do with it ? Classifying complete horseshit as AAA and then pawning it off on suckers like municipalities, pension funds, etc. could have anything to do it ? Naw ! The real culprit was Blankfein's Mexican gardener trying to live beyond his means.
Your are absolutely right. Maybe I should have said dumb ass dead beats. The financial crooks and Washington made it easy for the have nots to have all they wanted.
Shame on you! A city or state make it a non punishable offence to carry a small portion of marijuana. Does that make it ok for someone to start using it? A credit card company extends $30,000.00 in credit to someone. Does that mean they should use the entire amount? They build a casino close to where you live. Does this mean you should drive up every Saturday and gamble your paycheck away?
So your right and I'm right. The people that caused this are the people that made the bad decisions to borrow more than they could repay and the people who agreed to lend to people who did not have the means to repay the debt. Every coin has 2 sides. You can't blame this on somebody else and say that the consumer was a victim.
They ... They did it to us?
Just returned from a trip to DC and it is truly la-la land. The number of people in that area that have done great (with raises every year) is incredible. Larry Kramer (I can't stand the idiot) at least has been going after Gov't salaries in the last couple of weeks. More power to him. When I say Gov't salaries, I'm also talking about the overpaid military -- where inefficiency, corruptions, and dumb-a*s bubbas are also getting rich...
I thin the article sort of fudges the conclusion.. I mean Russians and Koreans and Indian, or whoever, people get to break into the Billionaires club -at a time when trade is increasing as consequence of currency fluctuations- only because they're the only ones left standing from amongst their competitors... and the banks have find someone to hold the account. 'Cos no one actually keeps a billion in wealth on tap, it's all held by the banks.
Anyway, how worried would you be that you could lose a few hundred million dollars on the next swan? Sure, it'snice for a while, but they've got few friends in that club at the moment. My point is -the banks use all of us. They'll continue to use us until they're forced otherwise. But who's gonna force the banks to do anything?
Me - I'd ask Citi to incorporate in Texas, ask Texas to secede with a visa agreement with Washington to allow free labour mobility. Have everyone who could be bothered claim for Texan citizenship -for a year, say- - whether you'd want to run new-age soup kitchens is something else- but it's the only way I can think of to pull the rug from under the current web of, I don't want to call it 'corruption', but the NYFED is funding something which may or may not yet be beneficial to the US citizenry-and it isn't like the Fed actually needs the citizenry to be around while they do this?
Reich omits that the only portion of the middle class that is actually doing better, rather than much worse, are government employees. In reality, the disparity is between people or entities dependent on government for their living (e.g., gvt employees, stock brokers, banks, favored union employees and bosses) on the one hand, and everyone else on the other hand. A substantial portion of the gvt dependent group are already very wealthy and are becoming more so because of the bizarre handling of this recession/depression by our governing class. It's easy to pick that group out and say, "see, disparity is increasing." But that misses the forest for the trees.
your original inane point, double, was that somehow the white woman making $43k has become "class stratified" from the black woman with $5 net worth, a seeming non sequitir, especially using median amounts. the posters immediately following you saw your lack of logic was flawed, but you attacked with "trailer trash" blather, showing your true feelings on class stratification. GW's post contrasts the "mega-wealthy" with the other 99%, not the middle class vs. lower class.
My last comment: the survey mentioned by Yves Smith does not say, as you seem to have read, "that somehow the white woman making $43k..." It says "a median wealth of $42,600..." In plain English, we are comparing relative net worths and not mixing income with wealth.
Oquities, are you dyslexic?
yeah, doublethink, i still don't see how comparing income to net worth can "illustrate the magnitude of class differences in American society." i know lots of people with high incomes and $5 or less net worth, and low income people who are wealthy. that's due to spending differences, brains, or maybe an inheritance, but not necessarily "class stratification," which is based on wealth accumulation and concentration, and not income disparity as you state. "google it."
I did.
What are Weber's three dimensions of stratification?Class or a set of people with similar amounts of income and wealth. Party or a set of people with similar amounts of power. Status group or a set of people with similar social prestige or positive regard from members of a society.
http://www.sociologyguide.com/questions/social-stratification.php
Where are velobabe’s comments regarding Abramovich?
The problem, both public sector and private, is that we forgot that debt is debt and there are certain assets that you simply cannot leverage
Worse than the inequality is the fact that today's wealthy principally bring to the table parasitic economics (trading, services, gambling, etc.), rather than entrepreneurship in actual organic wealth generating activities which are badly needed in this economy.
If you manufacture, mine or grow, you are a producer and are badly needed.
Anyone else needs to kiss their butts.
parasitic economics (trading, services, gambling, etc.)
Do you have some basis for your belief and statement?
mr. doublethink at 22:33 - you're living up to your name by comparing income to net worth and/or assuming that money earned is money saved.
if you were comparing equally skilled and educated people it might be relevant, not - just a random data toss.
George Washington's post is about income disparity in America; this is also known as class stratification. My comment about a $5 net worth is not to compare income to net worth but rather to illustrate the magnitude of class differences in American society. Comparing equally skilled and educated people would not be the point.
"doublethink," by the way, is from George Orwell's 1984. Google it next time.
It's clear you don't appreciate the irony of having a proponent of government interference in people's lives picking a nickname that seems to indicate his or her opposition to Big Brother. Or perhaps you are advocating doublethink.
So, during a period of financial stress, it's beneficial to be wealthy? I'm shocked.
The real cause is twofold:
1. Our tax system makes it very difficult to accumulate personal wealth. Social Security and Medicare taxes take over 15% of income, hidden from the official tax rates, and in a highly regressive way.
2. The obscenely high level of "entitlements" has created an underclass of low-income people who are in a comfort zone without working. They have no incentive to get out and improve their lives as long as the government supports them as they are. Many of these people participate in the underground economy as well. How else do families on welfare have flat-screen TVs and videogames? At a higher level, in the lower-middle class, we have large numbers of people living on Social Security and pensions. They were duped by the government into believing that they would be "taken care of" and therefore consumed too much during their careers leaving them with no investments upon retirement. Increased lifespans due to advances in medicine have exacerbated this problem.
Without the dual obstacle of taxes and socialist income redistribution we would see much more mobility between income levels and far more middle-class wealth creation.
The unintended negative consequences of government programs always exceed in size the originally intended goals, while those goals themselves are never achieved.
Your first point is excellent and the real key.
1) 15% social sec and medicare taxes on ALL INCOME under $100k. Why? Super-regressive.
2) You should've folded in that dumb ultra-low capital gains taxes accrue mainly to the uber-wealthy. So now the top 1% or 1/10th of 1% pays ~20% tax rate because all their income in "capital income". Why?
3) Entitlements are an issue, but not so much as you say. n a $15T economy, we have $1T maybe $1.5T in entitlements. Half of those are medical. Certainly would be nice to raise the Social Sec / Medicare age to 70.
The tax issue is the key. As long as income is fairly taxed at a flat-to-progressive 30-40% rate... then income inequality works itself out.
There is absolutely nothing wrong with income inequality per se. The government's attempts to solve this inequality by taxation and other meddling in the economy is the root of all evil. Follow the constitution of the United States, it's a great document. It mentions nothing about solving the income inequality "problem". So just don't do it. Free society produces the biggest financial output and that benefits everybody. Any attempts to coerce people to give up their income so that others can do better is slavery.
Very good post.
This document some Citigroup analysts wrote in 2005 is worth reading. It becomes harder and harder to believe that this is all is happening by chance.
http://wp.me/px1MN-es
Read Player Piano by Kurt Vonnegut
I think I hear the band playing "Nearer My God to Thee" and someone shouting about lifeboats and women and children. So much noise it's hard to decide what duration to go for in my next sovereign debt CEF purchase......
1. Technology has wiped out a lot of non-skilled or semi-skilled labor. People who used to have good-paying factory jobs after high school, don't.
2. Taxes seem primarily directed at income, so if you already have it, you escape.
3. The forces of "natural selection" are being thwarted. But the "freakonomics" result is that people without money or education tend to reproduce more and yet have ample access to all the essentials and even luxuries of life. Those "producers" who have desirable skills often reproduce less and are burdened more with paying for the non-producers.
4. As Lady Thatcher said: "Socialism is wonderful until you run out of other people's money."
5. I make my living providing medical care to people who don't work, have lots of kids, and collect social security disability, state assistance, medicare or medicaid, etc. These folks tell me what they do all day: watch tv, or, whatever they want. They all feel entitled to be taken care of, and often complain that they are not given enough.
and your solution is?